What does this picture have to do with perfection when managing money? The answer is: More than you think.
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, my buddy had an extra ticket to a college football game this weekend, so I tagged along.
Anyway, as I was sitting in the stadium blissfully watching the game, I started taking an interest in the chain crew along the sidelines.
For those of you who aren’t familiar with American football, the chain crew is 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 on the sidelines. This is because the officials on the field can usually determine when a team has gained the required ten yards.
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 onto the field with poles at each end. They plant one pole into the turf at the original line of scrimmage, and then pull the chain 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. He then escorts the chain crew onto the field, being careful to never release 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 watching the chain crew this weekend, I know better now.
Believe it or not, I saw that the chain crew always established the new first-down spot by making a quick visual observation of the ball’s position from the sideline – at least 80 feet away!
In other words, the chain crew was merely “eyeballing” it. So the entire process is completely arbitrary, which makes the usual pomp and circumstance that accompanies critical third- and fourth-down measurements in American football an outright sham.
And you thought “close enough” only applied to horseshoes and hand grenades.
The chain crew is still important, however, because they provide field officials with the means to make decisions. Yes, even if the info isn’t 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 when it comes to managing money.
For instance, I know 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. Why? Well … some couldn’t decide what percentage of their income to commit for retirement, while others 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 a single year leaves $10,605 of pretax earnings on the table, assuming a constant 4% return over 35 years.
When it comes to perfection when managing money, perfect is usually the enemy of good enough – and often counterproductive too.
So the next time you find yourself dithering over a particular financial decision, remember to focus on progress over perfection.
Most importantly, make sure you’re not over-analyzing things because it could be costing you more than you think.
After all, there are times when close is good enough. Just ask any football chain crew.
Photo Credit: Ted Kerwin
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!
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.
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.
So true. Budget numbers and retirement contributions can all be tweeked over time. Money management is always a work in process.
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.
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.
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.
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.
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.
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…
Great advice.
Working as an analyst makes me very aware of the dangers of analysis paralysis.
There are times to be cautious but in most scenarios it’s best to act like a shark – movement is life, stillness is death.
I know many people who just ignore anything ‘finance’ since it’s ‘silly’. It’s enough for them to earn money and pay the bills, they don’t worry about getting off debt, earning more money, being more frugal etc.
The problem is that I’ve been exactly the same years ago and it never amounted to anything good. The moment I started caring more about my money, I also started earning better, growing my business and affording more stuff.
I am not a perfectionist but I am a man of action. If there’s something to be done, I schedule it and beat the task. I stick to it at all times for me to get used to meeting deadlines. And, when it comes to finances, I assess every possible matter and weigh if I am about to make the right decisions.
Back in school, they said “don’t let the perfect be the enemy of the good.” Better to do something that is at least in the right direction, then do nothing at all. A rule to live by that is much easier said than done.
I totally agree with you and I enjoyed the football analogy.
I think, too, that insecurity plays a big part. And not just insecurity about losing money, but of not being smart enough, or educated, or worldly enough to figure it out. Some people feel the issues surrounding saving and investing are too complicated for them to get it. What they don’t get is that no one else really, totally gets it either. There’s that saying from a book of the same title that says “Feel the Fear and Do it Anyway”.
A lot of people are listening to big mouth braggarts talk about how much they made in the market. It can instill a lack of confidence and fear. A guy I knew always chased returns. He really liked one high risk taking fund manager. Bill Miller beat the S&P 500 15 years in a row. When the market tanked, Miller was infamous for the extreme losses.
The returns chaser was really quiet after that.
Have all my financial decisions been perfect? No.
Have they been pretty good? Yes.
Pretty good is hard to beat.
An old lady used to ask me every day how was I doing? I’d tell her pretty good. She’d say, “Pretty good is hard to beat.”. It really is folks.
Amen. Appreciate your wisdom, Bill.