Simplify to Win

Tangled up pool cover wire

This is the nest I created, trying to pull the cord around my pool.  It is not pretty and is an example where a simple spool could have made this a whole lot easier, but with Amazon, you get what you get.  So I started to pull the line out, only to create a complicated mess. This seemingly 5-minute job now took me about 20 minutes, because I tried to move too fast and overcomplicated it, creating a mess.

Unfortunately, this is the case in our lives, and I find it especially in our financial lives.  We try to capitalize on opportunities through playing interest games, getting more points, life insurance, or a large number of things, only to create a mess that actually ends up costing us more in the long run than we thought we could get.

Here are some areas to simplify:

1) Budgeting

My focus on budgets is to keep it simple.  If you really like the detail, go for it.  But I learned quickly that the more detail, the more complicated and the less likely my wife or I were going to keep to it.  For example, I don’t want to go to the grocery store and then split my receipt up for detergents and things; instead, I just have an overall grocery budget, and that includes stuff like this.

2) Number of Accounts

Find what works for you!  It is great to have sinking funds and plans for longer-term expenses, all while capitalizing on some great rates. However, realizing added complexity means added stress and difficulty in managing, all for perhaps a few dollars at the end of the day.  My recommendation is to keep it simple.  If expenses are over the course of the year, just keep it in your checking (E.g. Christmas fund, keep an accumulating line item in your budget, let’s say $100, by month 3 you will have $300 there, by the time you hit September or October you may start spending out of it, which is perfect, now the money is in your checking account and you do not have to worry about moving it out of checking, into savings and then back again)  Some people like to move it out, just to get it out of their checking, if that is you set up automatic savings, have at it.  Just know that when it gets too complicated, it is time to simplify

This goes the same for retirement accounts.  You should have a Roth IRA somewhere, plus an employer account or a personal retirement account (SEP-IRA, if self-employed).  But do not have old employer accounts sitting in different places, IRAs in Vanguard, something else in Schwab, etc.  Keep it simple, keep it together.  If you leave an employer, transfer that over to the same brokerage you have a Roth account in.  If you have none of these, get with an advisor to help you consolidate.  Your mind will thank you!

3) AUTOMATE!!

Set up automatic savings transactions, investments, etc.  The more you automate, the less you have to think.  Save your time and energy for the things that matter.  Keep a decent amount in your checking, I like $1,000 just as a baseline to prevent overdraft, and automate payments, savings, transactions wherever you can.

4) Credit Cards Simplification

If you really like to play around with getting points and miles, have at it.  But if you can’t keep up or have to waste lots of brain power to figure out what card to use when, then it is time to reduce and rethink your plan.  The more complexity you add to your finances, the harder this is.  Read up on my analysis of credit card points and miles!  (LINK HERE).  While I know you can make some points and miles, get free flights, extra cash, it is minimal.  If you struggle with sticking to a budget, then do not mess around with these, but if you have it in a good rhythm, then why not get some free cash or trips?  Just keep it simple, 1 card for everything, use it according to your budget, and set it up on automatic payment.  It doesn’t get much easier than that.

This is a judgment-free zone. Do what works for you, just IMO, keeping things simple makes this run easier.

These are just 4 ways that things can be simplified.  There are a lot of things in life that can be complicated, just know when you are out of your zone and get some help to simplify things for you so that you can win where it matters.