What is the secret to financial success? I have the answer — simplicity. Yes, if you buy gold or real estate before it skyrockets, play the stock market game well or live off the land and save most of your income, you will have financial success.
But how many people can do that? Very few. The alternative is to aim for simplicity in your financial life. In my new book, Count on Yourself: Take Charge of Your Money, I go through an easy process of financial closet cleaning in order to prune all the money bits and pieces that clutter up our lives and then organize what is left over.
I call it the KISS approach to money — Keep It Simple Smarty.
No one knows who originated the KISS (Keep It Simple Stupid) principle, but there’s no question it was a powerful catchphrase in the 1960s for the U.S. National Aeronautics and Space Administration (NASA), when they were striving to put a man on the moon. That such a complex feat of science and engineering should reference simplicity in the form of KISS is very telling.
I’ve changed the last word to Smarty because I believe it’s smart to keep your financial life as lean as possible.
A typical family will have multiple bank accounts and credit cards, a mortgage, home equity or personal line of credit, as well as car and student loans, not to mention RRSPs, RESPs, and TFSAs to deal with on a monthly basis.
Complexity not only makes it difficult to stay on top of your finances but it costs you money in unnecessary fees and duplicated services.
Ask yourself: Do I need those retail credit cards, two chequing accounts with overdraft protection, more than one RRSP or RESP, all those TV channels, call forwarding on my phone? You’ll find the pruning process energizing.
When it comes to the investments in your RRSP, for example, apply the same principle of less is more. Have one investment for bonds, one to cover the Canadian market and one for the U.S. Just three products, plus some cash, and you have a perfect mix.
Keep it simple and you will find it far easier to get control financially and pay closer attention to the money side of your life.
Alison Griffiths is the author of the upcoming book Count On Yourself: Take Charge of Your Money. Reach her at alisongriffiths.ca or griffiths.alison@gmail.com.
