Schrödinger’s Financial Cat
I enjoy discussions of Schrödinger’s cat because it can spawn off some very interesting ideas, so what if we think of his cat in a financial model?
The interpretation of his original thought experiment ( from Wikipedia (about the Copenhagen interpretation)):
Schrödinger’s cat: a cat, a flask of poison, and a radioactive source are placed in a sealed box. If an internal monitor detects radioactivity (i.e. a single atom decaying), the flask is shattered, releasing the poison that kills the cat. The Copenhagen interpretation of quantum mechanics implies that after a while, the cat is simultaneously alive and dead.
What does this have to do with Personal Finances? Suppose we weren’t actually talking about a cat, but your level of debt instead, and yes I know people who think the following:
If I simply spend my money, without checking the status of my savings, investments, debts or anything financial, I am then in a calm state because I am both rich and poor, I am in a state of financial equilibrium.
On the surface this is not that far off base because, “…According to Schrödinger, the Copenhagen interpretation implies that the cat remains both alive and dead (to the universe outside the box) until the box is opened….” , thus this idea of being both Rich and Poor is like the cat being both Dead and Alive.
Schrödinger’s idea that if you didn’t see things, the answer is not known thus both answers can be true is an interesting thought experiment, but not really applicable to your financial life. Allow me to make the same comment I have made when this way of dealing with your finances was proposed to me, “You may be in a state of equilibrium, but you are also insane!“.
If you don’t plan on keeping close tabs on your financial state, you are going to end up in a bad financial place, that will take a long time to clean up, and it will happen whether you open your financial box or keep it closed (and assume that you are OK because you don’t know).