Literally thousands and maybe millions of articles have been written on budgets, savings and spending. Detrimentally, for most people, the prospect of even beginning to consider a budget is too much trouble, too daunting, too time-consuming, so they just don’t budget at all. All statistics on scale, some individuals manage just fine financially without one, while far more of the rest of us have problems just keeping track of a positive net bank balance.

A Gallop Poll in 2013 that performed a survey about budgeting stated that only 32 per cent of Americans keep a household budget. Yes, I know we aren’t US residents (generally), but we emulate or tend to live similar lifestyles. Perhaps, optimistically, we can surmise Bermuda residents are more conservative in budgeting, but that still leaves the majority who don’t, can’t, or realise that budgeting can help to improve their overall financial picture.

Why is this important part of our financial lives so easy to overlook?

Daniel Kahneman, in his research on the psychology of judgment and decision-making and behavioural economics, found that we have, inherently, certain biases for errors toward money and decisions. In practical terms, we tend to compartmentalise money in our minds. Our conscious spending decisions place unequal values on the same sum of money, say $600 — no difference.

We might not even hesitate to purchase a new designer bag, or make a credit card down payment on a finely tuned timepiece, or flit off to a Las Vegas vacation. Yet, when it comes to using the same amount — $600 — for several bags of groceries, we agonise over every item in our food basket. Other examples:

• We treat ourselves to takeout lunch — on bad days and good days both — to the tune upwards of $20 plus, ignoring the fact that two slices of bread with an inexpensive filling (egg salad, cheese, peanut butter) costs a fraction of that lunch and some time.

• We whine about the price of one loaf of bread ($7+/-) or commercial popcorn offerings, without considering that an entire 5lb bag of flour (costing about the same) with water, a bit of sugar and yeast produces eight to ten loaves of bread, home made — no artificial ingredients or preservatives. Half of a cup of Popcorn popped by hand at home completely fills a four-quart pot for an incredibly lower cost. No butter, of course.

• As investors, we can be subject to huge emotion-based decisions when reacting to volatile price swings in investment markets, assuming that we have funds invested. Individual investing topics are so intense, though, it will carry a future article on its own time.

So, these, some would say, erratic decisions simply mean that we are human, not perfect. Perhaps, the difference in using the same amount of money for two very different reasons comes down to whether it makes one feel good in increasing self-esteem, or it is looked at as just another duty task waiting on your already full plate.

We also tend to think on a short-term basis, heightened incrementally faster and faster given the overall social/business media expectations for 24 hours a day of every conceivable information sound bite. It is much harder for most people to consider a goal, then focus on that same goal for days, weeks, months, and years. We suffer more from attention deficit with each new generation — my opinion only, of course!

Start your budget engine. Readers among the estimated 32-40 per cent of Bermuda residents that do budget, good for you! Those who prefer to avoid the process as much as I do (gasp, a financial planner who hates to budget), this is the start of the Bermuda 14-week plan to improve your finances.

See last week’s Personal Finance article: A Post-Cup Match Financial Review link http://www.royalgazette.com/article/20150801/COLUMN07/150809998 and the link to Libby Kane’s original Business Insider article http://www.businessinsider.com/improve-your-finances-2015-5.

Week One. Get your 90-day number — the net of all income minus expenses. Where did all that money go? Why can’t I even remember what all those cash withdrawals were for? Let’s see $40 a week spending money = $160 x three months = $480 (almost $500). Gone. Guess we’ll put that under the miscellaneous column — that’s the one used when you have no clue what was spent, where, and on what.

Small stuff matters — more than you will ever know. The problem isn’t spending on the large items. We will spend days, weeks, months, even years agonising about getting best value when taking a superlative vacation, picking up that totally enhanced audio/visual system, a new computer, buying a car, a home. But when it comes down to the everyday purchases, we then act as if the eternal money faucet is perpetually on high.

Yes, this is an annoying refrain. The small stuff that we fritter away every single day — that is sometimes, unwittingly, often deliberate sabotage, and less often, but even more panicky, a real emergency. ATM: here I is — give me money today. We think sub consciously. I deserve that latte frappé non-fat caramelised whipped cream on top coffee and that massive Crow Lane sticky bun. Oh, and make that bun with rat cheese to go.

Budget blaster tips: we are working on a detailed chart of the many savings that can be accomplished by watching the daily small stuff purchases — to post next week. Send me your tips to avoid overspending and how much that economy adds up for you on a monthly basis.

Don’t ever want to deal with the details. You can be like my prior columnist friend Roger Crombie who wrote endlessly funny financial articles excoriating himself for his basic, amusing money management process, which was: “Just be sure that at the end of the month you have more money on the plus side of your bank account than you had at the beginning of the month. If your balance is below, then pick up the slack with extra income to catch up.” It worked for him. It can work for you.

* Readers, I am looking for volunteers — anonymous of course, to provide feedback on how they are coping with the retirement experience in Bermuda, or elsewhere. Please send me an e-mail.