1970's: Trips require $$ estimate & traveler checks
2014: Bring a
The idea I was looking at is pretty simple, when you have continuous flow you don't need to predict. It changes your behavior and allows you to to hit your mark exactly instead of having a lots of leftover money later you need to re-exchange.
Batch vs Continuous Flow
To me this echoed trends I've experienced in software development. As I've been able to approach a more continuous flow I have spent less energy, effort & time predicting what I'll do. I simply exchange work for features as I need them.
Unfortunately, there is still a lot of room for misinterpretation on twitter. So I wanted to clear up some misunderstandings.
An example would be useful right about now:
Let us look at 3 sample situation (number adjusted for inflation)
Let's say that in 1970's Robert goes to Europe. Let's look at the numbers
Bank Account: $20,000
Traveler checks: $2,000
Expenses in Europe: $2,500
Let's compare this to 2014 when Marsha decides to travel.
Bank Account: $4,000
Payment method: Debit Card
Expenses in Europe: $3,000
Abundance vs Flow
One misconception is that this means only works if you are rich and will never run out of money. However this clearly isn't the case with Robert & Marsha. Robert has much more money than Marsha, however he's in trouble, stuck in Europe with no access to money. He will tell you how he should have planned better. Maybe he didn't take resturants into account properly or taxis or souvenirs. All of this could have been avoided if only he spent more time planning and had better estimates.
But Marsha didn't have these issues. She had less money and she didn't plan her expenses at all. This doesn't mean she didn't have expenses or a limit of how much she could spend it simply means she didn't have to go to bank ahead of time and say "I would like $3,000 worth of travelers checks for my trip"
This is a pretty well understood idea in the financial world. It is the difference between Liquidity & solvency. Both matter.
If you are insolvent it doesn't matter how good you are at estimating, you are broke.
If you have high liquidity it also doesn't matter how good you are at estimating, you have access to you money.
Estimations vs Awareness
Estimation is the ability to predicted what I do. Robert needs this to travel in the 1970's, Marsha doesn't need it in 2014.
However, this does not mean Marsha can just go all around Europe spending money like crazy. She needs to be aware of how much she is spending. She need to understand the conversion rates and know when she is spending too much.
Her decisions matter
She needs to be aware but that doesn't mean she needs to be able to predict.
Making Smart Decisions
Marsha spent more than Robert.
Does that mean she spent her money better or worse?
It's impossible to tell from the budget alone. Making smart choices is important.
Sometimes people believe that -
estimates are the only way you can make smart choices
This is crazy.
People make great decisions everyday without estimates.
Of course there are also people who know exactly what is going to happen and do it anyways :-|
When people are trying to lose weight they spend a lot of time planning meals and counting calories. They will tell you about how important that is, but people who are thin and have been thin there whole lives don't tend to do this. They just eat sensible, they know when they are full and stop eating.
I must admit I have a bit of resentment today these people as I have never been one of them myself. This jealousy helps me to remember and sympathize with people who are struggling with estimates and refuse to believe they are not needed or a poor use of time and energy.
If you are traveling in the 1970's here are some travel tips. When you enter a country the immigration officer will check that you have enough money for the trip, one way to do this is take out $1,000 in traveler checks and say that you lost them. Then you will get issued an other $1,000 in checks. Be careful to mark the original checks because if you spend them you will get charged with fraud but ...
wait, where are you going?
... these are helpful tips
... oh you don't live in the 1970's?
Well, maybe you'd like to hear some better ways of estimating?