Beware: this post might make me sound like a bit of a geek, and includes a fair bit of thinking out loud…
In my day job, I run pay-per-click advertising campaigns – managing those ads you see at the top and right of the search engine results such as at Google. The key to getting results here is testing, testing, testing. Constantly tweaking the campaign to find out what works best. By just looking at one factor at a time, you can easily see what change is working.
I’ve been thinking about how this “continuous improvement methodology” could help us with our finances. One area I think it could work is in cutting energy bills.
Why not test having your hot water on for a shorter period? For example, cut it by 20 minutes and see if you still have enough for bathtimes and washing up etc. If you run out, increase the period by 10 minutes and test again. In winter, try reducing your central heating by a degree or two, and work out what temperature you’re comfortable with. Instead of just picking a value from nowhere, use testing to find out your “optimal energy profile”.
Traditionally it’s been difficult to work out the effects on your bills of these sorts of changes. There was no realtime feedback – just bills arriving every quarter, and it was difficult to tell what you’d done to save money. But increasingly you will be able to track your energy usage online, with regular updates. For stats junkies like myself, this will be heaven. Having that sort of information to hand will make it far easier to guage the effects of changing your energy usage. And it will only be when we can really see the money being saved that more of us will do this sort of thing.
I’d be interested in hearing your thoughts on how this methodology could be used to improve our finances. What other areas could it be applied to? Is it a stupid idea?