One of many issues I get used to receives a commission for each day is was to take a seat and stare at massive quantities of numbers and attempt to make sense of them. The factor that has repeatedly helped me perceive these numbers is to develop a way of visualizing these numbers. It’s not a well-liked methodology as a result of it requires some preliminary funding of constructing an evaluation device. Nevertheless, it’s wonderful how properly the eyes can course of massive quantities of data (I hope I by no means go blind) in comparison with mentally processing lists like 27.45, 27.43, 26.99, … Even taking a look at one-dimensional y=f(x) diagrams does much less for one’s understanding in comparison with diagrams which are based mostly on what’s being modeled.

I believe this strategy might be utilized to inventory market knowledge (work in progress).

I additionally suppose it may be utilized to private finance, though that is likely to be overkill. Nevertheless, I noticed some extra complex cash flow diagrams from Frugal Retirement that gave me the thought to develop this concept additional. You possibly can learn extra about money stream diagrams here.

We’ll proceed in three steps.

  1. First, draw a field for “you”, “job” (extra bins when you have multiple job), “investments” (issues that really pay you cash, your home doesn’t depend except you’re renting out a room), “actions” (akin to commuting, watching TV, running a blog or different hobbies, consuming, exercising, sleeping), additionally draw a field for “housing” (that would embrace insurance coverage).
  2. Subsequent, draw traces representing the cash flows. Attempt to make the thickness consultant of the cash that flows between two bins. For example, cash most likely flows out of your “job” to “housing” and that’s sometimes represented by a giant fats line. Cash most likely additionally flows from the “job” to “commuting”.
  3. Now utilizing a dashed line, draw the flows of time. There may be most likely huge dashed traces going from “you” to your “job” and to “sleeping”. There’s additionally a line going from “you” to “commuting” – nonetheless, in the event you’re a cab driver, there is likely to be a line from “job” to “commuting” as an alternative in the event you can decide up passengers in your approach house.
  4. Lastly, use a dotted line to attract the stream of well being. For example, time and cash could stream from “you” to “train” and well being would stream again. When you bike to work, time would stream from “you” to “commuting” and “well being” would stream from “commuting” to “you”. When you drive, money and time would stream from “you”.

The problem right here is to plot the classes. They will’t be too specialised, however they will’t be too common both. You need to obtain simply the correct amount of categorizing and abstracting, the place “proper” means consultant of the underlying actuality. Cash (representing interactions with different folks), time (representing your power/life) and well being (representing your properly being) are helpful measures. Nevertheless, many individuals would most likely be tempted to make use of ‘enjoyable’ as an alternative of ‘well being’ for one among their flows.

Budgets are sooo old school, so begin being artistic 😉

A lot due to ML for the $10 donation.

Initially posted 2008-07-07 09:57:32.


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