Wednesday, May 1, 2013

Just Enough

I love this series from Parent Hacks: Manage Your Money Just Enough

Mainly what I love is the title. It's easy to get swept up in doing everything "right" - finding the perfect envelope system, tweaking investments to get top performance, developing systems, perfecting budgets.

The reality is that if financial freedom is a recipe, there are two ingredients: action and time. There's only so much you can do before you have to let time pass, and while that's happening, managing your money "just enough" is a great plan.

I believe it was in a book about Eastern medicine where I read about a concept called "80% is perfection". This means that in any holistic approach to your life - diet, exercise, etc. - there is no achieving 100%. It's just not possible on a human scale. But getting things right 80% of the time will get you to where you want to go, and is achievable.

Is it a bit of a cop-out to only aim for 80% or for "just enough"? I don't think so. I think it's a great sanity saver!

2 comments:

  1. I believe this concept is frequently referenced in business and self-help books -- I've heard it called "the 80% solution." The idea is that, like you said, the first 80% is the most important. An axiom that follows is that the first 80% of a task takes 20% of the time, and achieving the last 20% takes 80% of the time -- so it's kind of the sweet spot for many, many things to say "good enough" and free up time to do other things.

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  2. That's a great way to look at things. People think they need to meticulously manage their investments to do well and therefore don't invest at all. Really, if they just sent a couple of hundred bucks away a month to a general index fund they would be a lot better off than if they did nothing.

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