There are a lot of forces out there in the world that would lead you to believe that finances are inherently complicated.
But it simply isn’t true.
We preach simplification every day of the week. You can and should simplify your finances.
So, what is sabotaging your finances? You.
You should simplify because it is more simple. And simple is easy. But also, because there is science behind a concept called Decision Fatigue. It is the idea that the more decisions you have to make in a given day and a given period of time, the less self-control you have, and the lower the quality of the subsequent decisions you have to make.
The fascinating thing is that it doesn’t matter if the decisions are big or small. What kind of salad dressing? What shirt to wear? What credit card to use? Which account to transfer from? It all counts.
Therefore, making a lot of decisions about things that don’t really matter or add value, puts you in a compromised position when an important decision needs to be made. Should we spend our money on this? What is really most important to me? Will spending this money move me closer to my goals?
So, What Has The Biggest Impact?
Well, it certainly isn’t reconciling an account here and there, categorizing transactions, importing,… these are little things. Maybe you get a rush because you feel like you’re doing something, but really, this is just the maintenance work of budgeting. The big hard work—the work you want to save your best mental energy for—is thinking through your priorities, being true to yourself, and really sussing out what is most important to you.
The Goal Is To Keep Budgeting
We want you to budget well, but more importantly, to keep budgeting. And we know, from years and years and years of teaching people how to get control of their money, that if your budget is complicated it is likely you will give up. We want you to stick with it for the long haul. So, keep it simple—less frustration, more success. Good stuff.
To the guy who has seven different savings accounts…
You are having a hard time budgeting. You think maybe you aren’t good at it or it doesn’t really work. But you are just spending way too much time moving money around from one account to another and deciding when you should transfer what, where. It’s way too much trouble for no gain. Have one account and trust your budget.
To the gal who doesn’t trust herself not to spend…
You are “hiding” money from yourself all over the place. You feel like the money has to be physically somewhere separate, except you still know it is there, and you raid it more often than not. You are never getting ahead. You need to be honest with yourself. Separate accounts will not change your behavior, but deciding what is really important to you could.
To those of you who have 157 categories…
You are spending a lot of time trying to decide whether your pet food goes in “Pet Care” or “Pet Maintenance” and you can’t remember what you did last time and it is starting to feel like budgeting is not such a great idea. It feels tedious and it makes you more stressed. You need to simplify and spend your time on decisions that will move the needle.
Keep It Simple, Stupid
We don’t think you are stupid. That is just a common saying so it made for a catchy title. The reason we are writing about this is because it is super common. It’s an easy trap to fall into. You and we want you to avoid it altogether. Keep things simple and focus all your decision-making juju on the tough decisions about when and how to spend your money. You won’t regret it.