A Financial Lesson From Steve Jobs’ Wardrobe
Steve Jobs’ work wardrobe consisted entirely of black turtlenecks and jeans. Mark Zuckerberg rarely deviates from a grayish-blue t-shirt. What’s the deal with these tech tycoons never opting for a new outfit?
As it turns out, this quirk is actually a strategy to combat decision fatigue: the tendency to make poor decisions when confronted with too many of them. Accordingly, talented leaders often eliminate as many frivolous choices out of their lives as possible. (What should I wear today?) It helps them preserve energy for important matters.
Psychologist Barry Schwartz explains why this works in his book, The Paradox of Choice: Why More Is Less. He makes the case that reducing choices actually reduces anxiety. For example, an ice cream shop with seven flavors is less overwhelming than a shop with 237 flavors.
But eliminating decisions goes beyond turtlenecks and ice cream – it applies to money as well.
As we age, our finances become more complicated, whether we want them to or not. More decisions lead to more stress. Instead of putting a system in place, we might squander time wondering about things that don’t matter to your Long View investment strategies – such as today’s breaking news or yesterday’s hot holdings – or revisiting sensible decisions already made: Stocks or bonds? Did I pay that bill yet? How much should I put into my 529 plan?
The solution? Eliminate as many of these decisions as humanly possible, and set up a system to streamline the rest.
The simpler you can keep your system, the better. That starts with putting your finances on autopilot, just like Jobs and Zuckerberg did for their outfits. Here are three ways to do that:
Savings: Set up a direct deposit so a portion of the money you earn is automatically transferred from your checking account into your savings account.
Bills: Almost every bill these days is eligible for automatic payment. Putting your bills on autopilot pares down redundant maintenance and frees you to focus on more important decisions. (That said, do still double check your bills each month to ensure nothing is amiss – especially your credit card statements.)
Investments: Systematic contributions to your investment accounts are a vital step toward financial discipline. It’s easy to think, “I could use that money for something fun this month,” but automatic withdrawals make that choice irrelevant. It’s like having someone deliver healthy meals to your door; you’re unlikely to go out of your way to eat unhealthy.
Putting your financial decisions on autopilot empowers you to channel your resources more effectively without wondering what needs to be done monthly, weekly, or hourly. Sure, autonomy and freedom of choice are important qualities in a healthy life. But when it comes to financial choices, it often pays to be boring.
Need some help putting your finances on autopilot? We’ll get you started here.