Hitting Pause on the Hedonic Treadmill

One of the most important parts of surgery occurs away from the operating table. Before the procedure begins, the surgical team takes a timeout.

A bulletin from the American College of Surgeons describes it as “an immediate pause… to confirm the correct patient, procedure and site.” This calculated pause has been shown to significantly improve patient care and the surgical team’s performance.

The odds of a successful surgery increase with this one simple thing. A. Pause.

The pause is as much as a surgeon’s tool as a scalpel. And, if a pause can do that in the urgent, high-stakes environment of the operating room, what can it do in our financial lives?

Most of us have had those if only thoughts: if only I had that new car or got a job promotion or moved to a bigger house, I would be happy. Only once that something was attained, the happiness didn’t last or wasn’t as intense as hoped.

So, we direct our time, money and energy toward accumulating even more. And a lot of financial decisions then are made in motion as we chase those bites of happiness.

It’s the hedonic treadmill, the downsides of which can leave us both literally and figuratively poor.

Though we are hardwired to seek forms of gratification, we are not condemned to this forever unsatisfying cycle. With a simple pause, it’s possible to step off the hedonic treadmill and pursue happiness without digging yourself into an unsatisfied grave.

Recognizing the hedonic treadmill

The first step is to recognize that you are running in place.

I grew up in a household where money was almost always doing something. A paycheck, a scratch-off lottery ticket, a dollar found on the ground, you name it. All of it was translated to a material good. The mindset was if you want it, you should have it.

For a long time, I felt success was perpetually out of reach, no matter what I accomplished. There was always someone else who earned more and had better stuff than me. It wasn’t until I got married and had children – when life really stopped being about me – that I fully realized I had been chasing all the wrong things.

Psychologists Philip Brickman and Donald Campbell coined the term “hedonic treadmill” to describe the theory people repeatedly return to a static level of well-being, regardless of what experiences and possessions they accrue.

It can lead to a lot of financial pain as you spend money on more and more material items. But that’s not the worst outcome, because you can run the treadmill your whole life without going broke if you have enough money. The upshot is that you spend your entire life never feeling satisfied.

Perhaps it is best summed up by the classic Will Rogers quote: “Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”

Unfortunately, it is not easy to admit when you are one of those people. That’s because of the stories we tell about ourselves, which is the root problem.

The stories we tell

Stories help us make sense of the world. They help us form identities. Except those stories are often wrong.

We tell stories of how achieving or acquiring that one thing would make life perfect. Or, we tell stories of how if something else would have happened in the past then things now would be wonderful.  

We create narratives of how we wish to be seen. The things we buy and the things we do help write that story. For many, it is a fiction.

As Seth Godin puts it in All Marketers Are Liars: “Stories let us lie to ourselves. And those lies satisfy our desires.” Of course, marketers are good at selling us on those stories. For example, in the 1960s, ad men helped create thin and light cigarettes to attract female smokers and make them feel healthy.

Often our stories collide. Yours becomes mine and mine becomes yours. We find ourselves trying to follow another person’s story to “keep up with the Joneses.” Consider a paper from the Federal Reserve Bank of Philadelphia that found neighbors of lottery winners are more likely to go bankrupt.

Ultimately, we tend to think of wealth not in objective terms but in comparison: how much more I have now than previously, how much I think I should have, how it compares to other people, etc. 

To summarize: we tend to tell stories of things as we want them to be rather than as they really are.

Ways to pause the hedonic treadmill

Considering our attraction to stories, it would seem impossible to break free, especially as it impacts our financial lives.

But if we take a moment to pause and examine our stories carefully, then it is possible to see the truth and focus on the things that provide lasting happiness. Here are three ways:

CONTEMPLATION

The workings of the hedonic treadmill become clear when you thoughtfully observe and reflect upon your life. Everything from how you feel about your job to how you feel about money.

A common practice of contemplation is mindfulness meditation. Contrary to popular belief, the goal of meditation isn’t to empty your brain of thoughts. Instead, you accept and investigate your desires to the point they lose their hold on you. This way, you see things as they are without judgement.

Meditation has been scientifically linked to various mental and physical benefits, such as lower stress and improved memory. Research also suggests meditation can improve our financial decision-making, including as a counter against the sunk-cost bias.

A paper published in the Journal of Personality and Social Psychology concluded that the positive emotions generated through loving-kindness meditation – mentally sending kind thoughts to others – helps to overcome the hedonic treadmill effect.

Meditation is a tool to cast away illusions – like the fictional stores we tell – and perceive things in their true nature. It is a way to pause and take stock of a situation so that you can act with intention rather than react.

Contemplation though doesn’t require sitting quietly for 10-20 minutes every day. Becoming more introspective with your money can be as easy as asking yourself a few deep, personal questions: Am I truly happy? How well do I honor my values? What do I want my future to look like?

Basic financial planning is in a sense a form of contemplation. As you pause to review your spending, saving and progress toward your financial goals, you see in minute detail your efforts to build life satisfaction.

STIPULATIONS

For a more practical solution, you could implement personal stipulations or rules for using money. They can help you fully consider whether the material items or experiences you want will truly make you happy.

