Idea of the Day #81

How I Replaced My Complicated Budget with 5 Simple Rules

How I’m Using Risk and Ratios Instead of Predictive Budgets

It’s pretty well documented by now that humans suck at predicting. You can read The Black Swan by Nassim Taleb, Noise by Daniel Kahneman, or Growth by Vaclov Smil among many more to confirm this fact.

So why do we rely on projections when budgeting? In essence, a budget is a prediction about future income and expenses. While in some categories, it’s true…