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Is Your Money Problem a Puzzle or a Mystery?

Gregory Treverton, a national security expert at RAND Corporation, famously distinguished between two types of problems, puzzles and mysteries. He was describing the modern challenges faced by the American intelligence community. According to Treverton, puzzles are problems having a definitive solution once the relevant information and insight is found and used. Solving puzzles requires taking a specific sequence of steps or actions to get to the answer. Mysteries, on the other hand, don’t have clear-cut answers. The solution is a moving target, depending on a host of factors that change over time.

There are other significant differences between puzzles and mysteries. With a puzzle, more information is helpful. As more missing pieces fall into place, for example, a jigsaw puzzle is closer to the solution. For mysteries, in contrast, more information can muddy waters, take you down a wrong path, and generally make it more difficult to get a handle on the solution. As Treverton says , “mysteries often grow out of too much information.”

Over the past decade, the distinction between puzzles and mysteries has been instrumental in analyzing phenomena as diverse as the Enron bankruptcy from the early 2000s, the most effective way to treat prostate cancer , and even the interpretation of the Constitution by Supreme Court justices. These discussions are all about social problems where groups, often large ones, are involved in creating and solving the problem.

The distinction also applies to our personal problems and is psychologically useful. In this blog post, my main point is that we should ascertain whether our problem is a puzzle or a mystery before we try to figure out how to deal with it. Far too often, we frame our challenges incorrectly, seeing issues that are really mysteries as puzzles. This leads us to try and find specific solutions which don’t work. The end result is a worsening of our problem, and anger, frustration, despair.  Let’s explore this idea in the area of personal finances.

Puzzles and mysteries in managing your finances

Some financial challenges are puzzles, pure and simple. For example, if you have a goal of saving $1,000 for an emergency fund , there is no ambiguity in your desired outcome. You know exactly what your goal is and you’ll know when you get there. This problem can be solved in one shot (if you are fortunate) by, for example, taking a chunk of your income-tax refund and putting it in the emergency fund. Or you can solve it bit by bit, by saving a little here and a little there. Staying within a defined budget for food, travel, etc., or contributing a certain amount to a retirement savings account are also financial puzzles.

Our most consequential money problems, however, are mysteries. Many people have concerns such as “I want to be financially secure,” “I want to save enough money to retire comfortably,” or “I wish I could be a smart shopper and not waste money on things I don’t really need (or even enjoy).” None of these money challenges has a definitive end-point. Most don’t even have a solution that applies in the same way to everyone, or even to the same person over time.

Psychology Today Canada