One popular rule is the waiting period. If you still desire something after waiting three days, a week, a month, etc., then you can give yourself permission to buy it.

Another spending rule is to calculate the cost of something based on your earnings. You may reconsider buying a $200 pair of shoes if you earn $25 an hour, meaning they cost the equivalent of a full 8-hour work day.

Personal finance writer and Ritholtz Wealth Management COO Nick Maggiulli ascribes to a creative win-win system. For anything he splurges on, he invests an equal amount of money. It makes him pause and think twice about spending too lavishly because it would cost him double. Yet when he does, he is also essentially rewarding his future self.

AUTOMATION

But why not take human fallibility out of the equation?

You can bypass your emotions and reduce the temptation of the hedonic treadmill through automation. Once you know what truly makes you happy, you can automatically funnel money to those things.

There are several ways to automate your finances, including automatic paycheck deductions for retirement accounts and monthly fund transfers to accounts reserved for goals like a house down payment, as well as a “fun” account to spend however you wish.

Essentially, your absolute financial priorities are always cared for first.

The persistent belief is that happiness is achieved. You must always be doing something or working for something. But most the time happiness is found. Every once in a while, you should stop and take a look around.

You may find that you have been running hard for nothing. Or, you may find that you have a pretty good life and just haven’t recognized it yet.

It becomes amazing.

The things done.

When.

You.

Pause.

The 44 Stages of Living Through a Financial Crisis

As 2020 mercifully comes to an end, newspapers and magazines are releasing their best-of and year-in-review lists. There is much to reflect upon, or eagerly forget. But, as someone just shy of 40, one of the things that sticks out most to me is the fact this year marked the second major financial crisis of my generation. We are two-time financial crisis veterans.

The feelings of 2008 are indelible. The disillusionment of being only a few years into my career and suddenly asked to take a significant pay cut. The hopelessness and fear of never finding a new job and earning a respectable salary.

Twelve years later and here we are again. I realize this time is different, with optimism of a quick rebound once the vaccine is distributed. But the individual economic pressures remain the same. I was lucky before and am fortunate today. Many people were not then and are still not, and many more will join them.

If nothing else, I hope this generation will be known as resilient. To have shown an ability to endure difficulty and make opportunity out of nothing. And I hope this encapsulates the experience of a financial crisis, and hopefully a little wisdom.

The 44 Stages of Living Through a Financial Crisis

  1. Unbridled confidence to take over the world
  2. Confusion
  3. Denial
  4. Anxiety
  5. Resignation
  6. Panicked check of 401(k) (am I reading this upside down?!)
  7. Breathless scream of four-letter words
  8. Test email to boss (got a response, yes, still have a job)
  9. Increase news consumption 1,000%
  10. Grief
  11. Check 401(k) again (will just work till age 90, no problem)
  12. Watch Federal Reserve announcement
  13. Check 401(k) again (too early to start shopping for vacation homes?)
  14. Furlough
  15. Sleep in
  16. Social media blast of fun thing while friends at work
  17. Quickly realize not working sucks
  18. Official layoff
  19. Social media blast of query for jobs from friends at work
  20. Collect unemployment
  21. Question college major and all other life choices to this point
  22. Grief again
  23. Send resume to top jobs
  24. Send resume to every job
  25. Tap emergency fund
  26. Roll eyes until literally fall out of skull after reading another article lamenting the “lazy self-entitlement” of millennials
  27. Shamelessly use emergency fund to buy beer
  28. Check 401(k) again (clean it out???)
  29. Move back home with Mom & Dad
  30. Convert former bedroom now man cave back into bedroom
  31. Ponder life without marriage, a home or kids
  32. Become a freelancer
  33. Ask friends and colleagues for projects
  34. Work three jobs for the income of one
  35. Start blogging or making videos
  36. Ask friends and colleagues to spread the word
  37. Get a new job or start own business on own terms
  38. Move back out. Start over.
  39. Rebuild emergency fund
  40. Restart 401(k) contributions and don’t stop
  41. Decide never to check 401(k) again until age 60
  42. Revelation: bad things do and will happen, but grace, humility, patience, emergency reserves, optimism about yourself, and the vulnerability to ask for help can get you through just about anything
  43. Compassion for those not so lucky
  44. Resume take over of the world

Friday Five

Ways Covid will reshape aging and retirement

An enlightening collection of expert insight from Anne Tergesen, but most importantly beautiful silver lining that maybe the pandemic will change many things for the better.

As with past crises, including Sept. 11, psychologists are finding that people across generations are focusing on what matters most to them, including relationships.

Listen: Tim Ferriss interviews Mary Karr

There is great synergy between Tim Ferriss and the queen of memoir, Mary Karr. Check it out for great tips on writing and living.

For me, the solution to fear is curiosity and presence. I can’t be terrified and curious at the same time.

Lux Capital on doing good things

I don’t know if it is the creative polymath Josh Wolfe who writes these or if it’s a team effort, but, man, they make VC both highly interesting and inspiring.

what is memorable isn’t always meaningful and what is salient isn’t always significant.

