Walking the Tightrope of Money and Expectations
Happiness equals reality minus expectations
Life is shaped by expectations. So much so our expectations ultimately determine our happiness. Life is lived in a relative manner and it is a constant evaluation of how we did relative to our expectations.
Let me explain.
Richard Koch, the author of the 80/20 principle, was recently on The Tim Ferriss Show. In one of the parts, they discuss one of the hottest topics today. Happiness.
He began to describe a story of a friend who seemingly had everything. Good upbringing, financially stable, entered and exited a successful company, but everything was not as it appeared.
“I know someone who was incredibly miserable for a very long time, and why was he miserable? This person was miserable because he grew up in a very well-off, upper middle class family. He said he was born with a silver spoon in his mouth, and he expected that life would carry on being easy. And of course, when he left home and had to earn a living, he discovered that actually things were very difficult.
Now, things were not quite as difficult as he imagined they were. I mean, for example, he started a very, very successful business and he ran that business for six years and made a lot of money from selling it. So when I was talking to this chap, who I’ll call Alexander, “Alexander,” I said, “You must have got a degree of self-confidence and good feeling from your experience in starting and running and selling this business.” And he said to me, “You must be joking. Those six years were years of high anxiety. I was constantly firefighting. It seemed so difficult to me. It seemed so difficult.” And I said to him, “Well, it didn’t seem difficult observing it. What was the…” and then he said, “Well actually, it was because I expected things to be easy.”
Life is all about happiness and expectations. Moving through life with the expectation that life will forever be easy is both naive and wrong. Naive in the sense that everyone faces challenges at some point in life, a life of none will be a life of very little fulfillment. Wrong in the sense that life is inherently difficult in some regard for everyone that is how the world works.
Happiness and expectations are deeply intertwined as your happiness is a derivative of your expectations. Expect life to be easy and it was difficult, unhappiness.
Get a 94 on a test but expect to get a 100. Unhappy.
Receive a job promotion today when it was expected six months from now. Happy.
Expect your team to be in contention for the division crown and playoffs but they are 16 games below .500 and 8 games out of first. Unhappy.
Sports Teams and Expectations
The Chicago White Sox are 16 games below .500 and 8 games out of first. They had the expectation of contending for the division and being just as good, if not better, than both the Minnesota Twins and Cleveland Indians, their division rivals. However, they are now 15 games below .500 and it has been largely miserable.
The grim state of the team was encapsulated quite well by their shortstop Tim Anderson to former teammate Jose Abreu after reaching base against the Houston Astros on May 14, 2023.
Not great. It has been a continual series of disappointments for the White Sox. The expectations way too high and failures compounding on each other. The expectations have determined the happiness of the team. A team seemingly thought to be good but is now an objective failure. A team who failed to satisfy the expectations.
On the other side of the coin is the Cincinnati Reds. A team projected to be woefully miserable but now, the best team in the division. A team projected for 65.5 wins but already at 50 and it is only the All-Star Break. The city is elated and the cheapest ticket when the Braves came to town a few weeks ago was $41 to not only stand but have an obstructed view. Who would have thought.
What set the level of pure euphoria for the city of Cincinnati was one of zero expectations. Expectations to be one of the worst in the league. A reasonable one at that with one of the smallest payrolls in the league. Far succeeding the expectations and thus reaching happiness. This is not a case of setting low expectations, either. Low expectations will result in a life of not fulfilling your potential.
Setting expectations is a dangerous game but they are a necessary one at that. A life of zero expectations is one of little fulfillment. We are here to feel fulfilled. Success in life is a combination of fulfillment and liberation. We get fulfillment by reaching and surpassing the expectations set forth.
In setting those expectations, it is a balancing act of trying to remain balanced and teeter carefully in the middle. It is a tightrope we must walk but lean too far one way and we could be in dire straits. We must dance along the tightrope in all areas of life, especially money.
The Tightrope of Money and Expectations
In recent years, the expectation for most is to retire early. The Financial Independence Retire Early (FIRE) method has become largely popularized and has occupied many forums, social media, etc. The FIRE method is the key to the door of retiring early, for some.
It is built on the idea of saving up to 70% of annualized income, usually at least 50%, and then living off small withdrawals, say 3-4% per year, from the accumulated funds upon retirement. It is a method that requires sacrifices along the way as saving at that rate isn’t feasible unless something is relinquished. For every give, there is a take.
The expectation upon retirement is a life of freedom. Free of constraints of the corporate world, free of the mundane 9-5, and free to do as you please. All at an earlier age. An age in which you are still deemed young. Those are the expectations at least but as we know, the expectations don’t always jive with reality.
Unfortunately, some find that out the hard way. The FIRE method, like anything in life, requires sacrifices. However, the sacrifices come at the cost of our lifestyles.
A night spent at home to save for an early retirement is a night missed out to strengthen the connection with friends and family. A trip with friends to Europe avoided to save for early retirement is a trip of missed fulfillment to not only spend invaluable time with friends but to see culture, places, and food you may have never experienced before.
It is important to understand the expectations we have set forth in this world, especially with money. We are consumed by money and our money expectations largely dictate our lives. Money makes the world go round and money determines how we can live. Money determines the trips we can take. Money determines the food we can eat, and the clothes we can buy. Money is kind of a big deal.
Understand the expectations set forth and thus what those expectations require. It is a fault to set forth an expectation that is ultimately too high because you don’t fully grasp the nature of it.
A $550,000 salary is certainly nothing to sneeze at but a $550,000 salary while aggressively saving for retirement carries large requirements and has preconceived notions attached. Living a life where you don’t fully comprehend the expectations set forth with money is a dangerous one. This is not a case for or against the FIRE method rather it is a case to understand the beliefs, assumptions, and expectations set forth financially by you.
Parting Words
Money plays a role in happiness. How big of a role is ultimately determined by your expectations. If your expectations are growing faster than your money, you will always be disappointed with what you have. Be realistic. Minimize the gap between expectations and reality. Understand what your goals for income, money, salary, etc. truly mean. Your income should never double and then your expectations quadruple. A life best lived is a life of happiness and a life of happiness is one in which expectations meet reality, even with money.
Thanks for reading.
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