Spending Too Much? Fix Your Habit with an Exercise in 5-Why
My friend called his wife from the truck dealer and informed her of his latest purchase: a beautiful new crew-cab pickup truck. This was his third vehicle purchase in 11 months, and with each purchase he had traded in his current vehicle and carried the “negative equity” into his new loan. The conversation with his wife did not go so well.
5-Why: A Lesson from the Japanese Auto Industry
What does the Japanese auto industry have to do with solving our spending problems? It’s all about a simple tool known as 5-Why, that the Japanese developed over fifty years ago. 5-Why is just starting to find its way into many aspects of life outside of manufacturing (here is an example of 5-why used in industrial settings), where it used for finding and addressing root causes of recurring problems. The concept itself simple, but very powerful if applied correctly: Ask “Why?” five times to arrive at the true root cause of a problem.
Back to My Friend
One night over some beer my friend was finally loosened up enough to work through a 5-Why exercise with me, related to his latest vehicle purchase. We took time to discuss each “Why?,” and ended up with a quality result. Here is a summary of our discussion –
First Why: Why did you buy the truck, only three months after buying the sedan? Answer: “The sedan really wasn’t the right car for me.”
Second Why: Why wasn’t the sedan the right car for you? Answer: “Well, I needed a lot more storage room than my sedan provided.”
Third Why: Why did you suddenly need a vehicle with so much storage room? Answer: “I like the idea of being able to pack my whole life up into a vehicle and go anywhere I want to.”
Fourth Why: Why you to want to break out of your present situation? Answer: “I don’t like my job. It consumes most of my life, and I want to get off the ‘treadmill’ ”.
Fifth Why: Why don’t you like your job? Answer: “I work in a chaotic business that is failing, and it consumes every ounce of my energy. All I do is work my tail off to pay my bills.”
The Root Cause
The 5-Why exercise had brought us to the root cause: My friend bought the truck because it represented freedom from his current life, which was miserable because he was in a lousy job situation. The ironic thing was that buying the truck only added to my friend’s monthly bills, perpetuating the need for a job he did not enjoy.
The good news, however, is that my friend is now addressing the root-cause and is looking for a better job. He only wishes that he had completed the 5-Why exercise when he was sill thinking about buying the truck!
Try a 5-Why For Yourself
5-Why exercises are sometimes more productive when done with a friend, but they can also be done with some honest self-reflection. If your 5-Why will be about excessive spending, you might first start by creating a Pareto chart (click here for an example) of your “unnecessary” spending categories, and then conducing the 5-Why analysis on your biggest category, (i.e., “Eating Out”). There are two requirements for a successful 5-Why: (1) put it in writing, and (2) be completely honest with yourself.
One Last Note
Remember that excessive spending does not make you a failure as a person. As for my friend, his truck purchase was the result of a legitimate, underlying problem that he is now addressing. Understanding the root-cause of your excess spending will raise your self-awareness, allow you to forgive yourself, and become a stronger person.
Give 5-Why a try!