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Are you an analyst, a budgeter or a tracker?

Are you an analyst, a budgeter, or a tracker?

A new calendar year promises a fresh start. Downtime over the holidays has recharged batteries, providing time to step back from minutiae and consider the big picture.

Goals are set.

Priorities determined.

Strategies announced.

Diets commence. Gym membership sales skyrocket. Vows of a “dry January” are solemnly sworn.

New Year’s resolutions typically resemble some variant of: eat a little less, exercise a little more, and spend less than you earn (make sure you invest the difference).

A corporate resolution is a “strategy” announcement, typically: earn a little more, spend a little less, and fervently hope for a private equity buyout before the business gets disrupted.

By February normal service has resumed: quiet gyms, full pubs, and the Deliveroo app reappearing on phones.

Year-end financial result production is a similar annual ritual.

S&P500 - 2017 Total Return

S&P500 – 2017 Total Return. Image source: Yahoo Finance.

Portfolio increase of 20.18% over 2017! Congratulations, you matched the S&P500 total return, but… so what?

Saving rate of 50%! Wow, but… so what?

Year-end numbers should be telling the most predictable story ever. You are the central character, who has been living out the plot! It never ceases to amaze me how many organisations and individuals get surprised by the outcome… were they not paying attention throughout the year?

Surprises are evil

I sat down to run my own year-end numbers.

Much to my chagrin I too was surprised… my personal finance software of choice had been derailed by Yahoo and Google discontinuing their free Stock Quote and Exchange Rate APIs.

There is a lesson there somewhere about the risks of building a chargeable service upon a foundation of components reliant on the generosity of others: APIs, open source software components, and email services.

Sometime later, after manually entering the closing prices for my investments, I had my year-end numbers. Tick, job done.

The question is: then what?

Sun Tsu

Sun Tsu had written off budgeters and trackers more than 2500 years ago. Image credit: Brick Generals.

Are you an analyst, a budgeter, or a tracker?

Budgeters are optimists, much like the folks making New Year’s resolutions. Budgets are an attempt to divine the future by allocating anticipated spending into categories. 2500 years ago Sun Tsu wrote: “Strategy without tactics is the slowest route to victory”. Some things don’t change, a budget without an implementation plan is a work of fiction!

Trackers are realists. They can state with perfect hindsight exactly where all their money went. Sun Tsu had something to say about these folks also: “Tactics without strategy is the noise before defeat”. Knowing what went wrong is interesting… but things still went wrong!

Analysts actually think about the numbers. Good spending and investment decisions are well-informed ones. Listening to the story that numbers tell provide that knowledge.


Tracking and forecasting are the easy half of the job. Image credit: The Brothers Brick.

Analysis for fun and profit

Tracking and forecasting are the easy half of the job. Take the time to actually listen to the story your numbers tell:

  • What worked?
  • What didn’t?
  • What should you do more of?
  • What should you stop doing altogether?

Now that you’ve heard your number’s story, how will you apply that knowledge to your decision making?

By all accounts, Sun Tsu was a pretty smart bloke and a survivor. He made it to his 48th birthday, a remarkable achievement given his chosen profession and the average life expectancy 2500 years ago. Even way back then he had figured out that defeat was inevitable when budgeting and/or tracking is performed in isolation.

Hear the story your numbers are telling you. Apply that knowledge to your future decision making. Improve!

Finally always “trust, but verify” any advice you receive, including from your numbers. It turns out the markets went on a bit of a surge towards the end of 2017, increasing 9.1% since my software ceased automatically updating. Who knew?!?

Next Steps

  • If you haven’t already, run your 2017 numbers.
  • Analyse what they tell you.
  • Factor that analysis into your future decision making, a well informed decision should be a good one.
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