Throughout my adult life, I have been heavily involved in the realm of finance whether through my job as a full-time accountant or through personal endeavors. I’ve studied and experimented with numerous financial products and strategies in the pursuit of financial freedom. Over time, I’ve come to realize that the financial world is becoming increasingly complex, making it difficult for the average person to navigate and make informed decisions. This complexity often leads to feelings of overwhelm, resulting in increased stress, anxiety, poor decision-making, and, unfortunately, loss of wealth. That’s why I believe there’s a compelling argument for removing unnecessary complexity from our financial lives and sticking to what we know and are comfortable with for the following reasons.
Reduces Stress and Anxiety
When we stick to financial strategies we fully understand, our stress and anxiety levels remain significantly lower compared to when we dive into products we barely comprehend. For example, during COVID, I ventured into day trading. On the surface, buying and selling stocks daily didn’t seem overly complicated, but I quickly realized I only had a surface-level understanding.
Every morning, I bought a stock, my anxiety shot through the roof. There’s a common saying on WallStreetBets: “We’re going to the moon!” and in my case, that’s exactly where my stress levels went. Sadly, my brokerage account didn’t make the flight. The value cratered on the launchpad because I didn’t fully understand which stocks were good for day trading, when to buy or sell, or how to set an effective stop loss. I also didn’t grasp the psychology involved, and often, my emotions got the best of me.
Improves decision making
If we get involved in financial products or strategies we don’t fully understand, we’re likely to make poor decisions. I remember a college professor once explaining “highest bidder’s remorse” the idea that if no one else is willing to pay what you’re paying, including the seller (who’s selling for a reason), maybe the asset isn’t worth it.
In every business transaction, there’s a genius and an idiot. If you don’t fully understand the deal, you’re probably the latter. But when you stick to financial areas you understand, you can use your knowledge to identify undervalued opportunities and make smarter decisions.
Saves your precious time
A big misconception promoted by finance influencers is that they work just a few hours a day and make a ton of money. That might be true now but getting to that level of knowledge took them years.
Many companies pay full-time professionals to manage investments, research markets, and analyze strategies. So the idea that you can casually browse the web for an hour before work and outperform the market is unrealistic. If others are spending 40 hours a week on this and you’re only spending five, you’re already behind.
For me, turning on auto-investing in mutual funds means I spend zero hours a week actively managing investments giving me valuable time to do what I love (i.e., not working).
Strengthens financial security
When your financial approach is simplified, you’re more likely to stay on top of it. You’ll find yourself checking in more regularly, keeping track of who you owe versus who owes you, and ensuring that bills and payments are made on time. This awareness also allows for better cash flow planning and early detection of any suspicious activity in your accounts.
Promotes better saving and investing
When you understand your financial plan, you’re more likely to stick with it—and win. Let’s be honest, winning with money is exciting, and it encourages us to keep going.
In my experience, the more complex the transaction, the more likely I was to lose money. Within days or weeks, I’d usually abandon the strategy altogether. But I’m now in my 11th year of auto-investing in mutual funds and the wins keep rolling in.
Conculsion
Effortless finance and simplifying your finances isn’t about cutting corners or being lazy. It’s about getting back to basics and leveraging what you know to invest with confidence. When you remove the strategies you don’t fully understand, you empower yourself to make intentional, rational, and informed financial decisions. Doing this consistently will pay off in the long run.