As we plod down the path to financial independence and early retirement, we grow more financially savvy every day. We pore over our asset allocations and engage in lengthy debates about things like the value of bonds in the accumulation phase. We keep a stern eye on our expense ratios. We become familiar with diversification of our financial assets as a risk management strategy. We diversify our portfolios by holding a variety of investments in order to minimize the impact any single security can have on the well-being of our portfolio. There is also much talk about diversifying sources of income and the personal finance community worships at the twin altars of side hustles and landlording.
Can these valuable financial lessons be applied to other areas of our lives?
Let us start by asking ourselves: What is more important than money?
If you answered, “Happiness!”, give yourself a pat on the back. If you did not, go directly to jail. Do not pass Go. Do not collect $200.
Can we agree that the increase and preservation of happiness is as worthwhile a goal as growing and protecting your nest egg?
What is in your happiness portfolio? Is it well balanced? Is it diversified?
Your Happiness Portfolio
They say that all work and no play makes Jack a dull boy. It is worse that that. Not only is poor old Jack doomed to an eventual endless purgatory of dullness, Jack has made the grave error of putting all his happiness eggs into a single work basket. One cranky client, and Jack’s day is shot. One asshole manager and his year is in the crapper.
Luckily for us, we are better off than Jack. We have sparkling, alluring personalities marred by not one iota of dullness. In fact, we likely already have more than one thing in our lives that bring us happiness and satisfaction. Here are a few commonly held asset classes in one’s happiness portfolio:
- Your family, immediate and extended, including your pets
- A job that stimulates
- Your circle of friends
Three Fund Portfolio, anyone?
You, unlike dullard Jack, are probably already reaping the benefits of the various asset classes in your portfolio. You have a spat with your spouse in the morning, but then you are awarded a peer bonus at work that afternoon. A customer reams you out because of a bug in your software, but then your toddler climbs into your lap and covers your face in kisses. Your kid throws a screaming tantrum on the floor of the grocery store, but your partner pours you a glass of wine and massages your feet. When humankind swings on your last available nerve, your dog looks up at you like you are god’s gift to the world.
While your family, your job and your friends likely make up the bulk of the asset allocation in your happiness portfolio, you probably hold small positions in other happiness securities like
- Watching the rain come down while you are curled up warm and dry on the couch armed with a steaming cup of coffee and a good book
- Playing a kick-ass game of tennis
- Singing at the top of your lungs (and off-key) on a long car drive
Whatever asset classes you choose to hold in your happiness portfolio, the important lessons are these:
- You must hold happiness assets whose performance is not correlated with one another and
- Your portfolio should be well balanced between all your asset classes.
If, for example, you have only two happiness assets: Your job, which accounts for 20% of your happiness and your spouse, who accounts for the other 80%, then if your spouse runs off with the mailman, the performance of your happiness portfolio is going to be abysmal.
Your financial portfolio could sport a sensible asset allocation of 50% U.S. Stock, 20% International Stock and 30% Bonds, but if in the 50% domestic stock category you held the stock of a single U.S. company, the performance of your portfolio over the long run is going to be disappointing. Diversification is critical for success.
And so it is with your happiness portfolio. Once you identify your major happiness asset classes, you should strive to diversify them.
Our sample, simple 3-fund happiness portfolio had an asset class called Work. For me, for nearly my whole life this has meant my one and only day job. What did this mean for my happiness? When I was being creative at work, and building new things, I was happy. When work turned into an endless drudge of meetings with everyone around me spouting corporate speak, my happiness index took a nosedive.
And then I started writing this blog. Now, when my day job is not scratching my creative itch, I can rely on the blog to do it. And on days when my blog pageviews are more a trickle than a flood, I can seek comfort in the fact that the stuff that I create at work is installed at thousands of customer sites.
Unfortunately, there is no Jack Bogle of Happiness. We don’t have the luxury of passively investing in our happiness streams. Investing in our happiness portfolio takes effort. We need to put in the work if we want the the returns. What do you do when the markets are down? Do you withdraw your money and run for hills? Not you! You grit your teeth, and double down. So must it be with your happiness portfolio. When happiness is in short supply, don’t give in to a life of despondency. Work harder on your existing assets and bust your ass to acquire new ones. Change your job. Make new friends. Fall in love with your wife all over again (or move on to spouse numero dos, if that is what it takes).
Investing in people and relationships is hard work. Investing in ourselves can be even harder. Things worth having are worth the effort though, and happiness is a worthy goal.
Monitoring Your Happiness Portfolio
You track the health of your financial portfolio using spreadsheets or Mint or Personal Capital. Tracking is good because
- It helps you figure out if you are on track to reach your goals
- It helps you spot mistakes, and fix them early
In the absence of a nifty happiness app how is one to track of the performance of one’s happiness portfolio?
The answer is mindfulness (and, of course, spreadsheets. They say the answer to life, the universe and everything is 42. I think it might actually be spreadsheets).
Take the time to think about what is making you happy and what is not. Consciously decide to be happy when a security in your happiness portfolio is performing well. This is where spreadsheets can help with mindfulness. I keep a spreadsheet that I update every night. One of the questions I make myself answer when I update the spreadsheet is whether any of my smaller happiness positions did well on that day. The spreadsheets counts the number of days that the answer to this question is yes. So, if I saw a rainbow that day, I increment the count. If I laughed so hard at something that I squirted my drink out of my nose, I answer yes. I find that updating my spreadsheet every night helps me in two ways:
- I remember and consciously enjoy little things that may otherwise have gone unappreciated. When I take the time to be grateful about them again, I feel happier. And that sets the tone for the next day.
- I like to be able to update my spreadsheet (yes, that is a bit weird. I am aware), and I have found myself searching out happiness opportunities during the day so that I can declare success when I make my update at night. So, if at 3 in the afternoon it dawns on me that I haven’t yet had a happy moment, I try to do something to rectify it. I’ll go talk to a colleague who has a great sense of humour. Or I’ll call a friend for a quick chat, or to make a plan to meet up. The point is that being mindful about the performance of my happiness portfolio has made me actively seek out happiness, and that in turn has made me a happier person.
The Language of your Soul
In all but the most dire of human circumstances, happiness is a choice. It is a choice we must make for ourselves every day. Build your happiness portfolio alongside your financial one. Seek out assets wisely, and diversify.
May your soul never run out of things to say.