Clean. Elegant. Simple. These words evoke a sense of calm and control. In fields as diverse as science, product design and business, simplicity is the holy grail for creators and practitioners. Why? Because simple approaches are easier to understand and execute and often yield better results than complicated ones. We know from our own experience at work and home that regardless of the task, the best plan is the one you will act on and stick with. Complicated solutions can paralyze us, whereas simple ones give us the confidence to move forward.
Achieving simplicity is hard. It often demands the ability to sort through complex information and then skillfully remove the clutter until the solution is distilled to its essence. Perhaps most famously, Apple founder Steve Jobs and chief designer Jonathan Ive relied on the principle of simplicity to create clean and elegant designs across every part of the company, from its brilliantly engineered products to its retail stores and corporate headquarters. In 1997, in its first marketing brochure, introducing the Apple II personal computer, the headline read: “Simplicity is the ultimate sophistication.”
Still, complexity sells. A prime example is the diet industry. It rakes in billions of dollars every year exploiting Americans’ search for a quick fix for the growing obesity epidemic. However, most health and wellness experts, although they may disagree on the finer points, know the “formula” is simple but not easy: Eat healthy and exercise regularly and vigorously. Michael Pollan, UC Berkeley professor and author of several books on food and culture boils down the eating part to “eat food (meaning real food like fruits, vegetables, whole grains, nuts, etc.), not too much, [and] mostly plants.”
The exercise part is just as straightforward: Exercise at least three days per week (more is better!) including aerobic, strength and flexibility training, and if you work a desk job, be sure to get out of your chair and move around throughout the day.
The same principles apply to your financial affairs. The next few articles will provide some simple personal finance guidelines that anyone, regardless of age, can use to ensure a more secure life for themselves and their family. These rules will help you focus on what matters most, avoiding unnecessarily complicated analysis and allowing you to make better decisions.
Complexity is not your friend. The more complicated something is, the more likely something will go wrong. The financial services industry is notorious for using complexity to hide conflicts of interest designed to transfer money from your pocket to someone else’s. If you don’t understand it and it can’t be explained to you in plain English using grade school arithmetic, pass on it.
Invest in yourself. The most important financial asset, especially for young and middle age workers, is the ability to earn a living, pay current expenses and, ideally, to save and invest the balance to help finance a comfortable future. Spending time and money to build valuable skills will increase your earning potential. Just a few thousand dollars a year of extra income and savings can grow into hundreds of thousands of dollars if left to grow over three or more decades of work. It will do wonders for your bank account and your peace of mind, and maybe the best investment you will ever make.
Next week, we will continue to explore additional strategies to help you simplify your financial life.
This article is for general information purposes only and is not intended to provide specific advice on individual financial, tax, or legal matters. Please consult the appropriate professional concerning your specific situation before making any decisions. John Spoto is the founder of Sentry Financial Planning in Andover and Danvers. For more information, call 978-475-2533 or visit www.sentryfinancialplanning.com.