Avoiding Decision Fatigue With a Spartan Personal Finance System

I'm reading The Paradox of Choice by Barry Schwartz, a book about how we are overloaded with options and this is proving detrimental to everyone's happiness. 

One important point Schwartz made is that it's not just the plethora of jams or chocolates we can choose from today, which is bad enough, but the choice disease has crept into spaces like utility providers, insurance, retirement plans, healthcare, and education.

There's a sneaky transfer of cognitive labour going on here. In the Stone Age, domain experts like investment analysts and doctors made these decisions for us. But now, the consumer is responsible for making her own retirement fund and health screening decisions. So now everyone has to become knowledgeable about all these things.

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Reading this book made me think about my old job writing for a personal finance comparison website. The unspoken philosophy here is that everyone should be a maximiser, if they aren't already. Get the LOWEST interest rates and the HIGHEST investment returns and the BEST credit cards. 

Of course I drank the Kool-Aid and tried to maximise my finances at one point. But guess what? It never works! You can never get a moment's rest. Either the provider you've chosen after much agony will fuck you up by revising their rates, or regulations will change and new competitors suddenly flood the market with better deals. It's really tiring and pointless to try and keep up.

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These days I have banished personal finance decisions to the bottom of my Things to Think About pile. 

I don't budget. I just record expenses and income, on Google Sheets. I have a good sense of my OpEx and don't try to control how much I spend on each category. I think it's important to be fluid and not be that scrooge that never spends any money on presents (been there). 

Day-to-day cash: DBS. My bank account and cards are all here. I made this choice purely because of the simple app UI and the ability to cancel credit cards through a chatbot. I didn't even care about the interest rates. (BTW I'm using an account that pays 0.05% p.a. interest, something I used to mock in my former life...)

Spare cash: Singapore Savings Bonds.

Longer-term spare cash: VTI on Saxo. Thanks to The Simple Path to Wealth for that!

Singaporeans are fortunate to be living in a nanny state. I'm totally serious. For all its flaws, the government has at least gone to great lengths to administer insurance and retirement schemes. I'm not going to be a smartass and try to beat them at their game. 

I only buy government-mandated health and disability insurance. Everything else, I self-insure, i.e. insource risk management. For more on self-insuring, read Morten Strange's Be Financially Free.

As for retirement planning. I read Bill Perkins' Die With Zero earlier this year. It's about the why and how of spending down your savings before you die (fancy term: decumulation). You'll need to pair this with an annuity to make sure you don't end up outliving your savings (fancy term: longevity risk). I felt really lucky that Singaporeans already have this set up for them vis a vis CPF LIFE.

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What's longer than my actual money management system is the list of Things I Don't Do, Period. Cue all the lines I've drawn in the sand...

I don't have a mortgage; we saved for the house the old-fashioned way. I don't have the desire to upgrade my lifestyle or house. 

I don't have any interest in complicated investments like options trading. 

I'm not interested in kids.

I'm not interested in cars.

I don't have social media. No TikTok or Instagram or Facebook. I even removed the Google Search button from my phone. I haven't read or watched the news since I left my previous job. 

I don't have Netflix or Spotify. When I'm bored (which is never?) I look at our pets, read a book, or look at people. I can seriously tickle myself for hours sitting at a town square and making up stories about passers-by.

I don't join Telegram groups that help you save money. It's easier to save money by simply not exposing yourself to 1-for-1 bubble tea and hamburger deals all the time.

I don't tithe money to my parents. I saw their account balances and realised my contributions are... well, nice, but not necessary. Personally, I am in favour of generational financial boundaries. I don't think adult children should give money to their parents, any more than parents should give to their grown kids. We're all adults and should find our own way.

I don't do supposedly money-saving things like food rescue or collecting things on Olio. Those are a waste of energy too.

I am not friends with most people I was once friends with. I'll admit I've been ruthless about cutting people out of my life. Only a few remain, but they're people I would lay my life down for. That's gotta be better than, like, 50 mediocre friends you have to hang out with while secretly despising them.

I don't subscribe to the whole FIRE (Financial Independence, Early Retirement) thing. My beef with it is that it requires delayed gratification. I think the present is too important to sacrifice for the future. Thoreau wrote my motto in Walden: “I determined to go into business at once, and not wait to acquire the usual capital, using such slender means as I had already got.” 

I don't have a gym membership or even a fitness regimen. I rely on physical work (book jockeying and food delivery) and HPB's free yoga classes (another nanny state perk!).

I don't have fancy clothes or makeup, for that matter. Jon cuts my hair.

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Maybe my lifestyle sounds a little extreme to you (no TikTok WTF?). But it's in line with the thesis in The Paradox of Choice that we should embrace voluntary constraints on our choices.

Additionally, in those limited instances when we can choose, we should settle for "good enough" rather than strive for the best, says Barry Schwartz. Given that I am only willing to use about 10% of my brain power on things that don't matter intrinsically to me, "good enough" is actually the best I can manage.