The remarkable story of the first person with Down syndrome to conquer Ironman

Just shoot this inspiration straight into your veins.

It was then that Nikic summoned a well of patient, hopeful perseverance — along with the energizing power of the simple vision he had set for his life.

One step forward, two steps.

One step. Two steps. Three.

Friday Fiction: Laura van den Berg

Some writers are afraid that committing certain events to the page will conjure them into existence. I never paid much attention to such superstitions, but then my last novel featured a writer daughter and a dying father and then, not long after the publication, my own father was handed down a terminal diagnosis and I thought: Yes. All those other writers were right to have been afraid.

Or maybe not.

The thing is: no one knows how any of this works. Which seems impossible, given all that we do know, but it’s true.

Four Things That Make Money Meaningful

Behind the long braids of barbed wire and tall machine-gun towers of Dachau came the unmistakable sound of laughter. A transport of prisoners from Auschwitz had just arrived, and they were joyful. 

To me, this was the most affecting scene in Viktor Frankl’s book, Man’s Search for Meaning, about his physical and spiritual survival in Nazi death camps. He and his fellow captives became elated upon realizing they had been relocated to a camp without a chimney. As he writes: “We laughed and cracked jokes in spite of, and during, all we had to go through in the next few hours.”

Even in the darkest periods of mankind, fleeting moments of felicity could be found. Throughout the book, Frankl details what gave him a sense of meaning – art, humor, work, camaraderie – which helped him carry on over his several years in captivity.

As people tried to take away his humanity, he abided by the very thing he believed makes us human: “[A] human being is not one in pursuit of happiness but rather in search of a reason to become happy…through actualizing the potential meaning inherent and dormant in a given situation.”

Whether you believe it is the pattern recognition system in our brains or some deep ineffable cosmic conscious, it is hard to deny we hunger for meaning. And regardless of your circumstances, you need not go far to find it.

So, if there is meaning to be found in everything, what about money?

How we use money can be considered an expression of what we consider meaningful. Although it is easy to succumb to societal pressures and spend it on status symbols that provide no meaning at all.

It’s why any financial adviser worth a damn will tell you to concentrate on your values, the things that truly give your life meaning. Those things help you use money not to build wealth for wealth’s sake but build life satisfaction. What good is money if you feel empty?

What is meaningful to you, may not be to me; and what is meaningful to me, may not be to you. However, there four things that often involve money and that various studies show are where most people tend to find meaning in their lives.

1. Family

When I look at my bank statement, I can separate expenses into categories like entertainment, food, transportation, etc. But underlying about 90% of them is one thing: family.

Perhaps, you can relate.

A few years ago, the Pew Research Center conducted two separate surveys asking Americans what makes their lives feel meaningful. By far the most popular answers were family and spending time with family.

There are many ways money can meaningfully promote the well-being of your family. A fully stocked fridge. A home in a safe neighborhood. Monthly contributions to a college fund. A weekly move night.

And above all, there is the financial freedom to spend as much quality time with your family as you want. For the greatest asset you can provide your family is your presence.

It’s worth nothing family doesn’t have to mean married with children. It can encompass your extended family, your close friends, any group you belong to, your pets – whomever you call loved ones.

How often do you regret spending money on the prosperity of your family? Probably never.

2. Helping others

World religions and philosophies have been teaching it since antiquity: One of the greatest sources of meaning comes from not what you do for yourself but what you do for others.

Consider what those who have reached retirement have to say. According to an Age Wave/Merrill Lynch study, retirees were three times more likely to say “helping people in need” brings them happiness in retirement than “spending money on themselves,” with the majority of those who donated money or volunteered feeling “a stronger sense of purpose.”

When giving back is a priority, your financial life invariably becomes more meaningful. You may make regular donations. You might arrange your finances so that you can spend more time volunteering both now and in the future. And as you think more of others, you are less likely to spend money on things that don’t end up improving your life nor anyone else’s.

3. Experiences

If you want to use money more meaningfully, then buy more experiences and less material items.

Numerous studies show that people enjoy greater well-being and happiness from life experiences and consider them to be a better use of money.

The joy of material items is short-lived. Whereas joy builds in the anticipation of an experience, is released during the experience and lasts in the form of memory.

A higher value placed on experiences can make you more intentional with your money, or even more comfortable not spending money at all. Experiences help train your brain to find meaning in the abstract – the thrill of riding down a hill on a skateboard, a long walk through the woods, the laughter of a child – things that stay with you long after they’re over.

Meaning is all around you if you look. Frankl believed experiences were one of the primary ways of finding meaning in life:

“The second way of finding a meaning in life is by experiencing something – such as goodness, truth and beauty – by experience nature and culture or, last but not least, by experiencing another human being in his very uniqueness.”

Frankl’s first way of discovering meaning? Work.

4. Work

Meaning isn’t derived only from how we use money. We actually find meaning most in how we earn it. In the Pew surveys mentioned above, work/career was second only to family as the most cited source of meaning.

Sure, your salary can be used as a measure of success. Which is a feeling that is multiplied by all the things your hard-earned money does for you outside the workplace.

