FREE NEWSLETTER
I’VE SPENT MUCH OF MY life trying to better understand the world, especially the financial world. But I wonder whether I should have spent more of that time trying to better understand myself.
Why do some financial situations scare us, while others leave us unperturbed? Why do we spend time and money in ways we later regret? Why do we find our bad habits so difficult to change? Why do we admire some folks, while being jealous of others?
These questions are better directed to a psychologist than some aging, ink-stained wretch. Still, it’s questions like these that have fascinated me in recent years. I can’t claim to have the answers—but I have some sense for why they’re difficult to answer.
It takes years to know ourselves. It’s embarrassing to think back on the self-confidence of my 20-something self. I was so sure I knew what I wanted and that my way was the right one.
The decades that followed have highlighted how wrong I was. For instance, my instinct is to assume that others have good intentions. While that’s usually the case, it isn’t always. One consequence: I’ve occasionally been taken advantage of by folks I considered friends. Fortunately, while the emotional toll has sometimes been large, the financial cost has been modest.
But perhaps the big danger isn’t the personality traits about which we have some inkling, but rather aspects of our personality that we’re completely clueless about. Others might be able to fill us in on our shortcomings—if we’re humble enough to let them.
So much of who we are is innate, and much of the rest reflects early life experiences. There’s plenty of advice on what we can do to boost our happiness. But even if we followed all this advice, the impact would likely be modest. Why? We all have a happiness set point—an innate predisposition to be more or less happy—and that has a far bigger impact on whether we tend to be happy or not.
Layered on top of our innate personality traits are our life experiences, especially those from early in our lives. In my 20s, when I was raising two children on a junior reporter’s salary and money was in short supply, I remember my panic whenever I was faced with a car or home repair bill. Today, I can easily handle such bills, and yet a major expense can still bring back memories of those panicked moments from four decades ago.
We’re bad at figuring out what will make us happy. Why do we often waste money on things that bring us little happiness? Why are our closets and basements full of possessions we regret buying? We think we know what will make us happy, and yet we’re frequently wrong. My hunch: We go astray because we often spend money based on the influence of others, both past and present.
Bad habits are extraordinarily hard to break. It’s said that good and bad habits compound, and I believe it. My good habits—the discipline to exercise every day and to block out distractions so I can focus on the work I need to get done—have become so much a part of me that I can’t imagine changing.
What about my bad habits? That’s another matter entirely. For instance, at a restaurant, I’ll order an entrée simply because it comes with French fries, even if there’s another entrée I prefer—and even though I know I shouldn’t be eating fries. I’m especially susceptible to ordering the wrong thing if I’ve had a rough day and my “willpower budget” is at a low ebb. The good news: At home, Elaine largely dictates what we eat, and her inclinations are far healthier than mine.
Of course, eating isn’t our only outlet if we’re at a low ebb. Plenty of folks find other damaging ways to cheer themselves up, whether it’s spending too much, having a few drinks, buying lottery tickets or even making a few trades in their portfolio.
Life’s randomness is hard to accept. Why do some folks struggle financially their entire life, while others fly up the corporate ladder at fast-growing companies with booming share prices? Often, it’s easy to see the role of luck in the suffering and successes of others, so we’d be wise to assume that we, too, aren’t fully in control of our own fate.
Focusing on luck may help us to cope with one of life’s least admirable emotions: jealousy. When we think about our successes—financial, career and otherwise—we tend to think not in absolute terms, but about how we’ve done relative to contemporaries, including school friends, neighbors, colleagues and siblings. We’re not bothered by Warren Buffett’s billions. But we’re a little jealous about the college friend who ended up as CEO. Perhaps, however, our friend just had better luck than we did.
Today’s worries are almost always a waste of time, and yet we worry constantly. Many readers will be aware of the hedonic treadmill—our tendency to quickly grow dissatisfied with our latest accomplishment or purchase, and to start striving after something new, confident that this new goal will deliver lasting happiness.
We can think about our worries in the same vein. We finally put our latest fear to rest, only to start fretting about something else. It seems we’re hard-wired to worry, and the moments when we’re completely free of concern are few and far between. This, I assume, was a trait that helped our nomadic ancestors to survive—but I’m not sure it does much for us today, except increasing our unhappiness.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier articles.
Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
Developing realistic expectations is very helpful and then do the things to make these a reality. Failure is to be expected, particularly if one pushes the envelope. The important thing is to learn about oneself and to continue. If life were a running race, it is okay to slow down when one hits a wall, but never, ever stop. I learned that walking from time to time is okay.
“We’re bad at figuring out what will make us happy”.
For a long time, I believed in setting goals and working hard to achieve them. When I did reach those goals, it didn’t feel all that great. Then realized that to be really happy, I must enjoy the journey, not the destination. May be a little too late!
This article is a good way to reflect on my past successes and failures. I review them and I try to learn my lessons. Hopefully, I won’t repeat my failures. I think life as a whole has