Simplicity is the Ultimate Sophistication


Simplicity is the ultimate sophistication. 


Life is really simple, but we insist on making it complicated. 


That’s been one of my mantras – focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains. 


I think a simple rule of business is, if you do the things that are easier first, then you can actually make a lot of progress.


The older we get, the more opportunities we have for complexity. I think I’ll finally have a topic down and know a great deal about it. Then someone comes along and adds another level of complexity.

It’s confusing and makes us second guess some of our decisions.  This is just as true with personal finance and educating our kids about finance as any other part of life.

Sometimes it helps to step back and break down some of the major topics that we worry about to the bare essentials.

When you think about approaching your finances, there are some fundamentals to live by and we will be far ahead of the majority of our friends, coworkers, and families. I like that quote by Mark Zuckerberg above. If we can accomplish the simple things, we can get a lot of things done. We can make a lot of progress.

In fact, studies have shown that keeping a constant amount of complexity in our lives can lead to sickness and burnout.  Trying to multitask is even less efficient.

We need to take a step back and get a bigger picture of our finances and our lives. If we feel overwhelmed by how we handle our money, it just adds more stress.

It shouldn’t be that way.

Doing the right things with our finances isn’t complex. It’s simple. That doesn’t mean carrying out the answers is easy, but laying the foundation is really simple.

A friendly Q & A

Let’s pretend your friend just found out you have your financial life altogether. He doesn’t have much time and starts firing off questions.  You draw from your vast fund of financial knowledge to give him a basic framework to live by until you can get some more financial quality time with him. You say, “Let’s do a lightning round.”

Here it goes:


Where should I bank?

Anyplace with no fees that give you easy access to your money.

Where should I invest?

Anyplace with no or low fees that give you access to low-cost index funds.

What should I invest in?

Three things. Total Stock Market Index fund, Total Bond Market Index fund, Total International Stock Market Index fund

That’s too complicated?

Okay, then VTI and BND, look it up.

What should my bond allocation be?

0-50% You decide how much risk you want to take.

What type of life insurance should I get?


How long? 

Until you are financial independent.

What’s financial independence?

When your passive income meets your expenses.

Should my kids get life insurance?


Where should my kids go to college?

Anyplace you and your kids can afford to pay for without loans.

Should I pay for my kid’s college?

If they need help and only if you have max funded your retirement accounts each year.

Should I get disability insurance?


How long?

Until you are financially independent. 

How much should I save?

Start with six months expenses and ultimately at least 25 times your annual expenses.

How much house can I afford?

Twice your annual salary, less is better.

Should I do my own taxes?


Should I take out car loans?


Should I have a credit card?


Should I carry a balance?


I have debts, which should I pay first?

The one with the highest interest rate. 


And breathe…


When the solution is simple, God is answering.


Simplicity is the Ultimate Sophistication

         Be excellent to each other!


If we carry out the answers that we just told our friend, honestly we don’t need to think about much more to do pretty well.

It’s cool if you like finances and want to read as much as possible (Hey that’s me!). For the general parent/human being, carrying out these answers will put you in great financial shape.  There isn’t much more to worry about.

I was able to read each of those questions and answers in one minute, ten seconds. I read it in a normal paced voice. That is literally all you need to get on an excellent financial adventure.


So what do you think? What did I miss? Can it get even more simple? Let me know how you would answer these questions and which ones you would ask.

Start tracking your expenses, deposits, and investments with Personal Capital. It’s a great way to keep track of all your accounts in one easy platform. I use it to track my investment returns and overall net worth. Just click the link to the right and start your account today. The best part is it’s all free. There is nothing else on the market today that is as powerful and easy to use. 

Tom is a doctor, husband and father of five with a passion for parenting and finance. When he isn't skateboarding, riding BMX, or jumping on the trampoline with his kids, he is reading and writing about personal finance. He helps high income parents educate and mentor their kids to become financially, emotionally, and intellectually self sufficient.

10 Responses to “Simplicity is the Ultimate Sophistication

  • That’s an awesome list. I would add maxing out retirement accounts, and how much should I save each year (15–20% of gross income).

    • Ah Yes WSP! Those are good ones. I knew I would forget something.

      Tom @ HIP

  • Great lightening round. I agree with all of the answers above and in fact recently left my bank because they started offing a fee for keeping my money there! Craziness! I would add that if they are in a high risk job and have lot’s of assets, that an umbrella policy is worth the low cost….but now I am making it more complex.

    • EJ you could definitely add:
      Do I need an umbrella policy?


  • Should I get long term care insurance?

    • Hmm. That’s a hard one to answer simply.
      For high earners, if they did their job of accumulating a large nest egg then it probably isn’t needed. They can self insure.
      Good question though. It’s definitely something we should consider and think about.

      Tom @ HIP

  • Good list Tom. I would add: What is enough for me to retire? Aside from some philosophical musings that this question would motivate, there is a practical side of taking annual expenses and dividing by 4% or whatever SWR a person is comfortable with. Not knowing the end point can make the journey tiresome!

    • Thanks TFR, that is a good question too. I was kinda getting at it by saying save 25 times your expenses but your question is a better way to ask the question. I’ll have to do an amended version once all the personal finance bloggers chime in. 🙂

      Tom @ HIP

  • Great list Tom. A possible add would be – Should I go with a Traditional or Roth IRA?

    I hear people ask this often. Turns out it might not matter much.

    • Thanks Amy,
      That is a good one. For high earners it might make a difference because some aren’t eligible to directly contribute to a Roth IRA but could do the back door option. I would probably answer BOTH for that question since a traditional IRA contribution might not be deductible, so the investor should just do a backdoor Roth IRA in that instance.

      Tom @ HIP

Follow on Feedly