But it is the accomplishments, the projects done, the challenges overcome and the creativity involved that make work so meaningful.

It is one reason why many older adults plan to work in retirement – not because they have to, but because they want to. You can’t always replicate the sense of being part of something bigger, the sense of achievement, or the sense of usefulness in a leisure activity that you find in work.

When you find meaning in your work or career, you can boost your earning potential while avoid trying to find meaning by impulsively spending your paycheck.

Money helps nurture the things that give you meaning. But money isn’t a requirement for living a meaningful life. Living a meaningful life though will always lead to using money meaningfully.

Friday Five

It is a pleasure to read a president who can write well

What I can say for certain is that I’m not yet ready to abandon the possibility of America—not just for the sake of future generations of Americans but for all of humankind. I’m convinced that the pandemic we’re currently living through is both a manifestation of and a mere interruption in the relentless march toward an interconnected world, one in which peoples and cultures can’t help but collide. In that world—of global supply chains, instantaneous capital transfers, social media, transnational terrorist networks, climate change, mass migration, and ever-increasing complexity—we will learn to live together, cooperate with one another, and recognize the dignity of others, or we will perish. 

Much wisdom in this thread of Carl Richards’s drawings from How I Invest My Money

Author R.O. Kwon on the power of optimism

Hope is not just a feeling; like love, it is a practice. It is a verb. It is action.

The last interview with Ursula K. Le Guin

You do invent wonderful landscapes. The Earthsea trilogy creates such a vivid picture of the sea — have you done a lot of sailing?

Le Guin: All that sailing is complete fakery. It’s amazing what you can fake… they always tell people to write about what they know about. But you don’t have to know about things, you just have to be able to imagine them really well.

Friday Fiction: Mark Haddon

He had not eaten today nor had he drunk. He would wait until the craving had passed, then allow himself to do both when it became a choice, not a lost battle in his long war against the base needs of the body.

The Super Rad True History of Money

Actually, I don’t know the history of money. Sorry. It probably involves the Romans somehow.

What I do know is that we all have our own personal history of money. A history of money that touches every aspect of our lives. It shapes our work, our lifestyles, our relationships and our futures.

Here is yours. Just fill in the blanks.

My ____________ give(s) me a sense of purpose.

____________ is what I value most.

I feel _____________ about the present and ____________ about the future.

My three most important financial goals, in order, are: (1)____________ (2)____________ and (3)____________.

My greatest financial fear is ____________.

My biggest financial mistake so far was ____________.

My ideal lifestyle is one centered around _____________.

I earn ____________ from working as ____________.

I work on average _____________ hours a week and feel _____________ about it.

____________ is what makes me most happy.

I plan to save ____________ within ____________ years so I can one day _____________.

I want to spend more time doing ____________ with ____________.

One thing I would sacrifice now is ____________ if it means I get more _____________.

Other people (creditors) have a claim of ______________ on my money.

____________ comes into my account every month, and ____________ goes out.

Most of my money is spent on ____________.

Three things that I find are always worth spending money on: (1) ____________, (2)____________ and (3) ____________.

If something is too expensive, I ____________.

Expensive to me is a ____________ car and a ____________ house.

The dumbest big-ticket item I ever purchased was ____________.

If I wake up tomorrow without a job, I have ____________ in cash to pay my bills.

On a scale of one to 10, my confidence in choosing the best performing investments is ____________.

I describe myself as a _____________ investor.

My portfolio is made up of ____________, ____________ and ____________.

I expect my portfolio to earn an average annual return of _____________.

The last time the stock market dropped 15-20%, I _____________.

On average, I spend about _____________ hours each week consuming financial news.

If I die, my assets will be distributed to ____________.

The way I most want to help my loved one financially is ____________.

The first three things that come to mind that I am grateful for: (1) ____________, (2)____________ and (3) ____________.

I will donate ____________ to ____________ because I care about ____________.

I want people to remember me for ____________.

The kind of legacy I want to leave behind is one described as _____________.

Catharsis

The moral is that money is a personal story. It is and always will be written only by you. There are many familiar narratives, but those serve just as general guidelines.

The right one for you depends on your situation, your desires. Put another way, don’t try to relive another person’s money history. Financial success is your own definition. It is the only passage to a truly happy ending.

That’s the cool, rad thing about money. You can use it how you want to shape your life into what you want.

Everyone has a money history. What you do with it is up to you. Some repeat it. Some learn from it. The special ones use it to help others.

Friday Five – Election Week Edition

How to survive the next few weeks with grace

This week has felt like several weeks. Perfect time then to read this meditation from wellness sage and author Rich Roll on not letting difficult times get the best of you.

Only through perspective, by broadening our own aperture, can we put distance between ourselves and the incessant whine of matters beyond what a single individual can control. Perspective provides objectivity on the vast divide between perception and reality. It grounds us in humility. And it is through perspective that we return to what is most important: our shared humanity.

How to mentally handle uncertainty

Morningstar’s resident behavioral economist Sarah Newcomb offers excellent tips to deal with uncertainty and avoid making costly mistakes.

