Understanding my financial beliefs might benefit from understanding my general life philosophy. As much as that will admittedly change, there is at least one principle that has stuck with me since primary school. Be the best B student.
I’ve always been a smart kid, but I learned early on that getting a B was much easier than getting an A (and almost as rewarding). My goal was and always has been to do as little as possible and still do well. I learned that the less time I spent doing homework, while maintaining my grades, meant the more time I could spend with my skater friends on the local half pipe. I strove to get my “natural” ability to the level that it always looked like I wasn’t trying. People are sometimes impressed when I pickup an idea fast and put it to use faster. Stupid discussions about genetics aside, I’ve spent decades perfecting this skill – and a skill it is – that requires discipline like any other (I’ve just embedded it into my being so much that it’s a natural discipline now).
I don’t like doing more than I have to, and most people will say the same. However, because I’ve made that a life goal, I’m sometimes better at recognizing these situations and figuring out how to make it work for myself and others. Things don’t work well for me because I’m smarter (remember I was a B student, so how smart can I really be?). Things work well for me because I understand, simplify, then act. The key being simplify (and act), and simplicity is something anyone can benefit from no matter how smart or dumb you think you are (actually, the dumber I try to be, the better and less complicated things usually turn out).
Take pride in not needing to be smart. Things should just work, finances included.
There will be plenty of people who disagree with me (possibly a majority of people). I don’t propose that what I say will work for everyone. Each situation is unique, and should be considered separately. However, from my point of view, the system of finances is broken, and the powers that be aren’t acting in your best interest. The visible gurus are mostly schmucks trying to make a buck by fooling you and themselves. As an entrepreneur, I love the idea of finding value and turning a buck from that, but that isn’t what’s happening in the financial industry (I should know having worked in this industry on one of the many noisy and necessary, but – yawn – caffeine hyped trade floors). To hell with what others say.
For instance, I’m against budgets. I’ll speak highly of Ramit and his awesome IWillTeachYouToBeRich blog, where he gives some great advice including that on budgeting, but lets be honest, budgets suck even if we know the benefits they provide. Now, my alternative isn’t all that different from the original, and some might even call it budgeting, but 1) language matters, and 2) cutting out even 10% of the fat and hassle can give you 90% gain (remember be the best B student, not A student. Hell, sometimes being a C student is enough).
It’s OK having an imperfect system if that system is what works for you. This is probably my greatest motivator. As someone who knows better, I don’t do a lot of the things that are considered best practices or mandatory. While I agree that there are benefits, I disagree that the same (and more) couldn’t be done with less. Like the gurus of Less Is More at 37signals (see their SvN – Signal vs. Noise – blog in the links), I believe that the smartest people think they’ve got a system that’s right for all, when it in reality sucks for most. Stop adding complexity, and find the core benefit.
I know I’m right about something (we’ll see years from now what exactly I’m right about) because I know I’m not the only one in this situation. I look around at my friends and family, who I’ll talk to about what they should be doing, and watch them understand, but not do it. After which, given a couple more month, I probably stop doing it myself (shows how smart I am). That’s why it’s OK to have an imperfect system if that system works for you because it’s better doing something than nothing when you know (or think you know) that you should do more.
So now that you’ve read all of this, what the exactly should you do (I did mention something about budgeting, although I said it sucked)? Well, that’s for another post, but this will hopefully be a primer on why I believe and say what I do.