Ramit Sethi explains why too many financial choices overwhelm people. He recommends automating your money by funneling income into fixed accounts: a percentage to your 401(k), Roth IRA, long-term savings, and spending. Fewer decisions means less stress.
There are right now an infinite number of things you could do with your money. You could start your Roth ira, pay off your debt, optimize your asset allocation. Don't spend money on lattes. Should you go out to Vegas for the weekend with your friends? And there's a million choices and we tend to not do anything because it's overwhelming. There's a great book on this called the Paradox of Choice. What I like to do is reduce the number of choices, build up a personal finance infrastructure that automates my money and then gives me one or two choices. My one big choice really with my money is get as much money as I can funneled into the front end, because all the rest happens automatically. For every $100 I put at the top of my funnel, $5 will go to my 401k, $10 to my Roth, 10 to my long term savings account, and then the rest will come down to have me spend it on my disposable income. Those are just made up numbers. But you see that it doesn't involve me paying off bills every month and stuff that happens automatically.