The real existential threat to your finances is short-term thinking. Decades of research show us that short-term thinking is linked to increased impatience and discounting of future rewards[1], impulsive decisions[2], higher debt[3], lower savings [4], excessive risk-taking [5], and poor health decisions [6].

Fear and uncertainty can make short-term thinkers of the best of us. End-of-the-world narratives and our current state of pandemic confusion only serve to exacerbate the problem. It’s hard to plan for a 20-year time horizon when you can’t see past next week.

It’s not the end of your retirement

Ritholtz 403(b) educator and teach advocate Tony Isola provides some much needed perspective on staying the course when everything else seems out of control.

Is this really the end of the world? Do you think it’s worth sacrificing your most valuable asset, your health? Worrying and elevating your stress levels over events that have virtually no possibility of happening and which you have no control over isn’t a good use of your precious time.

Who said winners never quit?

Former poker star Annie Duke writes about the upside of quitting.

If you are stuck deciding between two options, you should choose the one that is easier to quit. The option to quit gives you the flexibility you need to successfully react to new information.

When it turns out that your initial choice wasn’t a good one, don’t stick it out simply because you chose it. Just quit.

Friday Fiction: George Saunders

Every day starts out as a certain day, dear reader, which, when it begins, we call today. Hence, every day, as we wake to a new today, we must assume that today may be the day. For what, though? That is what is unknown, that is what I must find out, and quickly now: for what will each of my coming todays henceforth be for?

The Market Owes You Nothing

Invest for long enough in the stock market and you’re destined to exclaim: “I didn’t expect that!” (Or, something to that effect: “I can’t believe it!”, “Wow!”, “Holy s**t!”) Probably many times.

You could be a longtime investor who was unphased by every bubble, bust and crash of the past 60 years. You can be Stoic philosopher Epictetus reincarnated in a day trader. It does not matter.

Eventually, the market will surprise you – and if you’re not careful, scare you.

Case in point: 2020. Let’s be honest. How many of us have had a hard time keeping up with the market this year amidst a global pandemic, political gridlock and social unrest?

As James B. Stewart, author of the classic Den of Thieves, wrote in the New York Times back in March: “I became a disciplined investor over 40 years. The virus broke me in 40 days.” The pandemic and subsequent market turmoil was enough to even give Warren Buffett pause, leading Josh Brown to wonder what version of Buffett this is.

You can have a finance degree, billions of dollars, the best technology, a team of advisors working for you. Those may increase your chances of success, or maybe not.

The market is deaf to the intentions of its buyers and sellers. Where it goes on any given day and the reasons why are essentially arbitrary. It’s part of the deal. As Morgan Housel has said, volatility is the price of admission.

Despite that, the stock market is our best option for growing money. That’s why we invest.

Just as long as you keep going.

To keep going often requires the right perspective to then lead you to the right action.

What’s that? Expect nothing.

Investing as a marathon

My very first marathon, in Detroit, was an unforgettable experience — and it was a failure. I made an ambitious goal to qualify for the Boston Marathon, which is notoriously difficult.  

For my age group, I would have had to finish around 2 hours and 55 minutes. I missed it by more than half an hour.

Even after dedicating myself to a rigorous training regimen, it didn’t matter. Because as marathoner Peter Bromka writes, “The marathon doesn’t owe you anything.”

The market works the same way. The market owes you nothing.

Perhaps the two most important qualities of a marathon runner are not strong legs or special shoes, but grace and humility. The world’s fastest marathon runner Eliud Kipchoge displayed such character after coming in a pedestrian (for him!) eighth place in the 2020 London Marathon, a race he has dominated. He said: “Sport is unpredictable, but you know what they say: If you want to enjoy sport then you accept the results. So I accept the result and congratulate all finishers.”

This week, steep daily drops returned to the market. It is also the week following what should have been my second run of the Detroit Marathon, which was canceled due to the pandemic. So I’ve been thinking about the similarities between investing and running a marathon.

Grace and humility are not two things conventionally linked to successful investors. But they can be extremely useful during the down times, which happen more frequently than many people think.

The average intra-year market decline since 1980 is 13.8%, according to JP Morgan.

Yet annual returns were positive for 30 of those 40 years. It is worthwhile then to humbly accept volatility as normal and gracefully keep investing.

Please don’t get me wrong. Talk of investor mentality and behavior can be overblown. Investors aren’t as fearful as we like to think, as evidenced by how many 401(k) investors stayed put back in February and March.

But when that moment comes that makes you question yourself, the right perspective helps you choose the right action, which is usually a decision between staying the course and making a huge mistake.

As I reached the mid-point of my first marathon and started to realize I wouldn’t achieve my goal, I kept running. I knew at least I could still proudly reach the finish line. The marathon didn’t owe me anything.

Short-term pain vs. long-term gain

A marathon is long – 26.2 miles. You are always at risk of your body unexpectedly breaking down. A marathon is outdoors. You are always at the mercy of the elements – rain, snow, heat.

Race day can go in one of a million directions. All you can control is how you train before the start and the faith you put in your plan during the race. The distance never changes, and the satisfaction of finishing is worth all the pain every time. No one finishes with regrets of having started.

