Minus the Minutia: the Power of Automation
by Clayton Daniel, Financial Commentator
Around twelve months ago I surveyed some 25 – 40 year olds as to what they wanted out of life and what they wanted to avoid. I expected the results to reflect everything I had ever read about Gen X and Y wanting to be rich, retire early on a passive income, kick up the heels or go travelling around the world. The results however did not reflect that expectation.
Instead of early retirement, people wanted job satisfaction. Instead of wanting more money, people wanted more time. Instead of perpetual travel, people wanted something to show for their hard work.
“[Baby boomers] were taught safety and security was purchased with the ownership of assets…..we have now seen the concept of ownership go from the domain of security, to the realm of responsibility”
I was amazed at the findings. Had I been lied to, or had no one simply done what I had done – gone to the demographic and asked? What I realised is that over the last twenty years, a lot has changed. In fact, that is an understatement, everything has changed.
The baby boomers grew up with parents from a war torn era. They were taught safety and security was purchased with the ownership of assets. And that’s what the baby boomers did. They bought. From homes to cars to fancy appliances. Ownership guaranteed freedom.
“Ownership takes time, it takes hard work, and it removes instant gratification”
Gen Y on the other hand have grown up in an economy of uninterrupted growth for the last 25 years. Add in the growth of technology, and the boom of the sharing economy, and we have seen the concept of ownership go from the domain of security, to the realm of responsibility. Why own a car when Uber can pick me up from anywhere and take me to anywhere I want to go. I don’t have to find parking, I don’t have to own a depreciating asset, I don’t even need to worry about sobriety. More convenience for a lower cost, where do I sign?
“Our brain is not built to handle so many things competing for our attention”
This idea of access over ownership has been a massive shift in the way we interact with the world. Ownership takes time, it takes hard work, and it removes instant gratification.
And there is so much to be instantly gratified by these days. Whether you Tinder your way through the weekend, Netflix binge your new favourite series, or stream a new album on Spotify, whatever you want these days you can have it. Immediately.
The problem is, these new services comes with a time cost. And despite the amazing complexity of our neo cortex to create fully functioning and (mostly) rational humans, we still haven’t outpaced our 200,000 year history. Put simply, our brain is not built to handle so many things competing for our attention.
Even a couple of hundred years ago it was simply:
a) Is there food?
b) Is there water?
c) Is there shelter?
If all three are checked, you were good.
These days our tick boxes are a lot more complex. Does your boss like you, did you choose the right career path, and is there kale in your green smoothie?
“You adapt, and create shortcuts to get big results from little changes. And my pro tip is automation”
Our brains are so exhausted by these open loop questions, when you add on the fact we are working longer than ever, and filling every other second we aren’t indulging our senses with a social media hit, it’s no wonder some of us are feeling under the pump.
But this is modern day life, you can’t avoid it. And saying ‘let’s go back to the old days when it was better’ is redundant advice. Instead you adapt, and create shortcuts to get big results from little changes. And my pro tip is automation.
“Once we remove ourselves from needing to make every single financial decision, we can free our minds up to focus on what we should be giving attention to”
Research tells us all these distractions and interruptions require us to make decisions every day. And each of these decisions saps you of your ability to make good decisions. It’s called decision fatigue and explains why over the course of a day, your decisions get worse. Judges make worse decisions in the afternoon compared to the morning, people buy useless extras at car dealerships, and we are susceptible to ‘impulse purchases’ at the checkout. Therefore, the lower amount of decisions you make, the higher your ability to make good decisions.
“One of the best things you can do with your money is to set it all up on automation”
So when the results of the survey I conducted came back, I realised what people needed was a way to deal with modern life. With so many things competing for your attention, how is it possible to make the best decisions? What I found was the more decisions were set to automation in the background, the better the results were for every other part of life.
Once we remove ourselves from needing to make every single financial decision, we can free our minds up to focus on what we should be giving our attention to: performing better at our jobs, making time with family, and finding new experiences.
“[Raiz] hits the spot on two fronts, access and automation”
After implementing this theory for a few years and seeing the results, I am convinced; one of the best things you can do with your money is to set it all up on automation. I don’t know when my rent is paid, how much I have for my next holiday to New York in August, or whether my long term asset base is getting larger, all I know is it is. Why? I don’t control it. It’s all on automation.
In no small way, this is why Raiz has been as successful as it has been. It hits the spot on two fronts, access and automation. It’s easy for me to see my investments as I can access them right on my phone, and secondly I don’t have to do anything, the money is deposited into my account with every purchase.
Avoid decision fatigue and outsource to automation. Go spend your time on things that matter.
