Analytical versus Creative Budgeting: Which one do you do?

Sometime around a child’s early teen years a cognitive development called Formal Operational Thinking takes place. Where they could once accomplish tasks by seeing the physical object, formal operational thinking takes teenagers beyond this plane and opens their minds to both abstract and analytical thinking. In other words, teens are able to see a problem in their minds, virtually take it apart, and put it back together to come up with the most viable solution.

Mind you, the level of this thinking process varies as children continue to grow. Those who lean more toward the analytical and logical have an easier time in virtualizing the problem at hand and solving it with a fair amount of ease. Think Sheldon Cooper of The Big Bang Theory. Those who think creatively would probably have an issue solving a problem involving the Pythagorean Theorem if Pythagoras himself showed up to show them how it worked. In the end, the traits formed by formal operational thinking can shape the way people deal with situations during the rest of their life.

This includes the way they set up a budget. Sure, a financial document such as this is fairly simple to create for home finances, but the way analytical and creative thinkers put one together is different. The analytical thinker is more methodical in the way they set up their household plan. They focus on the necessities first — food, shelter, power, clothing, transportation. From there they add sub-categories onto the originally created ones. It can be compared to a computer program where the main operations call out sub-routines to execute secondary procedures. Should any new category need to be added, it has to be done within the confines of the original categories. There are no strays in the budget of an analytical thinker.

The financial plan of a creative thinker is more free flowing. They probably have the same initial categories as an analytical thinker does, yet they don’t stick with the routine of adding sub-categories. A new entry needs to be line itemized, and they add it in where it seems to fit — usually in a general income or expense category. The creative thinker may have a much larger summary of budget categories on their ledger sheet, because they add them in when needed and never remove them when done. Still, they’re able to break down their funds into the proper categories each time they receive payment.

Then there is a third category of thinker — the one who has both analytical and creative sides of their brain running. Think of Kathy Reichs, the forensic anthropologist who writes the Temperance Brennan novels that were the inspiration for the TV series Bones. These folks follow the same category/sub-category setup as the analytical thinker does but has no problem adding a stray entry into their income or expense fields if they feel it’s necessary.

Which type of budgeting do you do?