That difference between short-term pain and long-term gain also applies to the market.

There will be highs, lows, bulls, bears. You can’t predict when they occur or for how long. But over time the direction has been the same. Up. As an investor then, it is worth it to commit to the historical uphill reward, even after the steepest falls.  

The market has rebounded from every decline of 15% or more, from 1929 through 2019. And the average return in the first year after each of these declines was 54%, according to Capital Group.

It is you who owes

What you get out of a marathon is what you put in. That is not a result of only my biology and my circumstances, but also my work ethic and attitude. It is what you owe to run a marathon.

You are the one who owes when building wealth. You owe it to your ideal future self.

You owe it to yourself to live below your means.

You owe it to yourself to save every month.

You owe it to yourself to never pay more in fees than necessary.

You owe it to yourself to stay the course.

You owe it to yourself to focus on your goals and your dreams – never the money itself.

Sure, it would be more exciting to sprint to wealth, with those double-, triple-digit returns we dream about. But you’re more likely to burn out. Even the people whose job it is outperform the market tend to come up short.

Just attempting to run a marathon is a feat, as is simply saving in a retirement account. Many don’t even get that far. The New York Federal Reserve found that more than a third of eligible workers were not participating in their 401(k) plans.

Luck surely helps. Grace and humility allows us to better take advantage of that luck. You don’t know more than the market. And the market owes you nothing.

As an investor you can feel content to keep going at a pace you’re comfortable with to stay solvent and reach your financial goals – your retirement, your vacation home, your child’s education..

The perspective is worthless on its own; what matters is the action, or inaction, that follows it.

For me, I still have dreams of reaching Boston. If I keep at it, I may get there. Even if I don’t, what do I lose? I will have enjoyed many miles and races that have greatly benefitted my physical and mental health, which is all enriching in itself.

Excuse me for mixing sports metaphors, but the market doesn’t owe you home runs. However, it is pretty generous with enough singles to get you around the bases, if you give it the time.

The market owes you nothing, which makes it all the more remarkable when it gives you everything.

Friday Five

Ben Carlson gracefully writes about the 5 things you can truly invest in

Who you spend your time with, what you spend your time on, and where you spend your time are some of the most important decisions you can make in life.

This is true if you have a lot of money or not.

The Accumulator gives us the facts of investing life

The basic facts are much easier to acquire for an amateur than superior skills. Knowledge is an all-you-can-eat buffet in the digital age. You can stuff your face with it via blogs and books.

The only question is what you choose to swallow.

Susan Orlean reveals all the tools you will ever need to become a writer

As for your writing surface, I’ve written on steno pads and legal pads and hotel stationery and boxtops and scratch pads and the inside of my wrist, but you can’t beat a reporter’s notebook.

Jessica Easto serves as a guide for making the best cup of coffee

Coffee – what’s called ‘drip’ or ‘filter’ coffee, not espresso – can taste smooth and sweet like chocolate, or provide a zip on your tongue like a bright Champagne, or taste fruity, just like a blueberry. And when I say ‘chocolate’ or ‘blueberry’, I mean the coffee itself literally tastes like those things, without any added syrups or flavourings. The first time you drink coffee that tastes like more than coffee, you’ll never forget it.

Friday Fiction: Eloghosa Osunde

I’ve always had a problem with introductions. To me, they don’t matter. It’s either you know me or you don’t—you get? If you don’t, the main thing you need to know is that I am a hustler through and through. I’m that guy that gets shit done. Simple.

Financial Writing with Empathy

If you want your writing to be more engaging, answer one question: Who am I writing for?

Berkshire Hathaway has legions of devoted shareholders, some of whom are quite famous — LeBron James, George Lucas and Bill Gates, among them.

But when writing the annual shareholder letter, chairman and CEO Warren Buffett has only two people in mind: his sisters, Doris and Bertie.

As he said in an interview: “It’s ‘Dear Doris and Bertie’ at the start and then I take that off at the end.”

Why? Because Buffett knows that his two sisters are not particularly active in the business and investing. They’re not well versed on the workings and lingo of the industry. And he knows if he can connect with them, he can connect to anybody.

This targeted approach is a writing method Buffett uses to help refrain from using business jargon, and to make the letter more accessible and readable for wider audience of investors.

Most importantly, it is an act of empathy.

Empathy is the awareness of the feelings, thoughts and attitudes of other people. It is an understanding of what others are experiencing as if you were feeling it yourself.

When people think their feelings are being addressed in piece of content, they are more likely to engage. A study of advertising campaigns found that those with “purely emotional content performed twice as well as those with only rational content.”

Empathy is the key to connecting with readers on that emotional level. It’s the difference between speaking to someone and speaking with someone. It can help you and your writing stand out among the noise.

Considering how emotional financial decisions can be, empathy is a necessary feature of financial writing.

We all want to make rational financial decisions. What often gets in the way is our emotions. A financial blog or article can have all the right answers, but it will likely fall flat if it concentrates on the rational aspects — analysis, statistics, rules, etc. — while giving the emotional short shrift.

