In the summer, my family and I go to the beach a good amount. We’re lucky to live about 25 minutes from the coast so it’s an easy drive to go to the beach for a few hours. With two little kids, my wife and I have a system where I drop her and the kids off right near the sand so they can set up while I go find parking.
That avoids the hassle of having to trek our stuff with two kids. Plus I’ve got a nice little method to find parking. From the drop-off spot, I drive through a few neighborhoods on my way up the hill, where there’s always parking at the top.
A lot of people drive up and down the streets, and through the neighborhoods multiple times to try and find a spot. You can see the frustration on their faces as they endlessly drive through neighborhoods without success. I used to do this too but found it frustrating.
Sometimes I get lucky on my way up to the hill and find a spot in one of the neighborhoods. Usually I end up parking up the hill though, which is fine too. It’s usually about a ten minute walk, which is no big deal.
One particular day over the summer, I did my usual routine of dropping everyone off, and going through the neighborhoods on my way up the hill. I didn’t find any parking in the neighborhoods that day, but there was plenty of parking on the hill. The first spot I saw, I went for.
The parking spot was in kind of a weird area where the street curves, creating a challenging parking angle. Plus, there were cars ahead and behind the spot, so I would have to parallel park. No problem, I’ve parallel parked many times.
It took me a few tries to parallel park with the challenging angle and tight fit, but I got into the spot fine and curbed the wheels. It took longer than if it was a normal spot, but I got in well enough. As I was ready to exit the car, I noticed a woman about twenty yards ahead of me. She had arrived as I was parallel parking.
She zipped right ahead of me and went straight to a spot that was flatter, at less of an angle, and had less cars around. In the time it took me to parallel park in the difficult spot, she had already parked, gotten her bag, and started down the hill.
“Why was she already parked and walking down the hill when I had been there first?” I thought to myself.
As I started walking down the hill towards the beach, the answer became clear. She was thinking simple while I just took the first spot I took. She was intentional about the spot she chose while I just took what I saw. She took control of the situation while I kind of let things happen.
In the big scheme of things, it really doesn’t matter that she parked easier and faster. The lesson was clear though. Think simple first.
One of the main missions of my blog and book is to help people think simple about personal finance. Money is portrayed by so many as this complicated topic that only the experts can figure out. As a result, people get overwhelmed, decide they aren’t good at it, and throw in the towel.
Personal finance is actually much simpler than it’s made out to be. These are four easy ways you can start simplifying your financial life today.
1) Get Clear on What You Value
Think about your life and figure out what you value. This ties into the concept of value-based spending, which I cover in detail in my book. In a nutshell, value-based spenders only spend money on necessities and items/experiences they truly value.
There is no wasteful spending on things that are going to sit in the closet or be thrown away after a few months. Value-based spenders are focused and intentional on what they spend their money on.
Value-based spenders don’t worry about trying to impress their neighbors or friends with their financial purchases. Every financial decision is made based on the value it brings into their life.
2) Eliminate the Distractions
Outside forces try and interfere with your personal finances. Here’s what I mean by that. We are bombarded with car advertisements promising $5,000 off MSRP, low interest financing for 60 months, two months without payments, cash back, and more. Credit card ads with zero fee balance transfers and the best reward programs are everywhere you look online.
Mortgage companies advertise the best rates, the fastest approval, and the quickest closing. Banks offer cash back for opening new checking accounts, among other things. There is a saturation of financial products and services; it’s easy to go from shiny object to shiny object.
We have the power to eliminate the distractions. Pick the financial products you need, ignore everything you don’t need, and move on with your life. You don’t need to refinance every 6 months or change credit card companies weekly.
3) Automate
This is one area where it will take a little time to set up, but it’s well worth the rewards and simplicity. Once you get your automations in place, there is very little upkeep. Have your savings and investments automatically transferred from your paycheck, or other source of income, and put all your bills on autopay. This eliminates manual entries and having to think about where to put your money. Think of it as financial success automation.
When your income increases, simply change the automation to a higher amount. For example, suppose you have been automatically transferring $1,000 per month from your paycheck into investments. If you get a pay increase of $150 per month, change your automation to ideally $1,150 per month—less if you need the money for cost of living increases. This should take less than 10 minutes, and you won’t have to change it again until you have another change in your financial situation.
Automation also ensures that you pay yourself first, one of the core financial principles to build wealth. And paying yourself first via automation combines two powerful forces into one, highly increasing your probability of financial prosperity.
4) Spend Less Time on the Things That Don’t Matter
Too often in personal finance, we get caught up in the things that don’t matter. It makes us feel busy, giving us the impression that we are making headway towards our goals.
John Wooden, arguably the greatest college basketball coach of all time, famously said, “Never mistake activity for achievement.” Wooden ran his practices shorter than most other programs, but every minute was accounted for, purposeful, and intentional. His teams would work intensely on just the important things. Distractions, idle chit chat, and other time-wasters were not part of practices.
Busyness in personal finance does not equate to success. Anyone can spend hours trying to find an online savings account that pays a twentieth of a percent more. That takes time and might make someone feel busy and productive, but it’s not very fruitful.
Taking the time to automate your finances, reading a book about how to improve in your career, or taking a financial training are much more useful than spending hours on a miniscule detail that won’t really improve your life.
In what areas can you simplify your finances?
