Why Close Is Often Good Enough When Managing Your Money

I’m not a big football fan. Oh sure, I occasionally enjoy watching football on television. But, unlike hockey and baseball, I rarely bother buying tickets to attend football games in person.

That being said, this past weekend my buddy had an extra ticket to a college football game between USC and Arizona State, so I eagerly tagged along.

Anyway, as I was sitting in the Los Angeles Memorial Coliseum blissfully watching the home team dismantle the opposition, I started taking an interest in the chain crew along the sidelines.

For those of you who are not familiar with American football, the chain crew is comprised of three men who are responsible for measuring the yardage the offensive team gains in their quest to get a first down. It’s an extremely important job too, because, as any gridiron aficionado will tell you, football is a game of inches.

Most of the time, the chain crew stays ensconced on the sidelines because the officials on the field are able to easily determine whenever a team has gained the ten yards required to earn a first down.

Sometimes, however, the officials on the field are unable to make a first-down call via the naked eye.

That’s when the chain crew goes into action. Two so-called “rod men” carry a 10-yard chain that is attached to poles at each end, on to the field. One pole is planted into the turf at the original line of scrimmage, and then the chain is pulled taut. If the nose of the ball exceeds the reach of the chain, the offense has earned its first down.

To ensure the sanctity of any measurement, a third official is responsible for marking the chain at the closest 5-yard mark on the field and escorting the chain crew onto the field, being careful to never let go of the marked link on the chain. Doing so ensures the chain’s position is not inadvertently corrupted when it is transferred from the sideline to the field.

It’s all very impressive to the casual observer, which is why I used to think that “The Dance of the Chain Crew” was a carefully choreographed ballet of scientific precision.

However, after closely observing the chain crew in action this weekend, I now know better.

Believe it or not, I noticed that every time the offense got a first down, the chain crew on the sideline always established the new first-down spot by making a quick visual observation of the ball’s position on the field — even though most of the time they were at least 80 feet away.

In other words, the chain crew was merely “eyeballing” it.

And that’s when it dawned on me: The whole process was completely arbitrary, which makes the usual pomp and circumstance that accompanies critical third- and fourth-down measurements in American football pure overkill, if not an outright sham.

Even so, the chain crew is still vital to the game because it provides the football officials on the field with the means to make decisions — even though the data they provide is not quite 100% accurate.

I know what you’re thinking: So what’s this have to do with personal finance?

Plenty.

Unfortunately, a lot of folks who recognize the importance of managing their personal finances often refuse to make critical financial decisions or implement good personal finance practices because they’re perfectionists.

For instance, I’ve talked to plenty of folks who never got around to implementing a budget because they had no idea how much money they should allocate to their individual discretionary and non-discretionary expenses. I’ve also spoken with people who delayed making contributions to their 401(k) plans because they couldn’t decide what percentage of their income to commit for retirement, or feared they were going to “incorrectly” allocate their fund mix between stocks and bonds.

Armchair psychologists call that “paralysis by analysis,” and it can be costly. For example, failing to contribute $3600 into a 401(k) for just a single year leaves $10,605 of pretax earnings on the table, assuming a constant 4% return over 35 years.

When it comes to managing our money, perfectionism is usually the enemy of good enough — and often counterproductive too.

So the next time you find yourself dithering over a particular financial decision, make sure you’re not over-analyzing things; it could be costing you more than you think.

After all, there are times when close can be considered good enough. Just ask a football chain crew.

Photo Credit: Ted Kerwin

Comments

  1. 1

    says

    Just get started investing for retirement and saving is what I always heard. I’m glad I did because otherwise I wouldn’t be as far along as I am already. I just picked a couple funds and then adjusted them after so research. If I waited to do the research first I may not have invested nearly as much!

  2. 2

    says

    I totally agree with this!!!! It is much better to do SOMETHING then to sit around and wait for the perfect answer to appear. You’re right that being a perectionist can actually hold people back in some ways.

  3. 3

    Kelli says

    Len, your advice is spot on! I did the very thing you speak of with my 401k. I ended up not contributing to it for over two years because I was not sure what to should do. I was afraid to take the plunge so I did nothing at all. The good news is I finally got my act together, but it makes me sad to know I wasted a couple of years and a little cash sitting on my rear.

  4. 5

    Dom says

    So true. Budget numbers and retirement contributions can all be tweeked over time. Money management is always a work in process.

  5. 6

    Cindy says

    Doing your taxes and balancing a checkbook are two other places where I don’t worry about things to the penny. In both cases I round to the nearest dollar. It makes things much simpler and it all seems to work out in the end.

  6. 7

    says

    This is great advice. You can’t worry too much about perfection when it comes to your finances because there’s so much you can’t control. You don’t need to have the “perfect” amount of money in your emergency fund, but you better have something there! You don’t need to be invested in the “perfect” index fund, but invest somewhere! Doing something is almost always better than doing nothing.

  7. 8

    says

    Here’s my question: were you bringing this up with the dude who brought you to the game? He’s probably completely absorbed in the action while Len’s contemplating the magic of three underpaid dudes on the sideline. I’ll bet you count the number of offsides in Kings games, too, don’t you? ;-)

    I’m just messing with you (obviously). Great stuff as usual. When I was practicing as an advisor I’d usually limit the choices for my client to two or three because if there were more it would completely paralyze them and we’d never get anything done while looking for the “perfect” one.

  8. 9

    Nikkki says

    Perfectionism is the procrastinator’s blessing and this kind of blog post is right on time for someone, like myself, who can become hanstrung by my own desire to insure that everything is “just right” before I put more money into my brokerage account or raise the contribution level on my 401K.

    Thanks for the kick in the ass.

  9. 10

    says

    I absolutely agree with your advice. Over-analyzing your finances to the point where you become unproductive is one of the problems some of us always experience. It is best to hire a financial adviser who can help you get out of this “financial paralysis” and to also assist you in handling your finances properly.

  10. 11

    Frank says

    While the initial chain placement is somewhat arbitrary, the END result is often critical. The other lesson is to keep your eye on the goal and adjust your game plan accordingly…

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