10 ways to stop your brain’s love of complexity from messing up your saving & investing

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“More effort is wasted doing things that don’t matter than is wasted doing things inefficiently.” – James Clear

An impressive study featured on the cover of Nature  (like the Oscars of the scientific study world) shows that our brain instinctively defaults to addition and complexity when problem-solving. Understanding how this knee-jerk reaction messes with your finances will help you increase your wealth and reduce your stress. Who doesn’t want that?

Adams et al show in ‘People systematically overlook subtractive changes’ how much our brain loves complexity. You see it in recipes, tax regimes, engineering and work schedules. If there is a problem, our first instinct is to bring in more meetings, longer hours, more people, more ingredients, more fine-tuning, enough bits and pieces to cover all risks and eventualities.


Most of the time we don’t have time to think deeply about the world around us and we resort to endless mental shortcuts to get through the day. You’ll spot your favourite brand easily at the supermarket and ignore everything else. When you’ve just bought a red car, you’ll start noticing red cars everywhere. When Dogecoin has been shooting up in value, it’s hard to imagine it shooting down.

Going against these instincts takes mental effort, or at least training, so most of the time we don’t bother. Is our brain optimised for saving and generating long-term wealth in the stock market? Nope. So I’m going to train you up today and show you how to avoid the instinctive desire for complexity in your personal finances that will trip you up.

Adams et al asked people to improve essays, golf course designs and Lego structures that needed to support a real brick. Most people added paragraphs and fancy golfing features, rather than stripping out unnecessary clutter. Very few noticed how removing one lego brick would stabilise the whole structure.

Performance was even worse when people were distracted by having to do another task at the same time as solving this problem. Subtraction and simplicity are just too much effort.

Go and have a think about where you tend to add complexity and what could be simplified by subtracting something. Here are 10 ideas for your finances, based on my 3-Step Guide to Expat Financial Independence.

Mindset & Planning

1) Hearing voices

Being aware of your tendency to add and complicate will make you more likely to think of solutions involving subtraction. Stop and think. Practise.

Our beliefs and mental shortcuts around money are inherited from our parents, culture, childhood, adolescence, early adulthood, boss, friends, teachers – all over the place. Imagine all these people shouting when you are trying to make a money decision. Who is getting through?

Write down your attitudes to earning, spending, saving and investing and note where you got each attitude from (it could also be a reaction against other’s beliefs). Decide what you want and don’t want your attitude to be for each area and try to codify it.

For example, “I will grow my wealth through passive index investing and not timing the market.” Then when you find yourself thinking hmm maybe I’ll wait to trade until the US jobs report comes out tomorrow then you can tell yourself to stop timing the market and stick to your principles. You are subtracting all the warring voices in your head.

2) Your numbers

Pulling together all your numbers so you can get a grip on your finances can feel like a big project. We tend to avoid getting started on these, while thinking about all the details we’ll need to throw into the mix.

If the overwhelm is going to delay you, just strip out all the details. Start with your bank accounts, as it’s usually easy to log in and see how much cash you have. Add them all up – have you ever done that before? That’s a win.

You know your salary. You can check your credit card statement (it helps to put everything on one card). Subtract one from the other and you have a starting point for estimating what’s left over.

For an even easier method, look at how your bank balances change from month to month. I haven’t even told you to categorise your expenses and you’ve already got some insight into your (cash) wealth and spending patterns. Subtract the details until you have momentum and energy.

3) Your future

Planning for your future is easy to put off, as it too seems overwhelming and, by definition, quite a long way away. So unknowable, with so many variables. Again, ignore the details.

What 3 things do you care about for your future? It may be something like:
1) Having at least $4,000 to live on in retirement.
2) Owning a house eventually.
3) Paying for my children’s university fees.

Focus on these and ignore everything else for now. If you have a partner, do you at least agree on these top 3 priorities, with some ideas on how to get there. It’s a great start. Subtract any other distractions until you have clarity on these, as nothing else really matters.

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4) Spend less

The corporate world wants you to have more things, more subscriptions, more services. There is always a niche service that will allegedly improve your life in some way. There are always new handbags, new gadgets, new restaurants, all designed to give you a temporary boost and help you forget your miserable existence. Why are you buying these treats and getting these deliveries? Be honest with yourself and deal with the root cause.

More stuff means over-stimulation, more decisions on what to wear, where to put stuff, how to find things, what to watch. It helps to have a ‘one in, two out’ approach. Get rid of at least two similar items for every non-essential item that you buy.

If you want to spend less, set yourself an overall savings target for the month and year, then stick to them. You don’t have to sweat over credit card statements – the looming presence of a target should be enough to change your behaviour. Commit to the target and enlist the help of someone with tough love if you aren’t good at sticking to targets.

Subtract the clutter from your life and card statements – be the badass bouncer on the door of your life. Subtract the extra room in your home that you got ‘just in case more people visit’. You can put them in a nice hotel for less than the cost of that room. Subtract time with the friends who are always expecting you to spend money, chasing a certain lifestyle.

5) Consolidate debt

Some people have debt all over the place. They have credit cards here, credit cards at home, personal loans, car loans, loans from friends, loans from parents, mortgages etc.

