Sunday, September 13, 2009

Analytical Leverage, Part 2a: Another Application

Money. Now, there's a good application - sorters and classification in finance. Actually, I haven't seen the stats, but I'll bet there are fewer people in the US who classify their expenses and income than who don't.
Yes - that would be the basic use we're talking about. First, do you keep track of your expenses - either in a computer, or a checkbook, or some other method? And when you spend money, do you keep track of how you spend it?
One way to use the sorter with money - the skill of classification - is to somehow categorize where your money goes. We all have to do some of that for tax purposes, anyway. But then, some of us get carried away. Charitable contributions, volunteer expenses, car repair, ... need I say more?
My point: you are already using the skill of classification analysis. No one has to teach you the skill. The step I would add is the awareness of HOW you are using it.

I really think this is enough on classification. I'm going to skip the diatribe on business uses - how classification of assets and liabilities makes financial analysis more productive - and end this post. Next time, we'll head on to another thinking skill.

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