Mere information is rarely helpful unless it also directly relates to your life.

With empathy, your writing can show that you understand what the reader feels and thinks, that you share those feelings and that you want to help however you can.

How to make your financial writing more empathetic:

The good news is your desire to help other people make better financial decisions is proof you’re an empathetic person. And showing it in your writing doesn’t require special hacks. It’s all about writing plainly and sounding like a human who shares the same goals as the reader.

Here’s how to do it.

Humanize your language

Writing about things like balance sheets, taxes and investments can easily come off as stiff and academic. An easy step to humanize your language is to write in the first person. The personal and relatable touch of first person is more engaging than the formal tone of third person.

Let’s compare.

Here is a typical corporate tagline in third person: “Acme Financial is a wealth management firm that provides personalized, honest and expert financial planning services.”

Now, using the more friendly first person: “We’ll help care for your financial needs with personalized advice that you can trust.”

Don’t be afraid to use empathetic words and phrases like “I understand how you feel”, “You are in a tough spot” and “This must be really challenging for you”.

Above all else, simply write as if you were having a conversation. If that means breaking some grammatical rules… Well… So, what?

Simplify the complex

With all the different products, rules and regulations, finance is often overly complex. Add in the desire to sound like an expert, it can lead financial writers to use industry-speak with terms like “asset allocation” and “tax-loss harvesting”.

It can sound alien to average readers, leaving them confused or wanting.

So, show that you care by writing with short, simple and familiar words. And follow the Feynman technique: explain things in a way even a child could understand.

Further, emphasize what your readers really want.

You may be able to wax-poetic about a strategy for withdrawing 4% of a $1 million portfolio with a 99.9% probability of lasting for 30 years. But it may not resonate unless you explain how it will help retirees sleep at night and never fear running out of money.

Create your characters

Like Buffett, it helps to actively visualize the people you are writing to. If you don’t know real people that match your target profile, that’s okay. Make them up.

Research suggests that by mentally stepping into the shoes of fictional characters, we become more empathetic and socially-aware.

Create as much detail as you can — names, ages, interests, even stock pictures. Whatever helps you form a relationship to those you want to reach most. Then write to them every time you write.

You have a message that could help people. All they want from you is to speak with them. Hopefully, this will help you do that.

Friday Five

Author Garth Greenwell writes beautifully on the role of relevance in art

Maybe this is just a kind of cheap mysticism, like a secularized treasury of grace—the old theological idea that there are certain substances, such as God’s love, that as they are spent do not diminish but multiply. Maybe what I’m suggesting is pure fantasy, imagining that our attention could be like the loaves and fishes at the feeding of the five thousand. Maybe that’s true. But maybe it’s also true that there are certain indefensible positions we must hold because not to hold them would be an affront to the human dignity necessary for any world in which we should rightly wish to live.

Marketing genius Seth Godin on playing to the masses or following your own path

You can either turn your operation into a cross between McDonald’s and Disney, selling the regular kind, pandering to the middle, putting everything in exactly the category they hoped for and challenging no expectations…

Or you can do the incredibly hard work of transgressing genres, challenging expectations and seeking out the few people who want to experience something that matters, instead of something that’s merely safe.

Unparalleled financial writer and thinker Morgan Housel on the noise of tragedy and the inconspicuous progression of growth

Growth always fights against competition that slows its rise. New ideas fight for attention, business models fight incumbents, constructing a building fights gravity. There’s always a headwind. But everyone gets out of the way of decline. Insiders might try to stop it, but it doesn’t attract masses of outsiders who rush in to push back in the other direction like progress does.

WATCH Financial blogging OGs and industry trailblazers Josh Brown and Carl Richards talk about the intersection of money and art

Friday (non) Fiction: Poet Maggie Smith’s moving new book on grief and transformation

Keep Moving

How to Live Like You’re Already Retired

The late poet Mary Oliver never worked an interesting job in her life, just as she wanted it. Her fear was that it would take away valuable time and energy from her true passion — writing poetry.

As she explained in an interview:

I was very careful never to take an interesting job. I took lots of jobs. But if you have an interesting job you get interested in it… Believe me, if anybody has a job and starts at 9, there’s no reason why they can’t get up at 4:30 or five and write for a couple of hours, and give their employers their second-best effort of the day – which is what I did.

I am not a full proponent of her idea. If you spend eight or more hours a day at a job, it helps to have at least some interest in what you do.

Still, Oliver makes a good point: There is no reason not to allocate more effort to the things that give us joy and less to the things that don’t.

It may sound trite. But honestly think about how well you do this?

I know I could do much better.

Recently, I struck up a conversation with the grandmother of a boy my sons were playing with at the park. She was a retired accountant who opened a mission for underprivileged children in one of Detroit’s most dangerous neighborhoods.

I thought to myself, I want to volunteer at a place like that… some day, when I have the time.

Most of us are guilty of waiting to do something until an ideal future arrives, which is never guaranteed to arrive.

In the financial industry, we mostly sell people on the idea of an ideal future that affords them total control over their time to do whatever they want. In other words, retirement. But why focus entirely on the future when we can live to some degree like that now?

