Measure yourself using the same techniques the Fortune 500 uses
[RSS readers: Click here to see the embedded spreadsheets in this post.]
I have a very attractive single female friend who’s convinced that she needs to lose weight to get a boyfriend. I took one look at her a few months ago and said, “You’re crazy.” She looked great. Despite my comments, she decided to spend the last six months being ultra-disciplined about her diet and exercise. She’s lost weight and looks even better now.
The thing is, she’s still gotten 0 dates.
If she were being intellectually honest, she would have kept a spreadsheet that looked like this:
It’s hard to ignore data as objective as this. Sure, maybe weight matters, but it’s clearly not the most important factor to work on. So today, I’m going to show you how I track spending, eating, etc — and give you templates to do the same.
See, I don’t understand people who do increasing amounts of work without measuring the results. I want to invent a time machine, go back in time, find a stegosaurus tail, come back, and beat these people in the face with it. At least then I can be hailed as a hero for inventing a time machine.
Seriously, why would you spin your wheels without figuring out a way to analyze what’s working and what’s not? After analyzing my own time, I’m convinced that about 30% of what I do really matters, 30% might matter, and 30% is completely worthless. The key is finding out which of your efforts are producing big results. As Tim Ferriss wrote in The 4-Hour Workweek,
Out of more than 120 wholesale customers, a mere 5 were bringing in 95% of the revenue. I was spending 98% of my time chasing the remainder…The end result? I went from chasing and appeasing 120 customers to simply receiving large orders from eight…my monthly income increased from $30K to $60K in four weeks and my weekly hours immediately dropped from over 80 to approximately 15.”
Now that’s measurement. And while 2007 was the year of conscious spending, 2008 is the year of measurement. Here’s how to use measurement to persuade yourself to change.
So, what should you track?
It’s important to track the right things. My friend could have tracked the color of her socks or the saltiness of her almonds, but I bet that wouldn’t have had a very strong correlation with her getting men. Here are 10 ideas for items to track, but I’ll bet you capture 90% of the bare necessities if you track just these things:
- What categories you spend money on (and how much)
- How many calories you eat
- How often you work out
How to track: Use the Think, Want, Do Technique
This is a technique I came up with a few years ago when I started tracking a bunch of things in my life. Let’s use monthly spending as an example.
First, write down what you think you spend.
Second, write down what you want to spend.
Third, write down what you actually spend. (This is where you track it and add it daily.)
Then compare the “actual” chart to the other charts. I guarantee you, the numbers will stun you. When I first started tracking my spending, for example, I discovered that 70% of it was going towards eating out. In one final move of disgust, I wanted to kill myself by buying a bag of cheetos and stuffing every single morsel in my mouth at once. I would then ask Alanis Morrisette to give my eulogy, during which time she would learn the actual meaning of irony.
Why bother tracking any of this?
Yes, it would be easier to do nothing. But I’d rather do less and get more results. That means having a little short-term pain while you build up an infrastructure to track what’s actually working out of all the things you’re doing right now.
Also, you can’t track this stuff in your head. We’re not properly wired to remember how much we ate or spent — even though, if you ask someone how much they ate/spent last week, they’ll confidently give you an answer. They don’t know what they’re talking about. We chronically mis-estimate for a variety of reasons.
Tracking actual data strips away ideology to show us reality. My friend, for example, was convinced that weight was the impediment to getting dates. Now she knows that weight alone doesn’t have a very big effect.
How to get started tracking today
The most important thing is to start tracking today. The point isn’t to set up the fanciest tracking system. it’s to learn from the results and change your behavior. (I aim for the most lightweight system I can create — mine has been going for years and is still a creaky collection of Excel, PBwiki, Quicken, Mint, and scraps of paper.) Forget being perfect. Just get started today.
2. Pick a place to track your progress. For money, I recommend any personal-finance software (try Mint, Quicken, or Excel). For anything else, create a free password-protected PBwiki. You’ll be able to type in your progress from anywhere you have Internet access.
3. Don’t worry about making the data structured so you can sort/analyze it. A few weeks ago, I found myself spending hours creating a fancy model to track how much I travel. I realized how stupid I was being, so I dumped the raw data into a plaintext PBwiki. After a month of data, I had my virtual admin go through it and analyze it. It cost me about $20 to have it professionally restructured and analyzed.
Here I’m tracking my commute times to see the optimal time to drive to work. Ghetto, but it works.
4. Use public commitment to maximize your chances of success. When I bet my friends $225 that I could gain 15lbs in 3 months, I invited them all to a wiki and updated it every week. This was incredibly motivational to me: The money was nice, but I didn’t want to publicly lose after posting my progress for all those weeks.
To use public commitment for your tracking, post a link to your spreadsheet here in the comments. I’ll pick out a few and highlight them on this blog. And if I choose yours, beware: I will make fun of you one month from now, on February 18th, if you don’t follow through.It’s up to you now!
Other resources to read: My NPR interview about measurement, an earlier post called How a beggar in Grenada uses data to optimize donations, and my delicious links on psychology, data, and optimization.
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If it were up to personal-finance “experts,” we’d never spend a penny on ourselves. We’d save 80% of ...Read More