Millionaire Next Door podcast episode
Have you ever felt overwhelmed and as if you don’t have enough time? Today we’re going to look at the book “Essentialism” by Greg Mckeown and discuss how to have a systematic approach to determining our highest priorities. Today we’ll focus on exploring as many options as possible and then have a strict filter for what sticks.
The book “Essentialism” had a big impact on me when I first read it and is one I came back to time and time again. We all struggle to find time in the day, so the idea that we would focus on only the essential activities really appealed to me.
We live in a world where everyone thinks they can do everything. The reality is we can’t.
Success in other areas, apart from your “main” thing or your true goals, could distract us from what we believe is essential in our life. So, that leads us to the question: what is essentialism?
What is essentialism?
As described by the book, essentialism is “a disciplined, systematic approach for determining where our highest point of contribution lies, then making execution of those things almost effortless.”
It is consistently asking, what are the right activities to be investing my time into?
If you don’t prioritize your life, someone else will.
Too often in life, we allow the busyness of daily life to come after us and say yes after yes after yes. Not only does this posture lead to overwhelm, it leads to us not giving our best effort to the things that we truly value.
We have choices, daily
We all have choices. Whether it be where to go eat, what toothpaste to use, what car to drive, all of these choices feel important in the moment.
The reality is, almost none of them truly are.
How do your daily food choices contribute to your long-term goals? If they’re health goals, then they can. But one day’s choice will not make a difference. We need to focus on what’s truly important, putting our energy and focus on that.
You cannot overestimate the unimportance of practically everything. – John Maxwell
We treat everything in life as equal, when it is very much not. We devote time to things we truly don’t value.
So what does this mean for us? There are 2 things to focus on:
- we need to do better at discerning what’s important, and
- we need to explore a lot of options.
Discerning what’s important
If almost everything is unimportant, we need to ask the question: what is truly important?
Without having the answer to that question, it’s hard to move forward and make better decisions. You can only know that answer if you’ve reflected and set personal goals.
Next, we need to acknowledge that some things we invest time in are low-return areas. That person you’ve mentored, the hustle that’s just not working. We need to discern what is providing us with the best return and focus on those things (obviously only if they’re going towards your goals).
We need to also embrace that less is better. It’s okay to do less. Doing less means you can focus more.
Doing less means you can divert all your energy and compound the results of the few.
What’s better: doing okay at 10 things or being elite at 1?
Explore your options
I’ll admit, this seems counterintuitive. You’re telling me to simultaneously cut and explore more?
Yes, I absolutely am. Or more accurately, Greg Mckeown is.
If you cut and have less, it allows room to explore more. When you’re an essentialist, exploring options is actually justified because the investment could be repaid tenfold.
When you focus on the few, the investment into exploring means that when you commit you really commit because you know for sure what’s important to you.
Greg introduces the idea of the 90 percent rule. Anything that is lower than 90 out of 100 is automatically ruled out.
If it’s not a clear yes, it’s a no.
This is the power of the extreme.
By setting extremely high criteria, you’re able to explore and then say no again and again.
When something finally passes the criteria, that means it’s really good. Like really, really good. Like so good you can bet the farm.
This more selective criteria, which means you’re focusing on the cream-of-the-crop values and endeavors, leads to better outcomes.
The combination of these two ideas is like bread and butter. Peanut butter and jelly. Santa and reindeer. You get the point.
What does this mean for my money?
Dig in and explore a lot of investing options
Now, don’t let this be an excuse to not start. You need to start first, then worry about exploring.
Put your money in index funds, then explore to your heart’s content. This exploration will allow you to scratch the itches you have.
I’d also argue it’d help you see what’s good: just buy and hold, baby.
- Keep it simple; we talked about it in the Millionaire Next Door episode, it’s hard to beat the market. What’s easier:
- Daily having to monitor the market for the trades you’re sitting in?
- Quarterly having to research your companies
- Or one time finding some good ETFs or index funds and letting it ride?
- The minuscule potential returns above the norm are not worth your time, and it’s likely you won’t even outpace a Total Stock Market or ETF
Research your purchases before you buy
We’ve all bought duds for products. The ones that we knew we should return but didn’t. The ones that broke on day 31.
By using these principles of research and discern, we’re going to do a few things different:
- You will not waste as much money on bad products
- You only buy it once, instead of buying bad first and good second
- You keep it longer, as the product will last
Using the 90 percent rule, if something is not a clear yes, it’s a clear no.
That shirt, dress, shoes, or toy you’re hemming and hawing about? Walk away. If you have to think about it in the store, you won’t touch it when you get home.
Closing thoughts: it doesn’t have to be hard
We make life so hard. By following the tenets of essentialism, we can make it so much easier.
Learning how to say no and discern the good from the great, your results can increase tenfold.
Making these decisions today will not only help you now, but they help your future.
Protect your future self. Focus on the essential today.