Spending Stability

Stability is the basis for continuous improvement. In The Toyota Way, Jeffrey Liker explains the use of “tact time” to stabilize the flow through an assembly line. When the flow is stabilized, you can look for ways of improving the process and make small adjustments to increase efficiency.

Stability plays a big role in getting more value out of what we buy and in accruing wealth. Making spending predictable allows us to think about what we’re purchasing. We can then work in small improvements and become even better.

One method is to use the amount of cash in our checking accounts as a gauge of flow. If our pay is being deposited in the same account that we withdraw from for spending, we can see changes over the course of a week or month.

After we’re setting aside money for savings, retirement, insurance, mortgage, household expenses, food, and entertainment, and putting in our income, is the amount increasing or decreasing? Are there large drops or spikes? Why? How can we stabilize these?

When we stabilize our spending, we are then being able to look for ways of gaining more value.