Keep It Simple

By now you’ll have grasped that when it comes to personal finances I’m a big believer that you don’t have to overcomplicate things to succeed.

I’ve been helping clients manage their financial resources for a decade now and in that time I’ve learned that complexity serves only to demotivate, disengage and discourage people when it comes to getting their financial affairs in order.

Yet why do we still perceive simplicity to be such a bad thing?!

Why is simplicity not the optimal strategy? 🤔

If it grants peace of mind and the best possible chance of success with your financial plan then why aren’t we all doing it?!

As we grow up and experience more of the world we learn that a topic typically gets more complicated as we dive deeper into it.

For example, supply and demand is a concept most of us can grasp quickly, but having a deep understanding of how these variables are affected by changes in interest rates, inflation and trade relations requires further study.

Complexity For Complexity’s Sake?

Unfortunately, we too often encounter complexity where simplicity is what we really need. In many cases it’s used as a way to confuse, leaving the recipient with little understanding and keeping them reliant on the expert.

The financial industry is no different. Experts highlight the dismal level of financial literacy and argue for financial education to be part of the school curriculum, but very few contribute to the changes we need.

Most industry players are complicit by using complexity to spread fear and a reliance on an industry which is happy to sell a product without having the buyer understand what they are getting themselves into.

You know how much I hate jargon and acronyms when it comes to personal finances 🤮 … but the Never Ending Worry Service (the ‘news’ – sorry indulge me!) creates the crisis of the day while the financial machine stands ready with the solution which would have solved the previous crisis but little chance of being suitable for the current challenge.

If there’s anything we’ve learnt from the history of the financial markets it’s that there are a few key learnings which will always apply. Once you approach every new crisis with this knowledge, the world becomes much simpler.

Simple Is Better

Money, too, can be simple if you want it to be.

If it’s complexity you want, then financial product providers will give it to you on a plate (and charge you handsomely for the privilege because the more complex the better … right?)

There’s a product for every financial fear you might have.

Worried if you’re saving enough for a rewarding retirement? – there’s a product for that.

Worried about the taxman/woman robbing your kids of your hard earned wealth when you pass away? – there’s a product for that.

Worried about preserving your wealth when inflation is high? – there’s a (you get the idea …)

So What?

But starting here is likely to lead you astray. You’ll need to work out what these mean for you and the lifestyle you want to have. A new crisis might make you second-guess your tactic, taking you back to square one.

A true understanding of money allows you to build on your understanding of your own situation and the life you want to live.

A strategy can then be built on a simple understanding of the concepts of spending less than you earn, investing for your unknown future, providing for short term expenses, compound interest, and historical market returns combined with old-fashioned discipline and patience.

I have found that people find the above process easier when it’s facilitated by a caring financial adviser who can educate, encourage, and hold them accountable.

Products may be required, but they’ll be put in their rightful place.

I proudly rely on a ‘plan first, products second’ approach with my clients. Essentially, if you don’t have a plan, how do you know if you need a product? (for example a pension or an ISA?)

The Choice Is Yours

We have a choice between simple and complex in many areas of life. Sadly, complexity is often perceived as clever and sophisticated. It’s easy to look down on a simple strategy when a complex one will make you look smart. With financial matters, nothing could be further from the truth.

The real tragedy is that many don’t know that simplicity with money is an option. They accept the complicity sold to them with the result often being overwhelm and a lack of understanding. In many cases this leads to disengagement, which itself compounds into long term consequences.

If you want to know more about this then check out episode 35 of my podcast.

If something seems too good to be true when it comes to your money then it probably is.

So have a think … how can your plan be simplified to remove the unnecessary? 🤔

Thanks for reading.


Benjamin Mitchell

Benjamin Mitchell

I’m a chartered financial planner that can help you plan for tomorrow and also live for today.

Book a chat with Headsup

When it comes to money, we put your goals in life first. No jargon, no sceptical recommendations...
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