We are always in search of a shortcut. In perennial search of course or investment which can give us quick results. Somehow, the more complex an idea is, the more we are attracted to it. What we often forget is the truth: the power of a simple idea and executing on it.
Keep it simple, stupid
Simple ideas are boring. Who wants to do 50 push-ups a day or invest 10% of their income for the long term. Wouldn’t that be unsexy? If you do the basics right, you will most probably get 80% of the results. The power of simple ideas is rarely understood. A popular example of the same is the Pareto Principle.
The Pareto Principle is the observation (not law) that most things in life are not distributed evenly. It can mean all of the following things:
- 20% of the input creates 80% of the result
- 20% of the customers create 80% of the revenue
- 20% of the bugs cause 80% of the crashes
- 20% of the features cause 80% of the usage
- And on and on…
You want to be fit?
Do you want to get fit? Do 50 push-ups, 50 squats and 20 pulls ups daily over a six month period will get you in shape (along with a good diet). Instead, you want a plan created by a personal trainer and a nutritionist and gym membership which costs a lot of money. They will work but why not try out the free bodyweight plan described above for six months? You may not get to six-packs but will get 80% towards your goal of having a fit body. If you can stick to this plan for 6 months, be my guest and go ahead with the gym membership. You have proven that you can remain disciplined over a long period of time and execute your plan.
You want to build an emergency fund?
There are many complex strategies in the world of finance. Stocks, dividends, mutual funds – what to choose and how to begin? That stops us from starting at all. If you stand back and think for a moment – what is the most simple and basic idea of in all of personal finance?
Spend less than you earn.
This powerful simple idea will keep you out of debt, build you a nice emergency fund for rainy days. Let’s say, you save 10% of your income for emergencies. Put it in a bank fixed deposit. The goal here is building a fund for emergency and not investment returns. In 10 months, you will have your monthly income set aside for an emergency. In 30 months, you will have almost 3 times your monthly income in your emergency fund. You are now cushioned from an unexpected emergency. Should this be your entire wealth-building strategy – No. This simple idea should be a part of your wealth-building strategy, especially when you are a beginner.
Do you want to read more books?
There are just 66 years between the Wright brothers achieving flight and man landing on the moon. Knowledge stacks. All you have to do is put in the work to acquire it. And once you have it, for the love of God, put it to use. – Tom Bilyeu
Everybody wants to read more books, increase their income but don’t usually have the time. Why not begin with reading 10 pages a day. People do not understand the power of simple ideas. As Tom says in the above tweet, knowledge stacks. It is a simple idea, but a very powerful one.
Why do these simple ideas work?
Simple ideas work. But why? They work because of compounding.
Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it. – Albert Einstein
We think that compound interest works only in finance. Not true. It works in all areas of your life. Read 10 pages of a book daily, you can finish 18-20 200 page books in a year. Apply the knowledge gained and you life will change for the better.
Implement these simple ideas in life. Experience the power of simple ideas in life.