If you’re really living the financial life, you have an unpaid credit card balance, a personal loan, cash in the bank and some investments as well. Just because you can.

Financial simplicity is a beautiful thing. You don’t really need more than one credit card here, hide the rest for emergency use only. If you are carrying a balance on multiple cards and maybe also a personal loan, consolidate the debt into one loan. You won’t have to worry about multiple payment dates and tracking statements.

Some people love to hop around, take advantage of any card offered to them, jump into pay now buy later deals, hop around zero balance transfers. All these waste mental energy and it just takes one mistake for the whole stack to fall over. Someone in your family gets sick and you forget to juggle all these debt balls properly.

Pay down your debt and pride yourself on having fewer financial products (do have two bank accounts where you live though!). As you subtract financial complexity, your mental bandwidth for life and all its real pleasures, which are mostly free, will increase.

6) Rightsize your cash

Many people hold too much cash in their bank accounts because it comforts them. They imagine all these reasons for possibly need the cash one day. But this excess cash is not working hard for them – it’s being eaten away by inflation and putting the brakes on having a great future.

Particularly bad is the ‘fantasy house’ – you think you may want to buy a house in the next 2-5 years, maybe only because that’s what people do. So a big deposit lies around doing nothing in the bank and then you don’t buy the house anyway.

Every dollar needs a purpose. You don’t need more than 6 months’ expenses as a cash buffer, plus a couple of sinking funds for 2-5 year expenditures that you definitely know you will making. Subtract all the minor or unlikely reasons for needing cash and put the surplus to work in the markets.


7) The Pacman portfolio

Draw a pie chart of your desired (or actual) stock & bond fund portfolio. If it doesn’t look roughly like Pacman then you have a problem.

Many advisors love to put their clients’ money into multiple funds. It makes investing seem complex, looks like they’re working hard and earns them lots of commission.

Even if you’re investing by yourself, the temptation is to add more funds. You’re optimising, you’re adding extra areas of potential growth, extra layers of protection, extra diversification, jumping on trends, hitching a ride.

Except you’re not. You are adding trading fees and making it impossible to understand how your portfolio performs. You need two, max three funds and that’s it. A global stock fund and a global government bond fund will keep costs low and optimise your portfolio wonderfully.

8) Structured notes and savings plans

Both these monstrosities are created by investment banks and insurers to make money from you. Not for you. They are highly complex. If you cannot explain a financial product to your grandma then you should run run run away as fast as you can.

The brain sees this complexity as justifying the high fees, as ensuring you will outperform, as confirming that your advisors are geniuses and you need them. Just as Cadbury’s has perfected the right mix of sugar and fat to send your brain into a tailspin, many clever people have spent years perfecting these financial products to be irresistible at first glance.

Just say no and save yourself many years of financial toothache and indigestion.

9) Shiny objects

Should you invest in crypto? Gold? Oil? NFTs? Art? Cleantech? All these are hot right now and you might miss the bus. But they require education and they add to your investing complexity, while reducing your available mental bandwidth for work, friends and family.

They feed your brain’s appetite for novelty and complexity, as surely as chocolate and ice cream tickle its pleasure centres. This does not mean they are good for you.

Lots of people are investing $1000 in crypto with the idea that in 10 years’ time (or less!) it might be worth $100,000. I say: have you eaten your vegetables first, or have you gone straight to dessert?

Instead of spending time learning about crypto, what if you first spent the same time and effort to boost your income and reduce your expenses so you could invest an extra $1000 per month. After 10 years of investing that extra $1000 in the stock market at 7% per year, you would have… $177,000.

Ah says the wise-ass, what if I put $1000 per month in crypto? Then I might have a million! Maybe. You might also have not very much at all or get so scared by the volatility that you stop.

Clear your mind of all the fancy FOMO opportunities out there and focus on the basics of earning more, spending less and investing the difference. Only when you squeezed out all the green juice from this should you allow yourself a little treat.

10) Timing and checking

Even if you have doggedly stuck to the Pacman portfolio, your brain will want to time the market. It will want to check check check your portfolio and the performance of your favourite funds. It will want to gorge on complicated articles with catchy titles predicting a crash.

Cut out temptation by investing on the same day each month. Cut out reading about stocks. Cut out checking your portfolio – if you must check the fund performance on your stock app but not your total portfolio value. That is only for occasional net worth tallies and rebalancing when you add money.

You are much more productive when you put your phone away – how do you think I am writing this finally – and there is a wonderful sense of focus, flow and inner peace. The same blissful feeling comes when you remove the urge to time the market and check your portfolio.

Lars Kroijer, former hedge fund manager turned passive income enthusiast says it best. Accept you don’t have an edge in the market. You can’t beat the index. So don’t try. Subtract all that energy, effort and thought from your investing. Then the return on effort from stock market investing is truly amazing.

Save your effort for where you do have an edge: at work, loving your family, hanging out with friends, helping others, enjoying life.

Any questions or comments? Add them below.

Join my Financial Transformation Program (25% off)

After helping tens of thousands of expats to plan, save & invest their own money with confidence, I have created this program combining private coaching, online courses, group learning, accountability and community. It has everything you need to know, the flexibility to suit your experience and life schedule, plus the support to make sure you actually take action towards a great financial future.

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