Make It Simple

I just wrote a A Simple Guide to Financial Freedom based on my experiences with Financial Freedom. Consider giving it a read if you are interested in this topic.

I love complexity. At least that’s what you’d think if you saw my financial setup right now.

I have multiple accounts with stocks and savings, several crypto wallets and exchange accounts. I have more credit cards than I will ever use and when I do my monthly update I now have more than 20 line items! In short: my money is all over the place right now.

All these things made sense to me when I established them. I have used different sites for stocks over the years but I rarely closed any accounts. In crypto things are moving fast and I want to try the new tech. Different credit cards offer different advantages — some have good FX rates, some can work with crypto, some have cashback, etc.

It is also a bit of diversification. I don’t have all my money in one pace, should something bad happen.

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Okay. I buy the diversification argument. But things have gone too far. At some point the cost of complexity is no longer worth it.

It have experienced this lately. I have wasted a lot of mental bandwidth on navigating my own financial maze. Moving funds around, funding the correct wallet or card, investing in too many projects/companies that all sound absolutely amazing — but even if any of them take off the returns won’t really do much to my overall portfolio as my investment in each of them is tiny.

This last part is especially important. Whenever you decide to invest in something, know that you are investing not just money but also energy and time. You’ll want to follow news about your investment, check in on the price, etc. And that burns your most limited resources: time and energy.

Another problematic behavior I have observed is trying to squeeze every last drop out of credit cards and savings accounts with yield. I’m moving tiny amounts of money around to get a better yield (sometimes just 1%). In the bigger picture I’m again wasting too much energy for a tiny amount of money. Hyper optimizing like that just isn’t worth it (1% matters a lot if we are talking a bigger part of your portfolio. But for daily spending it just doesn’t make sense to spend much energy on).

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My goal with the financial freedom project was never to sit around checking prices and moving funds all day. It was to get more time and freedom. And currently I’m burning some of my time on things that do not matter.

I my guide I wrote that you should automate your investments to make the habit stick. But automation does more than that — it also clears up mental bandwidth and time. I have used it successfully for a long time but lately I have neglected my robots.

I want to get back to a state where my time spent on personal finances is minimized.

A few things I will do:

• Keep enough money in my spending account so I don’t have to check every time I use it¹
• Stop investing small amounts in many different projects
• Stick to the automated system and adjust only a few times a year if needed

That should clear up most of my energy drains. Your situation probably looks a bit different than mine, but the underlying principle is the same — make it simple. Complexity can be fun in the moment but will waste your time in long run.

Rarely is is worth the extra effort to hyper optimize. Stick with the basics and keep your strategy simple.