Quick quiz: which crew member of the USS Enterprise (NCC-1701) is the best choice to teach us the right way to budget?
We know what you're thinking:
- a) Isn't...the answer in the title of this blog post?
- b) did you really have to include the NCC-1701...I mean, we knew what you meant once you said "USS Enterprise"...
- c) what does the heck does Star Trek have to do with budgeting?
These are really awesome questions! To them, we respond:
- a) Yes.
- b) IT MATTERS.
- c) Read on...
It is absolutely Chief Engineer (and later, Captain) Montgomery Scott aka "Scotty" who can teach us the right way to create a budget. Specifically, he can teach us about taking advantage of budget buffers whenever possible.
Scotty's secret power of budgeting is a direct result of his reptutation management strategy, seen here in a famous clip from "Star Trek III: The Search For Spock"
The secret can be clarified further by examining another quote, when Scotty addressed Geordi La Forge, the engineer of the USS Enterprise NCC-1701-D (See?!? We told you it MATTERS):
"Starship captains are like children. They want everything right now and they want it their way. The secret is to give them what they need, not what they want."
Therein lies Scotty's secret. Long ago, Scotty figured out how to separate the wants from the needs of his starship captain. Rather than spiral down a subjective rabbit hole of trying to debate whether a particular ask was a want or a need, Scotty created a mental heuristic – a shortcut:
- Listen to what's being requested.
- Figure out the real answer.
- Multiple this answer by a factor of 4.
- Tell them the factor x 4 answer.
- Deliver the real answer.
- Continue on with your "miracle worker" reputation intact.
This is exactly what a budget buffer is; it is a literal step-by-step "how-to" for the age-old adage hope for the best, plan for the worst.
Beam The Budget Up
Take our advice and follow Scotty's rules.
When you are planning your budget, for each expense:
- Look at the line-item for the expense, and determine if is fixed or has the tendency to change.
- Collect up the last 3-6 payments you've made on that payment and come up with an average.
- Look at the highest amount you've ever paid for that expense.
- Pencil this highest amount value (from #3) in as the line-item expense in your budget.
- When you are actually paying this bill, do what you can to shoot for hitting the average, allowing you to come in under your budgeted number.
- For every expense you keep below the budget, enjoy the additional cash on-hand that results from it.
Remember: building a budget is more than just printing out one month's bank statement and plugging all the values into a spreadsheet. Budgets (especially tight budgets) are living documents. They must be able to adapt and respond to real-world situations. Budgets need room to breathe, grow and adapt to your changing situation.
Take a tip from Scotty and build a budget buffer, so you can become the miracle worker of your own voyage.