Recently I’ve been thinking a lot about the 80-20 rule.
If you’re unfamiliar, the 80-20 rule, also known as the Pareto principle, states that 80% of your results should come from 20% of your efforts.
There are a lot of uses for this principle, but the way I like to interpret it is go for the big wins. Find that key process that produces the most results, focus the bulk of your energy there, and find ways to minimize or automate the rest.
Being a visual person, the most relevant example of the 80-20 rule came to me one day while I was watching HGTV.
Have you heard of Home by Novogratz?
Robert and Cortney Novogratz are Manhattan home renovators and designers who run the firm, Sixx Design. I first learned of them when Bravo aired a reality show about their family, called 9 by Design. On top of managing a successful business, their own television show on HGTV, and being incredibly cute and hip, they also have seven freaking kids.
But after watching one 30 minute episode, it’s easy to see how they make it all work. They are experts in practicing the 80-20 rule.
In their designs they go for big and bold and let the rest of the room play a minimalist supporting role. Huge art. Graphic wallpaper. A fabulous mirror. A killer rug.
They don’t spend time futzing with tchotchkies, simply the big wins.
Not only do they practice the 80-20 rule in their designs, but also in their family life. On the Bravo show, when asked how she manages to throw birthday parties for her kids on top of her busy career, Cortney said something along the lines of “it’s easy, just make a f**king cake and invite a ton of kids.”
My idols, these two are.
Being a working mom, and a mom trying to make money on the side, I’m always looking for ways to incorporate more of the 80-20 rule in my life.
So what does all this have to do with budgeting?
Lately I’ve been noticing one activity that has been taking up too much time, and producing too little results is tracking our spending.
We I’ve been categorizing our expenses with Mint for about two years now. Though in the early days I was more zealous about it, the process has always been a chore. It tends to be something I put off to the end of the month until those uncategorized transactions pile up so high, I need a good 1 -2 hours to sit down and balance it all.
In the beginning I was motivated to make the extra effort not only to see what we were spending our money on, but also to see if we were spending less than what we earned each month.
But then the months went by, and the amounts seemed to be about the same each time, and the whole process became less intriguing. We consistently spent X amount on groceries, and Y amount on gas, and yadda, yadda, yadda.
Don’t get me wrong, tracking our expenses has helped us make some good adjustments. It helped us see that our eating out habit needed a makeover, for one.
But part of me also feels like it hasn’t done much for us lately, which is why I haven’t done it for the last three months.
Maybe tracking our spending was a big win in the early days, but now it’s more of a mundane nuisance. Maybe now we turn to phase two: check in only once in a while, or if we have too many overdrafts.
Do you track your expenses? Have you done it for a long time? Has it become mundane, or is it still of value to you? Do you have another method?