Saving Time on Personal Finance

It’s no secret that most people don’t enjoy thinking about managing money. It’s boring at best, anxiety-inducing at worst. These views aren’t surprising. When interviewing people to build WorthiQ, the vast majority of respondents had little desire to increase their time spent managing money. Still, we can’t avoid money management entirely. Many things we want in life cost money, so money management is life management.

Since personal finance sucks but is unavoidable, we have to do the next best thing: minimize pain and maximize results. If time spent on finance is painful, then we have to spend as little time as possible on it without shooting ourselves in the foot.

In this post, we’ll dive deep into the strategy of personal finance, more specifically the strategy of minimizing time while maximizing results. This post is helpful for people who have trouble finding the motivation for parts or even all of personal finance. It focuses on how a small investment of time in the right places can make a big impact. If you’re more of a try-hard and are happy spending hours on personal finance, then the companion article might be a better fit for you.

Loosely Related Activities

To get our bearings straight, it helps to remind ourselves what personal finance looks like in practice. The term “personal finance” might mean something narrow to you–budgeting, investing, etc.--- but it’s really an umbrella term which covers a lot of things.

More precisely, it groups loosely related activities that have closely related outcomes to achieve a shared broader goal. The easiest part is the broader goal: money gets us what we want, so we need to manage it well.

However, the other two parts are a little trickier.

Closely related outcomes are a little easier to understand. Outcomes are the results of what we do to get money. A few examples of outcomes are making more money, spending less money, investing more money, and so on. Think of each outcome as a stepping stone. Higher income means you can save more. Saving more means you can spend or invest more over time. Having more money means you can spend more on things you want. These stepping stones are deeply connected, meaning that doing one step well makes the next step easier.

However, while outcomes are related, the same can’t be said to how we achieve these outcomes. Put in simple terms, knowing how to make money doesn’t mean you know how to spend it well, and so on.

This dynamic makes it entirely possible to put an incredible amount of time into one area of personal finance while achieving terrible overall results. Most people do a small form of this, putting extra time on parts of personal finance they enjoy while ignoring the parts they don’t, but extreme examples are what lead to a guest feature on a Caleb Hammer video. These are people who are trying to earn their way out of poor spending habits or save their way out of horrible investment choices, and so on.

It’s this dynamic – loosely related activities, closely related outcomes – that we’re battling against when trying to spend time strategically. Especially for people who hate thinking about money, we want to keep our life in order without diving so deep that we hurt other areas of our personal finance or life in general.

Along those lines, there are three principles that can help:

1. Go wide before going deep
2. Regularly calculate high-level metrics
3. Go from big to small

Go Wide

The first principle is a logical consequence of how personal finance works. It’s always better to not suck at all areas of personal finance than it is to be extremely good at one area. As such, spreading your attention widely is the most logical approach.

Broadly speaking, personal finance can be split into the four areas: career, lifestyle, milestones, and retirement. If you have a partner, you can add a fifth area which is how you work together with your partner on money decisions.

By investing a minimal amount of time in each of these areas, you’ll achieve much greater returns for your time spent, if only to confirm that you’re not severely botching something. To be clear, this is not to say that diving deep in one area has no value. On the contrary, it can actually save you lots of money in some cases.

This principle is simply saying that you should check your bases in all areas of personal finance before you dive deep somewhere. A failing area could hamper you much quicker than an exceptional area can help you. Again, we can go back to the countless examples of high-earners who live paycheck to paycheck or diligent savers who end up with nothing due to poor investment decisions.

Doing bad in any area is infinitely worse than doing exceptionally well, so make sure you’re not doing bad by going wide first and see how you’re doing across the board.

Track High-Level Metrics

But what outcomes are tied to each of these areas? Does it take enormous effort to just see how well you’re doing in the first place?

On one hand, personal finance is personal. Beyond avoiding obvious traps like credit card debt, determining how you’re doing is up to you.

On the other hand, you can make it easier on yourself by knowing what to track. While personal finance can be extremely complex in certain ways, it can still be summarized to a few key metrics that provide you a high level view of how you’re doing.

While there are many ways to slice this, here are the basic metrics that I would track:

| Area | Metrics to Track | Feelings to Track |
| ---- | ---- | ---- |
| Career | Income percentile vs. where you live | Career satisfaction |
| Lifestyle | Post-tax savings rate | Spending anxiety and guilt |
| Milestones | Liquid cash, saving progress toward milestones | Milestone ambitions and anxiety |
| Retirement | Investment performance, amount invested | Desired retirement timeline |
| Partner | Time and energy spent managing money respectively, changes in relationship status | Satisfaction with partner’s money habits |
With apps getting more convenient every day, it should only take less than an hour to update all these figures. If you check this once every few months or even once or twice a year, you can at least know how you stand. Some of the quantitative figures even come with nifty rules of thumb that can help you gauge if you’re doing OK. For example, people generally recommend saving at least 15% of your post-tax income. Are you doing that? You can check.

Overall, to stay on top of your finances, we’re looking at a few hours of work, spread out an hour at a time, over a whole year. All this to avoid accidentally botching a key part of your finances. WorthIQ makes it easier, but you can certainly do it on your own.

Go Big

Let’s say now that you’ve gone through the process of staying on top of your finances, and now, you’ve found somewhere to improve. Maybe it was a sore spot which has been nagging you for a while. Maybe you’re just bored and want something to do. Whatever the case, remember that our goal is still to spend as little time as possible, not getting lost in the weeds.

There are plenty of time-saving tips written elsewhere, things like automating your finances, simplifying your accounts, and so on. These things are all just tactics though. They can be prioritized to what’s actually a problem.

Sadly, we often don’t do that. We focus on what’s in front of us rather than what’s most important. Consider the price difference of a coffee vs. a car. We often complain about how much a coffee costs, but it costs 1000x or 10000x less than a car. We usually don’t spend 1000x or 10000x time worrying about how much our car costs though.

It’s not that we shouldn’t spend time on small decisions– it’s that we don’t spend enough time on the big ones. With limited time, spending time on big decisions should come at the expense of small decisions. Put into practice, this may look like ordering out more or paying for more day-to-day conveniences while planning for a wedding or getting ready to buy a house. If that extra bandwidth can translate to saving 10-20% on these milestones (or being 10-20% more satisfied for the same price), you likely end up saving way more than trying to penny pinch everything.

This principle can be applied to all areas of personal finance – tracking one stock every day rather than minding your whole portfolio, getting annoyed at the bonus you didn’t get vs. planning your career long-term, and so on. Put the big stuff first, and you’ll be further along than most when it comes to your finances.

Final Thoughts

For many of us, personal finance is a necessary evil. To make it less painful for ourselves, we have to approach how we spend our time strategically. That means recognizing how personal finance works and not just jumping into where we feel comfortable. Go wide, track high-level metrics, and go big–with these three principles, you’ll have a good starting point.

As a final note, in your quest to spend as little time as possible on personal finance, you may find (or have) a partner who wants you to get real deep in the weeds with them. Tell them to read the companion article and come back. You’ll both be much happier for it.