Expense tracking, budget making, checkbook balancing, bill paying, stock trading — all of this stuff requires an endless input of time and brain power. That’s why, for the last eight years or so, Lauren and I haven’t done any of those things.
Being good with money requires planning and consideration, but it shouldn’t take constant effort. The whole point of financial responsibility is to make your life better. If you’re not experiencing that effect, something is wrong.
Imagine going a whole day, week, or month without needing to look at the balance in your bank account. How would that feel? And what would it do for your mental health? You don’t have to be a millionaire to experience this, and experiencing it won’t preclude you from becoming a millionaire, either.
Right now, if you’re lucky enough to have at least a few thousand bucks to your name and a steady income source, it’s time to stress less about money.
Zero In, Then Zoom Out
The best financial move you can possibly make is to slash your household expenses and save a huge percentage of your income. To make cuts to spending, you first have to identify where your money is going. That means some sort of expense tracking. But how long are you expected to track your expenses? Forever?
Example: Grocery Mania
Suppose you’ve identified that food is something you overspend on. So, you decide to obsessively track everything you eat, add up the total price, and calculate your average per-meal cost (including dining out) across a whole month. Let’s say it comes out to $5.50 a plate.
Over the next couple of months, you intentionally stop eating out as much and center more of your at-home cooking around healthy, low-cost options (like in-season vegetables, or beans). You also decide to do more of your grocery shopping at stores like Walmart, ALDI, and Costco, and to buy shelf-stable items in bulk to score lower unit prices.
Eventually, you discover that you can feed yourself very happily for about $2.75 per meal, reducing your entire monthly food bill by 50% — amazing! Zeroing in on your food spending was totally worthwhile.
To keep getting this awesome financial result, you could babysit yourself perpetually, tracking the cost of every meal for the rest of your life, and it would work — but that would be a pretty miserable existence. Luckily though, you don’t need to do that at all.
Now that you have a feeling for which meals are cheap, which are expensive, and where to get every ingredient at the best price, you’ve laid the groundwork for better grocery shopping habits. Your temporary budget obsession has taught you to make good choices in the future automatically — no tracking necessary.
Think Bigger
Most people who are trying to get their finances in order don’t just focus on the grocery bill. It’s a great idea to pore over your bank account and credit card statements, sorting every little expense into categories and seeing what your broader spending trends look like.
For most people, the dominating line items are housing and transportation. The rest of the budget is usually made up of small or medium-sized costs like insurance, TV, and convenience foods, which add up to a surprisingly significant amount.
Doing this detailed analysis once or twice is totally worthwhile, but doing it every month for the rest of your life makes no sense. When you figure out what things are draining your bank account, you can find permanent fixes for them.
Once you’ve identified the fat in your budget and trimmed it, you don’t need to meticulously track your expenses ever again. The new habits you’ve formed will automatically make you richer with each passing month. So step out from under the microscope and just enjoy the new, more efficient life you’ve created.
Avoiding budget obsession has spilled over into other areas of our life too, like travel planning. We used to think a lot about what our trips would cost. Over time, we developed big-impact strategies like cutting hotel spending to zero by sleeping in a camper van, and setting up remote work opportunities to offset travel expenses. Those things took a lot of effort to figure out at first, but now they’re second nature to us, so most of our travels cost next-to-nothing without much thought at all.
It can be worthwhile to zero in on specific money habits and work on them diligently. Just make sure you learn something from the process and form long-term habits as a result. Then, you can ease up on yourself after a while. Eventually, you won’t need to track anything.
Forget When Your Bills Are Due
Another thing you might spend a lot of time thinking about is whether certain accounts have enough money in them for certain things on certain days — like bills that need to be paid. It’s a recurring calendar that’s always in the back of your head, triggering a back-and-forth dance of money from one account to another.
One of our personal financial secrets is that neither of us actually has any idea when our bills are due. They’re all set to auto-pay, and our joint checking account is always loaded up with a few thousand bucks to cover whatever debits may be lurking around the corner. Sure, we’re missing out on a few dollars in interest each month by keeping extra money in checking instead of savings, but it’s well worth it to avoid ever thinking about bills.
Whenever I happen to be logged into our online banking system, I’ll take a second to look at the transactions for the last 30 days. If all of our bills only show up once each, and the amounts all look reasonable, I know everything is going according to plan. No worries.
Admittedly, to achieve this stress-free bill pay setup, you need at least a small surplus of money at all times in the first place. If that’s not true for you right now, it might be worth putting yourself through a little (temporary) stress to get there.
Aggressively slash your expenses or work extra hours for a few months, and watch your balance climb. Once you’ve established that multi-thousand-dollar buffer, you’ll never have to worry about when your bills are due ever again!
Keep that budget surplus going for a while, and you can fill up a high-yield savings account to use as an emergency fund. Before you know it, money will be overflowing into things like investments, too.
Look At Your Investments Once Every Never
If you’re anything like I was, you’ll experience a whole new level of obsession when you first get involved in the world of investing, because there’s so much to learn. It’s a deeply complex topic, connecting economics, politics, history, current events, and statistics — a nerd’s dream.
There’s nothing wrong with diving head-first into this sea of information about investing. It’s both interesting and important, and if you don’t learn enough about it, you’ll probably never feel confident enough to shovel your hard-earned savings into things like stocks and bonds consistently over your lifetime.
But that obsession should also be temporary, because for most people who truly take the time to learn about financial markets, one conclusion usually prevails: A simple, passive investing approach is the best option in the long run. That means you do not need to look at what the market is doing every day — it’s a total waste of time.
In fact, Fidelity did a study and found that some of their best-performing accounts belonged to dead people, because they didn’t touch their investments at all for many years. So if you only bother to think about your portfolio once every six months or so, you’re probably doing yourself a favor.
Let Your Net Worth Be Your Guide
The bottom line here is that you can automate and forget about a solid 90% of your finances by just forming good money habits one at a time and riding them out for the rest of your life. Once you’ve got something mastered, give yourself permission to stop thinking so much about it. This can take a huge weight off your shoulders and allow you to kick back and just enjoy life.
But if you want one metric to look at continuously forever, it should be your overall net worth. You can calculate your net worth manually in 20 minutes or less, or use free software (affiliate link) to do it even faster. We check ours once a month, still to this day.
Your net worth is a one-number snapshot of your total wealth. Making sure it has an overall upward trend over the course of your lifetime is the single biggest indicator of financial success you can pay attention to. So consider making it the one financial obsession you don’t make temporary — and let the rest go, one by one.
— Steven
