Dear Financial Samurais,
You might think FinancialSamurai.com is all about making more money, but in reality, my number one goal is to figure out how to use money to maximize happiness. I’ve made terrible money as a McDonald’s burger flipper and I’ve also made a lot of money as a financier, and I can emphatically tell you that my happiness range has stayed in a pretty tight band no matter the income.
So long as you are making progress in whatever you do, you’ll feel happy. As soon as you start slowing down or going in reverse, the happiness range takes a downtick. Therefore, what I’ve realized is that achieving more happiness is all about managing expectations. You should manage your own expectations, your expectations for your kids, and your boss’s expectations of you. It’s also important to manage your parent’s expectations and your spouse’s expectations.
I’ve tried to demonstrate the importance of managing expectations with two posts:
The Harvard Nobody post isn’t to insult our smartest and most privileged members of society. The post is meant to make students and parents think about the incredible expectations that come from attending an elite school and the unhappiness that ensues when you don’t end up doing anything more special than someone who didn’t attend an elite school. The post is also intended to challenge academically gifted working individuals to not be afraid to do something more meaningful beyond just chasing money and prestige. Eventually, you will start feeling an emptiness inside.
The Early Retiree Mistakes post highlights the perpetual battle between fear, greed, and contentment when it comes to investing. One commenter was unhappy with the post, expecting financial devastation instead of the fact that I missed out on $500,000+ in gains during a three year stretch between 2012-2014. So I explained the situation with this reply:
There are two people who start off with $100. Peter buys one stock that goes up 10%, and Nico buys nothing. Peter is now $10 richer than Nico. Nico feels bad he missed out.
In another scenario, Peter buys one stock that goes up 20% and Nico buys one stock that goes up 10%. Peter is now $10 richer than Nico. Nico feels bad he’s not as rich as Peter.
In the final scenario, Peter buys one stock that goes nowhere. And Nico buys one stock that goes down 10%. Peter is now $10 richer than Nico. Nico wishes he just sat on cash (scenario 1).
In all scenarios, they can both live off one dollar a year and they both have less than 50 years to live. In other words, they both have more than enough to be happy.
Hope these examples help explain the relativity of finance, and the great fortune most of us have for living in a developed country like the US or Canada. I know I’m grateful. It just hasn’t stopped me from fully eradicating FOMO from my investing life.
I’m not hear to tell you what you can and cannot do with your lives. I’m only providing my perspectives and the perspectives of hundreds of other people who share with me their stories due to my platform.
Create greater happiness by under-promising and over-delivering!
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