Don't Overcomplicate Your Finances

This post works well with my free ebook How and Why You Should Manage Your Finances on Your Own (Without an Advisor)

Why We Overcomplicate

When we want to be good at something, we assume it must be complex.

Otherwise, wouldn’t everyone be good at that thing?

We think that just because someone is in a position we envy, they must have made decisions we never could have thought of.

This leads us to devote tons of time to research and tons of money to assistance.

In our society, we are taught that complicated = good. If it’s not complex, it must be lacking in some way.

Overcomplication in Our Finances

This pursuit of complexity bleeds over into managing our finances as well.

This leads to three possible outcomes:

1. You complicate your situation with the assumption that adding difficulty will result in more wealth, taking matters into your own hands.

2. You are concerned the task is too complex and hire someone with advertised expertise to manage your finances for you.

3. You are hesitant to touch the complex topic of finances altogether and let it fall by the wayside.

Let’s start by saying that option 3 is by far the worst.

The next best option is option 1.

At the very least, option 1 demands that you pay attention to your finances and put in effort to improve them.

This usually leads to things like day trading stocks.

The issue with complex actions like this is that most people generate mediocre or even subpar results.

Statistically, 90% of active stock traders fail to outperform the overall market.

Not to mention all the time and energy spent making these active decisions.

The best overcomplicated option is option 2.

You may be asking yourself, “But doesn’t the 90% statistic above also apply to this option?”

The answer is yes. Most professional financial advisors consistently fail to generate better returns than the overall market.

The only upside is that you’re not devoting nearly as much time.

The primary downside of a financial advisor is the cost.

The Best Option Isn’t Overcomplicated

The single best method to build wealth is the K.I.S.S. method.

Some of you may recognize this as Keep It Simple Stupid.

I personally see it as Keep It Simple Smarty, but the message is the same.

Lean into simplistic methods that keep your finances in your hands while continuing to build wealth.

This can include:

• Utilizing automation

• Sticking with simple investment strategies

• Periodic financial coaching to get personalized support

The key is to continue to pay attention to your finances and give them a chance to grow, but don’t commit too much time in the hopes of squeezing out just a bit more.

For Those Who Want More

You can leave it there and enjoy your growing wealth and free time, but if you’re like me, you’re not satisfied with leaving your wealth alone and letting it grow at the expected rate.

You want to find outlets to devote effort to that will generate more wealth.

My advice is to build something.

Leave your finances alone and put your time into creating an additional source of revenue.

I talk more in-depth on this topic in my post on multiple income streams.

Spending hours on your finances to earn 1% more of your portfolio is okay.

But building something that can earn 100% more of your portfolio is ideal (and entirely possible).

This generally means building a business around your skill or interest and finding ways to monetize it.

As long as you continue to save more as you earn more, your wealth will continue to grow

That’s all for this post!

I hope to see you back next week.