Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
“Keep it simple, stupid” (KISS). It’s a catchy phrase, but what does “simple” mean? Does it mean to make complex topics understandable, or to not make simple communications overly complex, or to not oversimplify complex topics?
Tim Mauer, CFP, author of Simple Money, wrote in a recent issue of his FLIP newsletter that oversimplification often takes the form of dualism.
We can define duality as splitting something into two opposed or contrasted aspects. In essence, it is the state of being divided or polarized, which is rampant in our society at every level of politics, religion, and money. Duality in making financial decisions can often produce costly mistakes.
One reason for this is that our brains love oversimplification. Daniel Kahneman’s Nobel Prize-winning research found that we make most of our decisions in our brain’s limbic system, which is all about the speed and ease of a decision. It loves keeping things simple with duality and loathes complexity, which requires laborious thinking, hard work that happens primarily in the cerebral cortex of our brains.
Mauer explained, “One of the chief methods of oversimplification is seen in our addiction to duality. This or that. One or the other. My way or the highway.”
Financial decisions and duality go hand in hand. “Should I cut spending or increase my income?” “Should I spend for this item or save the money?” “Should I borrow to buy a new car or keep my old beater?”
Upon closer examination, none of these decisions are inherently a simple “either/or.” For example, the polarized decision of “Should I borrow to buy a new car or keep my old beater?” can be expanded to many other options:
- Save monthly an amount equal to the payments on a new car and wait to buy a vehicle.
- Borrow to buy a three-year-old car with low mileage.
- Buy a used car with only the cash you have.
- Reduce the use of your current car by walking and biking more.
- Have a complete diagnostic done and spend money to repair your current car.
- Sell your current car and lease a car long-term.
- Sell your current car and lease short-term (car rental company).
- Sell your current car and use ride share services, carpooling, and public transport.
- Move to a neighborhood where a car isn’t needed.
Not all these choices will be reasonable for you, but they are still possible options. Being presented with only two choices is a financial red flag. There is almost always at least a third choice. With some thinking, you can usually find more options.
Many philosophers have contended there is no such thing as duality, suggesting that every decision starts with three options. Some refer to this as the “law of three.” I once heard author and philosopher Richard Rohr say, “You can't choose sides with three.”
The path to financial wellbeing often begins when we realize that our money scripts can be inherently polarized and conflicted. When we bring awareness and a greater sense of consciousness to the contradictions within us, the fog that often obscures the path to financial wellbeing begins to dissipate.
Non-dualistic thinking is desperately needed in not only personal finance, but also in religion and politics. We have been trained for conflict, to misunderstand and misinterpret one another. We all have PhDs in dualistic thinking. We are so invested in our own opinions, in confirmation bias, that we often cannot see the bigger picture. Our egos often find it hard to admit we may be wrong.
Mastering non-dualistic thinking is essential to the work of transformation that increases our emotional and financial wellbeing.
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM, is founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
Read more articles by Rick Kahler
