The 5 Whys of Spending

by Peter Polson, Tiller founder

The world has made spending easy. We swipe, we click, we tap, and voila! We’ve paid. Financial technology continues to improve, and it becomes even easier to spend money.

At first blush this seems like a real improvement. It saves us time. On the other hand, it increases the velocity of spending like never before.

But why are we really making that purchase?

Sakichi Toyoda, founder of Toyota, was famous at developing manufacturing processes that were efficient and high quality. One of his lasting innovative ideas is the “5 Whys.”

Say for example you have a car that’s not working. Simply asking “why” once will get you a step down to the root cause. The car isn’t working because the battery is dead.

Sakichi found that if you continued, you’d find a much more valuable answer.

The car battery is dead.
Why?

Well, the alternator is not functioning.
Why?

The alternator belt is broken.
But, why?

The alternator belt was well beyond its useful service life and not replaced.
Ok, now we’re getting close. Why?

The vehicle was not maintained according to the recommended service schedule.
Aha! A root cause! This is really why our car didn’t start.

Building awareness about spending

This technique doesn’t just yield great cars. It’s also a valuable exercise to understand our spending.

In a recent blog I discussed my purchase of a new sweater. Why? It replaced one that I had previously owned? Why? Because that one was damaged. Why? Because my dog tore it up. Why? Because it smelled like me. Why? Because my dog is a dog, she loves me, and she couldn’t resist.

So this isn’t really a clothing expense. If we didn’t have our beloved dog Bonnie, I’d still have that sweater. So truth be told, this is more of a dog expense than a clothing expense.

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Let’s take my iPhone 7. Why? Because I wanted a new phone. Why? Because my iPhone 6 started to feel out of date. Why? Because using apps started to feel slow. Why? Because I don’t want to wait to get a job done when I use my phone. Why? Because I’m impatient.

That’s helpful. My new phone has many benefits. A strong new battery, a better camera, etc. Honestly, those were icing on the cake. I bought my phone because I wanted a fast and responsive device that didn’t keep me waiting those extra fractions of a second when I’m trying to get something done. I bought my phone because I was impatient.

One more. What about the new Subaru we purchased in 2016? Why? Because it was impractical to get stuck and walk two miles with our three-year-old son and groceries. Why? Because the Prius couldn’t make it up the road to our house. Why? Because the clearance was too low so even with chains it would get stuck in a snowstorm. Why? Because we moved from the city to snow country. Why? Because that’s where we wanted to live.

Unraveling the intent

We made this purchase with some regret. The Prius had 120k miles, and I’d loved to have run it to 250k miles. Furthermore, we bought a new Subaru. A used one would have easily done the trick, but there’s another why going on here. If we pull that thread, we’d learn that we bought a new car because we don’t want to fuss with maintenance and, frankly, we like new things. As I’m tracking my expenses, I’d use the Tiller Add-on for Google Sheets, which makes splitting transactions easy, and allocate half of the purchase price to Living and the other half to Comfort (all the amenities of a new car with less maintenance fuss).

None of these categories were what I expected before doing the 5 whys exercise. All of them reveal a little more about my intent with the purchase. When we take the time to ask ourselves why, we learn a bit more about ourselves and our habits.

Why are you really pulling out your wallet or purse today? The answer may surprise you.


Tiller Founder, Peter Polson

Peter loves designing great products and creating tools and systems that help people live better lives. He was a founder and president of Junxion (acquired by Sierra Wireless) and later CEO at Dashwire (acquired by HTC). He enjoys most activities around mountains and water, especially skiing and hiking with his family. His kids gasp in amazement at the pennies he can magically pull out of their ears.