I meet a lot of unhappy people. Every month I speak to hundreds of investors. It amazes me that so many of them think having more money will dramatically change their quality of life. In 2010 I read a study conducted by two researchers from Princeton University— Angus Deaton (an economist) and Daniel Kahneman (a psychologist). Their study won a Nobel Prize for Economics. They polled 450,000 Americans and asked them how they felt the previous day and whether they were living the best possible life for them. They were also asked about their annual income.
Interestingly, individuals who make less than $75,000 a year felt more ground down by the by all of the problems they had. For those making north of $75,000 a year, individual temperament and life circumstances had a bigger impact on their happiness than insolvency. In other words, you have enough to cover a comfortable survival at $75k/year. You can take a vacation, afford a second car, save some money. You aren’t concerned about not eating.
This study blew me away. It reinforced what I had personally been finding as an earner whose income had doubled. When I did my first flip I was making $40,000 a year. To get $50,000 in profits from one deal changed my life. It instantly doubled my income and created all sorts of new possibilities. However, I found diminishing returns as my income increased. When I doubled my income from $80,000 to $160,000 and then to $320,000 and then to $640,000, I found that having more money didn’t make as much of an impact in my life. Sure I took a better vacation, but the better vacation didn’t add twice the happiness to my life. Spending a week in Monaco versus a week in Las Vegas, while cool, isn’t worth four times the happiness. Driving a $50,000 car versus a $25,000 car is only twice as cool until the new car smell wears off. And wearing a $5,000 watch instead of a $400 watch doesn’t make me look twelve times as handsome or successful.
I thought a lot about this study. I found over and over again that the people I meet who are the happiest are people whose life has balance. From this awareness, I came up with my list of “Five Fs” that I use as my own personal “happiness roadmap.” I have found that when I meet someone unhappy, I am able to trace their unhappiness back to where their life first fell out of balance. I will use a personal example for each of the Five Fs to illustrate why they are meaningful to me. I have listed them in order of what I think their priority should be in our lives.
FAITH
To me, our “faith” is the collection of values, ideals, ethics, and understanding of god which dictates how we live our life. We make decisions every day about every aspect of our life and filter it through our “faith.” Each person should have a statement which encompasses his or her faith. For example,
“Faith to me is encompassed by Judeo Christian Values as outlined in the Bible and supported by the values and laws held by the founding fathers and outlined in our Constitution.”
Until you have a personal framework outlining and defining your faith, you run the risk of making decisions in the moment and with emotion. This is a recipe for disaster and will always lead to failure. When teaching high school, I would frequently catch my students trying to cheat on vocabulary quizzes in Spanish class. Their initial reaction at getting caught was embarrassment and sometimes horror of what I would think of them. I used to say, “I’m not offended because I don’t think you were trying to cheat me as much as you were simply trying to cheat to help yourself.”
I have had employees and partners lie, cheat, and steal. Human nature is that we will make mistakes. Setting an honest framework for what your faith is and how it’s defined is critical to help you make decisions you can live with and will contribute to great successes.
FAMILY & FRIENDS
Making money at the expense of family time and friend time is one of the most common balance violations. When my two boys were little, I moved us to Idaho so they could be closer to their mother. They are my “why”—the reason I have spent hundreds of thousands of dollars and thousands of hours commuting from all over the world in order to get back home to spend time with them. We don’t value what we haven’t sacrificed for, and nothing makes me as happy as being with them and seeing their lives unfold.
If there is one area I have neglected over the years it has been maintaining good friendships. I think many of us have proximity friends—people we spend time with because it’s easy. They are our neighbors, or our kids play sports together, or we go to the same church. But I think the truest friendships are personal connections that exceed what may have initially brought us together (proximity) and have the strength to jump decades of absences and potentially hundreds or thousands of miles of physical distance.
Someone is a true friend when I am comfortable with them seeing who I am. We each have different aspects of our personality we trot out for different situations: we have our party-persona, work-persona, mommy/daddy-persona, extended-family-Thanksgiving-persona…the list goes on and on. In my mind, a true friend has seen every persona and still wants to be around you, still values you in their lives because you enhance it. I recognize I have a very narrow definition of friendship, but some of the richest and happiest experiences of my life have been an outgrowth of sacrifice for family and stripped-down humility with friends. These relationships add the vitality, color, and context that make life worth living.
FITNESS
I constantly read articles about obesity being a plague in American culture. We as a nation have never been less healthy, nor have we ever had better access to health care, or access to understanding the best care for our bodies. If heart disease is the number one killer in our society, then we should be required to have a prescription to supersize our meal at the drive through!
I have found that in order to find balance in my life when it comes to fitness, I have to deliberately structure exercise and healthy food into my daily life. I work out first thing in the morning because otherwise I will find a reason to put it off. I only allow myself two “cheat days” a week to indulge in the pizza, sweets, cheeseburgers, and other trans-fat-full food I love. Otherwise I head to the juicing store and buy the kale, broccoli, and spinach filled drinks I hate but that make my body feel so great. When I take care of my body, not only am I able to keep a ridiculous work and travel schedule, but I feel like I’m 42 going on 32. I can honestly say I am healthier now than I was ten years ago. It is a trend I plan to continue. Letting your health and fitness get out of balance is a mistake that has tragic implications.
FINANCES
I want to do a reality show where I follow people around who say they “don’t have enough time,” or look at the finances of those that complain they “don’t have enough money,” and show them all of their blind spots. I have built a $100MM business in less than 20 years. I don’t have many blind spots around either of these two issues, but I have learned to be patient with those who are still struggling.
This brings up one truth about finances. If you want to know what your financial values are, make a list of your expenses in order of easiest to hardest to give up. You will be surprised about what you value. If you spend 100% of your money every month, then a retirement isn’t something you care about at all. If that isn’t true, then why aren’t you putting your money where you think your values are? Mastering these principles is infinitely more important than simply making MORE money or more PASSIVE money.
FUN
Outside of visiting family on holidays, I went years and years without ever taking a vacation. I used this as an entrepreneurial “badge” of sorts, one that I would hold up to W2s and other business owners to show them how committed I was to my business and its growth. In hindsight, this was one of the stupidest things I ever could have done. Fast forward fifteen years later, I try and take a vacation and go somewhere fun every six weeks. It may be for just a day or two, but I have been traveling the world and have learned to embrace everything from a New Year’s Eve party in Edinburg, Scotland, to a Mexican cruise with my boys (where I got third place in the hairy chest contest, by the way,) to touring Paris on foot with a GPS and Google translate on my smartphone.
Fun needs to be planned into your life. Fun helps center you and gives you a chance to step back and think about your life from a more elevated perspective. Every year my partners and I take our employees somewhere “fun.” We have been to Mexico, we have done Bourbon Street on Halloween, and we have rented a huge cabin and retreated as a group to play games and enjoy great food and each other’s company. Admittedly, I have placed fun last on the list in terms of priority, but it takes only a couple of drops of jalapeno to spice up the whole dish, and you should be incorporating more fun into your life if you truly want.
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