I have a little pet theory I’ve been stewing about when it comes to penny wise/pound foolish decisions from business owners of all types. From landlords, to local cafes, and all the way up to Fortune 500 CEOs. It comes down to bad accounting.
I’ve taken to setting aside money into buckets. There’s a bucket that handles some filter replacements for our home furnace (it’s a 5 inch thick HEPA filter, so it’s bit pricey) and under sink RO system, for example. When it comes time to buy one, I just pull from that bucket. It doesn’t feel like I’m losing anything off my usual budget for the month. The money is just there, and it feels nice to be able to pay without worry. It almost feels like a reward for good planning.
Companies do this, as well. In fact, I helped setup a similar system at my local community makerspace (which runs as a 501(c)3). We pay into buckets for things like insurance every month, and then we pay it when the bill comes due each year. Again, it doesn’t feel like we’re stressed for anything.
Not all companies do this, or if they do, they don’t do it for everything. If you’re not setting aside a little bucket for something that you know will come up, then it has to be paid out of your general funds. That’s money you wanted to use for something more fun than furnace filters or insurance or a software package that can process navigation data automatically.
So when you see billionaires or landlords complain about something important being too expensive, it might be because they aren’t tracking their accounting buckets properly. If this keeps happening, that’s a good indication that they are anything but a glorious Captain of Industry.
I would add to this that almost all the companies I have worked for (from local businesses to multi national corps) constantly “save” money by hiding it in labor costs. There is some line item or other thing that is clearly definable on a budget and so they will outsource it in some capacity and then pat themselves on the back for the cost savings. However, what ends up happening is the resulting product that comes in is dog shit and it forces the people on the ground to fix it or otherwise make it work.
Most regular people just want to do their job and not rock the boat, so rather than make this new issue a pain point for management, they just deal with it. Over time those types of things start to add up and burn people out, but the higher ups are never directly effected and so I think they get a weird sense of anything they say ultimately “just working out”.
I have a little pet theory I’ve been stewing about when it comes to penny wise/pound foolish decisions from business owners of all types. From landlords, to local cafes, and all the way up to Fortune 500 CEOs. It comes down to bad accounting.
I’ve taken to setting aside money into buckets. There’s a bucket that handles some filter replacements for our home furnace (it’s a 5 inch thick HEPA filter, so it’s bit pricey) and under sink RO system, for example. When it comes time to buy one, I just pull from that bucket. It doesn’t feel like I’m losing anything off my usual budget for the month. The money is just there, and it feels nice to be able to pay without worry. It almost feels like a reward for good planning.
Companies do this, as well. In fact, I helped setup a similar system at my local community makerspace (which runs as a 501(c)3). We pay into buckets for things like insurance every month, and then we pay it when the bill comes due each year. Again, it doesn’t feel like we’re stressed for anything.
Not all companies do this, or if they do, they don’t do it for everything. If you’re not setting aside a little bucket for something that you know will come up, then it has to be paid out of your general funds. That’s money you wanted to use for something more fun than furnace filters or insurance or a software package that can process navigation data automatically.
So when you see billionaires or landlords complain about something important being too expensive, it might be because they aren’t tracking their accounting buckets properly. If this keeps happening, that’s a good indication that they are anything but a glorious Captain of Industry.
My son is kinda struggling with his allowance money. I might not be the greatest example or at least, a good financial teati him.
But the other day, my friend told me their kids received a special wallet with envelopes inside. Exactly the kind of buket system you describe.
So I’m going to buy this for both my kids, I think it’s going to be helpful for them.
Get yourself one too
I would add to this that almost all the companies I have worked for (from local businesses to multi national corps) constantly “save” money by hiding it in labor costs. There is some line item or other thing that is clearly definable on a budget and so they will outsource it in some capacity and then pat themselves on the back for the cost savings. However, what ends up happening is the resulting product that comes in is dog shit and it forces the people on the ground to fix it or otherwise make it work.
Most regular people just want to do their job and not rock the boat, so rather than make this new issue a pain point for management, they just deal with it. Over time those types of things start to add up and burn people out, but the higher ups are never directly effected and so I think they get a weird sense of anything they say ultimately “just working out”.