Using Finance to Create Simplicity

The world we live in does not encourage simplicity. In fact, we are presented with more and more everyday. We are constantly encouraged to complicate our lives by the things and responsibilities we acquire. We have more choice but more pressure than almost any other time in history. Seriously, our local grocery store stocks over 100 different types of spaghetti sauce. Buying something to top your noodles is no longer a simple choice.

finance simpleI was surprised to realize that we can actually use the limitations of finance to limit our stress, commitments, obligations, and worry. Most people think that more money will make them happier. But what many of us have come to realize is that the more money we spend, the more options, choices, responsibilities, and opportunities we have. The complexity of our financial life can become increasingly stressful even as our financial opportunities expand. (Photo Paxton)

Money doesn’t really care how we use it. We can spend it all, save it all, give it all, or bury it in the ground. It can make our lives better or worse. It can make our lives simpler or much more complicated. It doesn’t really care, but we do. We can use the financial decisions we make to set our priorities and focus our time, money, and energy on the things that are important. In order to create a simpler life, we can allocate our income in a way that limits unimportant distractions and focuses our money on the things we actually value.

Financial Commitments
We don’t have enough time to do all the things that are demanded of our time. We could all use an additional five or six productive hours in our day. Money works in two ways. Having money allows us almost unlimited choices into how we allocate our time but also gives us too many options if we are not careful. On the contrary, not having any money effectively eliminates options and makes the choices much easier but potentially less satisfactory. The solution is simple, when we are faced with allocating time and money, we can choose to spend on areas that are defined by our priorities. It makes it much easier to turn down that expensive travel baseball team or pass on the weekend trip to Vegas.

One of the most stressful things we encounter in modern society is the art, excitement, and guilt of modern commercialized gift giving. It can be tough to balance all the wants and desires of our friends and family with the amount of money we allocate to spending on gifts. But often, using financial limitations can make the process more relaxing and takes off some of the pressure that comes with inflated expectations. For example, Ms. SE and I often limit the amount we spend on each other for gifts to nominal amounts of $5 or $10. This allows us to still enjoy the process but simplifies the choices we have and lowers expectations. This is just a simple example of using money to make our lives simpler.

Payments are complicated. How much simpler would your life look if you had absolutely no payments? No credits cards, mortgage, tuition, furniture, cable, student loans, business debt. Wouldn’t it simplify your budget if you had no mandatory outflow. Even when we have money, sending all our money out to 5,10 or 30 different people is complicated. Simplicity is one of the main reasons we prefer to be completely debt free. There is something relaxing and refreshing about having absolutely no payments. How would your life feel if you had absolute no payments in the world?

Cash Flow
Planning cash flow encapsulates the nuts and bolts of financial simplification. Planning ahead how you choose to spend your money is an exercise in simplification. Basically, you can choose at the beginning of the month or year how you want to spend your money. This allows you to efficiently determine your priorities and alleviate some of the stress that takes places when trying to decide between alternatives. Instead of thinking of a budget as a shackle and chain, think of it as a tool to encourage communication and efficient allocation. Use it to make sure you are putting your money where you want it to go and not where a great television ad campaign thinks it should go. If you desire your family to have a simple Christmas, don’t allocate 50k for family gifts. If you want simple choices in whole unprocessed food, lighter allocations will remove the temptation of expensive convenience food.

Budgeting makes complicated decisions easier. When we think about buying a car or a house, the possibilities are endless. That is, until we combine our needs, desires, and possibilities. There are millions of cars to choose from and many of them are great. However, trying to pick the perfect one can be a bit complicated. However, if we are looking locally and have set a budget of 10k, then our options suddenly become much simpler. We still have plenty of choices but few possibilities to stress ourselves out. Similarly, if we only have $10 to get our haircut, we don’t have to search all around town, we have quickly simplified our choices.

Your money or your life
Your life will follow your money if you let it. Money has the incredible ability to give us ultimate freedom if we choose to simplify our lives. It also has the opportunity to make our lives complicated and stressful if we don’t manage it well. If you choose to simplify your life, make sure your spending and savings is part of the equation. You will also have the added benefit of financial margin when you choose to be intentional with your cash outflow.

Ms. SE and I personally use this principle on a daily basis. We have chosen to spend less than half of our annual income. In addition to having plenty of financial margin, we actually have to worry less about the complicated financial situations many other individuals face. We also love the idea that choosing a simple life gives us more time and freedom and allows us the flexibility to do the things we want to do

Finance can be used to simplify your life, if you let it.


3 thoughts on “Using Finance to Create Simplicity

  1. I totally agree that gifts can be one of the most complicated things to manage – financially or otherwise! It’s one of those intersections in relationships where our values of simplicity and economy directly affect other people. And often they are people who don’t share the same values which can breed conflict. I think putting a mutually agreed-upon cap on spending on gifts simplifies things and can foster creative gift-giving.

    • It has helped our family as well. We like having simple suggestions to minimize the stress of others, especially as our family expands. Like you mentioned, it is interesting to see the difference in values that something like gift giving creates.

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