In our personal finances, we typically have a relatively fixed set of resources (our income, assets, etc), but the technology we use to manage these resources can make all the difference.
I recently read the book The Next Millionaires by Paul Pilzer. It’s a great book on the new economics that will shape our generation and challenges many old economic principles. One of the great gems I found was an equation that Paul discovered.
W = P * T
Wealth = Personal resources * Technology
He submits that our wealth as a society is determined by the resources we have times the technology that we have. This is a very interesting way of looking at things. He gives the example of the oil/gas crisis of the 1970s in America. There was a real shortage of gas, it was even rationed. At that time gas mileage was about 9 miles/gallon from a $300 mechanical carburetor. The next decade’s technology introduced the computerized electronic fuel injector at a cost of $25 and yielding a mileage of 22 miles/gallon. The resource quantity of gas remained about the same (actually went down slightly) but the technology effectively doubled the supply. Technology can truly have a great impact.
Similarly, in our personal finances, we typically have a relatively fixed set of resources (our income, assets, etc), but the technology we use to manage these resources can make all the difference. Those who use financial tools typically understand their money better and make better decisions about spending and saving, resulting in an increase in wealth. This is exactly what I’ve found in my life also. Using CalendarBudget has enabled me to stay afloat with 5 kids, even going down to part-time employment. Whatever tool you choose, even if it’s a simple spreadsheet, is better than nothing. But keep in mind the formula… the better your technology, the more wealth you’ll have!