Recently, I had the pleasure of reading the wonderful book Deep Work by Cal Newport. In the book, he defines what he calls the craftsman approach to tool selection:
The Craftsman Approach to Tool Selection: Identify the core factors that determine success and happiness in your professional and personal life. Adopt a tool only if its positive impacts on these factors substantially outweigh its negative impacts.
What’s the alternative?
The Any-Benefit Approach to […] Tool Selection: You’re justified in using a […] tool if you can identify any possible benefit to its use, or anything you might possibly miss out on if you don’t use it.
Newport specifically uses these two strategies to discuss using social media tools, like Twitter and Facebook, and his argument is that for some people, it’s beneficial to not use Twitter and Facebook. He does this by laying out the benefits (keeping in touch with people that really aren’t a part of your immediate life, etc.) of social media next to the drawbacks (they suck away a lot of time and attention, etc.).
The problem is that many people only look at the benefits of something new, not the drawbacks. They look at Facebook, for instance, and see only the ability to keep tabs on people they went to high school with. That’s a benefit, so they join and start using the tool. They don’t see the drawbacks of using Facebook – it eats up time, it exposes you to lots of ads, it’s a source of distraction, it provides false images of what the lives of others are like, etc. With the any-benefit approach to tool selection, there is no process of weighing the pros and the cons of something; instead, if there’s a pro, the tool gets used.
When I see these rules, however, I see an immediate echo of how people spend their money.
For many Americans, the “any-benefit approach” is how they approach most of their spending. (Remember, 76% of Americans live paycheck to paycheck, which includes a lot of households with six figure incomes.) If an item has a benefit, particularly a short-term benefit, they buy it without considering the drawbacks. The only limitation that they put on this buying is the actual dollar constraint of their budget, not any sort of discriminating “craftsman” approach to spending.
For example, let’s consider that 45% of Americans are saving nothing for retirement and another significant percentage are only “saving” because it’s a bonus as a part of their salary. The pros of saving for retirement are numerous, but they’re all long term benefits. Those benefits come counterbalanced with two cons – one, it reduces the size of your paycheck and two, it doesn’t give you any short-term benefit.
On the other hand, consider that the average American family spends $2,625 a year eating at restaurants and $2,482 per year on entertainment. Those are two things with pretty clear short term benefits but almost zero long term benefits and a lot of cons – it’s money spent that could be spent on something else, plus those things have almost no lasting long term positive impact on one’s life.
Given these examples, I’d like to propose two alternate versions of Newport’s rules about tool selection.
The “any-benefit” approach to spending money is the idea that money should be spent exclusively based on the short term benefits of a purchase, with only a small consideration of the long term benefits and without any real consideration to the drawbacks. The only real negatives constraint applied in the “any-benefit” approach is the absolute limitation of income.
On the other hand:
The “craftsman” approach to spending money is the idea that money should be spent only if the overall positive factors, both short-term and long-term, outweigh the drawbacks, and this is paired with the constant realization that simply spending money is itself a significant drawback.
My entire approach to personal finance centers around a “craftsman” approach to spending money. Almost every personal finance decision I make flows from the idea that every purchase I make has some set of benefits and drawbacks, that long term benefits are just as real as short term ones, and that the act of spending the money is a drawback in the form of lost opportunities and money taken away from other goals.
Let’s say I’m at the grocery store. An “any-benefit” approach at the grocery store involves wandering down the aisles and grabbing anything and everything that might fit into making meals for the coming few days because, well, those items do offer some benefit in terms of making meals. A “craftsman” approach to spending money there revolves around seeking out how to get the most value out of your dollar for the things you need to and want to buy. That involves making a grocery list before you even go so you know what you actually need to get, so you can easily ignore the unnecessary things. That involves comparing items on the shelves, considering store brands for many things, and buying in bulk to get the lowest cost per unit price.
Let’s say I’m considering kitchen knives. An “any-benefit” approach simply seeks out the best individual knife or the best set of knives that can be afforded at the moment, usually based on sticker price. A “craftsman” approach does some homework up front, not only into what knives are actually necessary in a kitchen, but also into what brands are good and what brands offer the most bang for the buck, and then that person shops around for the lowest prices on the “bang for the buck” knives. An “any-benefit” buyer comes home with a block of knives bought at a store for full sticker price and never uses 75% of them; a “craftsman” buyer buys perhaps two or three knives of a specific brand and model, purchases them on sale, and uses them all of the time.
Let’s say I’m considering a board game. An “any-benefit” approach means that if I see a game that I’m interested in playing, I buy it. After all, I’ll have the benefit of playing and enjoying that game. A “craftsman” approach asks a lot of additional questions. Does a friend own this game? How much would I actually play it? Are there other games on my game shelf yearning to be played? Is this game really similar to a game I already have? Could I use the money better elsewhere? Given that this game would eat yet another slice of my time to play board games, am I okay with it eating up the time that could have went to another game? The thing to remember is that I’m not buying a game, I’m just buying the difference in quality between this game and the game I would otherwise be playing.
Let’s say I’m considering buying some gourmet cheese. An “any-benefit” approach just buys the cheese that seems to be the most delicious option for the situation. A “craftsman” approach will step back, look at the price, and ask themselves if there isn’t a good cost-effective solution here that can get most of the benefit of this expensive $40 a pound cheese for a much lower price. Do I even need the cheese at all? That’s almost always the first question I’d ask myself when staring at that kind of sticker price.
You can go through example after example after example like this, where you compare an “any-benefit” mindset to buying things (just buy it!) to a “craftsman” approach to buying things (ask lots of questions first!).
Naturally, the “craftsman” approach is going to result in you having more cost-effective items in your life and more money left over for other life goals, but it also requires more time. My approach to solving the time problem is simple: I try to answer the “craftsman” questions up front and then just repeat the conclusion when making repeated buys. In other words, I virtually never go into a store to buy something without some up-front research and planning. For repeated purchases, when I’ve made a decision about a particular item, I usually just repeat the results of that decision over and over, buying the same thing time and time again.
Does a “craftsman” approach take away from spontaneity? Perhaps. However, I think that a healthy budget creates some space for at least a little bit of uninhibited spending. For me, I still take a “craftsman” approach to those purchases because it has become a natural state for me, but I don’t tend to sweat the negatives of spending the money nearly as much when the money comes from that “free spending” part of the budget.
Consider adopting more of a “craftsman” approach to your dollars and less of an “any-benefit” approach. You’ll find over time that you have all of the stuff that you need with a lot less expense, and that means you’ll have money left over for the big things in life that you might think you don’t have room for, like saving for retirement.