Financial Freedom Quick Tip #22: Don’t be smarter than a 5th grader
Here is quick test to see if your finances are too complicated for you to keep tabs on.
Find yourself a 5th-grader, sit him down, and explain your entire financial position to him. If he can understand it, it is simple enough for you to manage it.
The building blocks of money are not complicated.
You shouldn’t need much more than basic addition and subtraction skills to manage your finances. The thing that makes personal finances complicated for many people, is that they have little bits of it lying around all over the place.
If you feel overwhelmed by your personal finances, or that it is too complicated for you to understand, it’s time to do some clean-up, and get rid of all the clutter!
If you have any store-cards, e.g. clothing accounts, get rid of them ASAP! If you have several credit-cards, get rid of all of them, or at most, keep only one. If you have multiple insurance policies, for the same or similar things, find one that does it all, and cancel the rest.
It is much easier to achieve financial freedom, if you strive for simplicity, not only in your finances, but also in your life. It is very difficult to conquer something you don’t understand.
If your personal finances currently resemble a bowl of spaghetti, start by simplifying your life and financial matters, until you are able to explain it easily to yourself.
Then, go make that appointment with a 5th-grader!
This tip is part of the Financial Freedom Quick Tips series. If you want to receive a notice every time a new quick tip is published, you can subscribe to Liberta.
August 15th, 2008 at 09:22 am
This is great advice. The simpler the better.
August 15th, 2008 at 03:03 pm
right on!
August 15th, 2008 at 03:05 pm
very good! simple=better
August 15th, 2008 at 05:49 pm
As a teacher, I have to say that this is the best and funniest thing I have ever heard. This is great advice! I love it!