Three is a great number for entrepreneurs, speakers, writers, and, well, humans in general. Three points are easy to remember. They flow in a sentence without being too simple or complex. In my work as a financial planner, I have found that clients are more able to successfully achieve at least one of their goals if we keep it to three.
In my spare time, I like to make stuff out of wood, and recently, I've delved into the world of vernacular stick chairs. In doing a little research, I have discovered that these cool chairs originated from simple, low, three-legged “creep” stools. Over time, these stools grew chair backs and an extra leg, but many of the original chairs were three-legged as well and incredibly stable.
And, if you lived in a dirt-floored hut on the side of a Welsh hillside, three legs were actually MORE stable than four due to simple geometric reasons.
Okay, back to my point, which is this: three legs are always better than one or two. Four legs are fine, but past that, things get a little ridiculous.
The same is true in life, business, and finances. I see two primary mistakes when it comes to personal financial success. One is tunnel vision, and the other is too many priorities. Both will get you in trouble in a hurry.
We focus too much on one priority, and the rest suffers. Allocating too much money to retirement will lead to cash shortages. Focus too much on cash, and inflation wins. Over-allocate to a single asset (pick any asset), and you create concentration risk.
Think in 3’s in order to keep things more balanced. Imagine your goals and your investments as a three-legged stool with legs of roughly equal length.
Too many goals will lead to failure in much the same way. The complexity of a financial plan increases exponentially as the number of your goals increases. Life can be challenging enough as it is, so why make things more difficult? Decide what's really important and focus just on that. I promise it's probably right around three goals, give or take zero. Give it a try, and you’ll see what I mean.
Fewer priorities lead to better outcomes. Our job as financial planners is to create an elegant, achievable structure from your primary goals. Our Wealth Stack scorecard is our primary tool for evaluating where you stand and how to get where you want to go. It forces tradeoffs, eliminates noise, and creates discipline. And guess what? The Wealth Stack focuses on three main categories, not twenty.
In your business, your personal life, and your finances, use the power of three to drive success, and you won't regret it. Our lives are every bit as imperfect as the dirt floor of a Welsh cottage.
Those are my thoughts,
Rob Schulz, CFP®