Earlier this year, I wrote a blog about a program I’ve been following* to help meet some health & fitness goals. As I’m a little more than halfway through the program, I have found many of the daily lessons to have applications to many facets of life, including financial planning.
One such lesson discussed the false sense of precision in many programs touting calorie counting as the key to success. The concept is simple, we take in calories that are then used up as we perform various activities each day. If we can successfully count those calories and get a reasonable grip on how many calories we burn, successful weight management becomes a simple math equation, right?
Not exactly.
Let’s suppose you can actually put up with counting calories with some level of precision on a daily basis.
Let’s assume the food scale in your kitchen and the portable model you bring everywhere are finely calibrated.
Let’s assume you’re perfectly on board with measuring and recording every morsel and drop you consume for a prolonged period. Even then, we still have several hurdles to get over. Below is a summary of several of these hurdles referenced in this Scientific American article.
- Calorie counts on package labels are often inaccurate.
- Not all calories are used by our bodies in the same way.
- Experts estimate that even if you painstakingly count every bite, you’re likely to be off up to 25% on average. That’s a LOT of extra jumping jacks.
The program I’ve been following suggests this level of precision doesn’t allow enough time to focus on developing good, sustainable habits. They argue that time is better spent doing things that allow you to ebb and flow through the occasional indulgence or vacation without destroying your plan. Developing these habits allow you to routinely get back on track.
Counting Calories in Planning
How does this apply to financial planning? We see a lot of clients when they first arrive that have avoided putting a plan in place for years for reasons just like those mentioned above. They try and build a budget. They attempt to count every penny of spending over some period of time. They buy a software program and put this data and much more into the system.
And then what?
Life gets in the way. It’s easier in the moment to avoid knowing what we’re doing. Ignorance truly can be bliss.
Even when we do succeed at keeping count for some time, like calories, our measures can be wildly inaccurate and even if some sense of what’s happening is gained, it rarely turns into improved habits.
More often, it frightens us and makes us put our financial blinders right back on just like a failed crash diet.
There must be a better way.
The Alternative
To build healthier, more sustainable habits, we must be open to being honest with ourselves and willing to be aware of what we’re doing every day. We can’t choose to be blind to our actions and those around us.
At the same time, it can’t require an overabundance of our time, energy and focus. With the many, many variables involved in a solid financial plan, daily precision can’t be the goal. Otherwise, the slightest diversion could cause massive problems.
As with so many things in life, a good financial plan requires balance. An eye on today, an eye on tomorrow, and a discipline that allows for success even when things go off the rails periodically.
Counting those calories or dollars can serve a purpose. It can allow us to check in with ourselves from time to time and calibrate our awareness of how close we’re sticking to our own values and plan.
But, in the end, it will be the practice of knowing where the path is, being aware of when we get off track and having the resiliency, both in our investment strategy and our daily financial habits, to get back to the norm that will create a successful experience in the long run.
*Note: As I mentioned in a prior blog, the program I’m using is called Precision Nutrition which was co-founded by John Berardi, PhD. The program has its critics as do all programs and is certainly not for everyone. I’m participating in it under the watch of a personal trainer. In other words, different things work for different people. The jury is still out on this program for me as a whole, but I do espouse the foundational ideas shared today.