Even so, I made my students in my Personal Finance course keep track of their expenses for three weeks. Not necessarily to torture them, but because they might need it later on.
I don’t keep one, so I’m not about to suggest that that everyone else needs to start writing down all their purchases, packing those little flimsy receipts into their wallets and stressing until every last purchase gets recorded into their personal accounting software.
Since I don’t keep one myself, I hesitate to suggest it for others.
And yet, if debt is a problem, you might need it.
The Observer Effect
The “Observer Effect” from physics explains is why you should budget expenses every month if you’re having trouble getting out of debt.
The Observer Effect is often described in shorthand as the Heisenberg Uncertainty Principal, although I recently learned these are different, frequently conflated, phenomena.
Quantum theory posits that the act of observation influences electrons in spatial relationship with other particles.
In other words, to look at an electron is to alter either its position or its momentum. Which kind of leads to messed up science.
But messed-up science can be our friend in personal finance.
To take a more common personal situation than quantum physics, doctors who study effective weight-loss techniques struggle with the basic scientific problem of Observer Effect. Essentially, when you enroll people in a study to observe weight loss effectiveness, you more often than not change the behavior of the people in the study.
Consciously or not, study subjects begin to consider more carefully their behavior and its effect on their weight. Whether you’re enrolled in the ‘control’ or the ‘study’ group, you no longer act or think precisely the way you did before enrollment.
Personal budgeting is a way to take advantage of this observer effect, if you have trouble coving your costs on a monthly basis.
We can use the observer effect to our advantage, altering our behavior in the act of observing it.
How I use the Observer Effect in my own life
I don’t carry monthly credit card debt, which is my primary excuse for not doing personal budgeting. Frankly, my behavior when it comes to monthly expenses is fine already. Because I’m cheap.
But I periodically struggle with two other problems: time management – and keeping to a regular exercise schedule. I already know the ‘right answers’ when it comes to these behaviors, but knowing the right answers is not the same thing as doing the right thing on a monthly basis
Hence, the observer effect.
When I get really stuck, I’ve learned I can track either of these behaviors in a spreadsheet. Do I think I run four times a week but really I only run twice a week? Do I think I go the local gym twice a week but really it’s twice a month?
Am I wasting two hours a day surfing Facebook, clicking ‘like’ on Gawker articles? When I track every half hour of my day, I can begin to see that a scheduled twenty minute conference call actually eats up an hour and a half, between preparation time, and follow up emails, and daydreaming about what I should have said during the call.
This tracking inevitably changes my exercise and time management behavior, subtly altering it for the better.
Look, I know it’s not a permanent change, and it’s not a cure-all. But it’s a start – and better than doing nothing.
A very successful business leader once told me the hardest part of his business is enacting adult behavior change.
I’ve learned over time that personal habits – especially personal habits we’re not proud of – rarely survive wholly intact after exposure to close observation.
All of which is to say if you have a hard time covering your expenses on a month-to-month basis – try budgeting.
 Apparently the ‘Uncertainty Principal’ describes the difficulty of simultaneously measuring paired properties in particles like electrons – such as location and momentum. The ‘Observer Effect’ with which it is often confused describes the problem of observing certain phenomena without changing the measured phenomena in the act of observation.
 My secondary excuse? Laziness.
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