There is a lot of research that shows what things unequivocally help retirees live a healthier, happier and more meaningful life (one of which is volunteering). Those same studies and surveys actually tell all of us how to live better lives right now. Because the benefits of those activities encompass all age groups. Essentially, if you want to lead a more fulfilling life, then do the things retirees are told to do to make the most of their remaining years.

As Oliver encourages: give yourself permission to put forth your best effort toward the things that provide happiness and meaning while half-assing the less important stuff in life.

It is something I certainly need to get better at, which is why I have begun to reframe life as if I were retired. That is, putting more intention behind the things I do, with less consideration of what other people and society thinks.

Here are the steps I am taking to try to do that.

Note: I understand that I speak from a place of privilege. When you have to work three jobs to put food on the table and don’t have healthcare, thinking about ways to make your time more meaningful is unhelpful. So, I recognize this is a parochial blog post, generally for those who have the luxury of mismanaging their work-life balance and for those who write to those same people.

Do the one thing known to make everyone happier: help others.

One of the top activities workers say they want to do in retirement is volunteer. For good reason. By helping others, you help yourself.

Of the 239 older adult volunteers surveyed by the Center for Social Development at Washington University in St. Louis: 79% said they feel better about themselves by volunteering; 95% said they have improved their lives; and 96% said they have been involved in meaningful activities.

There is no age requirement for generosity. As many people turn inward with materialistic and technological outlets for a sense of satisfaction, the real trick is to not think about yourself at all.

Keep learning.

One of the best pieces of advice I ever received was from an intoxicated member of a country club where I valeted in college. I was asked to pick him up from a gentleman’s club and drive him home. During the ride, he told me to never stay at a job where you’re not learning anything.

Because of the higher risk of cognitive decline, mental health becomes more important as we age. Hence, the many brain games and other activities geared toward older adults. But you’re better off the earlier you start making mental acuity a priority, and the best preventive steps is to learn new skills.

Many psychological studies suggest the challenge of learning a new skill can enhance memory, strengthen the connections between parts of the brain and lower the risk of dementia. Learning a new language, for example, can help improve thinking skills and memory abilities regardless of what age you start.

If your job isn’t your passion, make your hobbies your identity.

Work provides many perks, including a place to socialize, a sense of purpose and, of course, money and benefits. But for many people, like Oliver, their job is not their identity. Therefore, hobbies should be treated more seriously in society, not just as a way to pass the time.

That is why retirement is often thought of as an opportunity to do all those interesting things we wish we had more time to do while working.

The benefits of hobbies go far beyond simple enjoyment. Hobbies are associated with a variety of physical and psychological benefits, such as lower blood pressure, better fitness and reduced stress. One study even suggests the outdoor exposure and physicality of gardening increases longevity.

Art in particular doubles as a form of therapy, leading to lower stress, improved memory and better overall mental health.

As author Neil Gaiman said during his inspiring commencement speech:

“Life is sometimes hard. Things go wrong, in life and in love and in business and in friendship and in health and in all the other ways that life can go wrong. And when things get tough, this is what you should do: Make good art.”

Move around — a lot.

We all know exercise is important. Physical activity makes us physically and mentally healthier. Without the time constraints of a job, retirees often make exercising more of a priority, as it helps improve mobility and ward off health issues.

We could probably all move more each day. And that doesn’t mean two-hour gym sessions. The simple act of walking increases the supply of blood and oxygen to your muscles and organs, which helps you think and come up with new ideas. It explains why many famous writers were known as avid walkers.

Experience new places.

A common aesthetic of retirement marketing is of older adults traveling abroad — walking a cobblestone street, prancing on a white sandy beach, gazing over the railing of an ocean liner. Who doesn’t want to travel more?

Traveling somewhere new has been shown to boost emotional IQ, empathy and creativity in travelers. It doesn’t tough require a passport.

There are new places all around us to explore. Visit a new part of your city. Eat at a new restaurant. Hike a new trail.

Schedule consistent time with friends and relatives.

The majority of workers said they plan to spend more time with friends and family during their retirement years, according to an HSBC survey. Of course, distance along with work, kids, etc., are valid reasons why we don’t spend as much time with loved ones as much as we want.

But when you consider how essential socializing is in life, there is an incentive to find creative solutions for spending more time with friends and relatives.

Now that nearly all my friends have started families, we have adapted. Our time together is shorter but at greater frequency. Instead of a long night out, it is a half hour coffee break, a Sunday softball league, a quick run through a park.

Accept life’s hardships.

Nothing can insulate you from tragedy. It is a fact of life. The sooner you can accept it, the easier it is. It’s why older adults, having years of both good and bad experiences, tend to be happier.

As journalist John Leland writes in his book, Happiness Is a Choice You Make:

“Older people are more content, less anxious or fearful, less afraid of death, more likely to see the good side of things and accept the bad, than young adults.”

The happiness curve suggests that life hits its low point around age 50. Perhaps by aligning our mindsets to those in the later innings of life we can avoid that dip.

If you can go through the hard times with grace, then you can live a full life no matter how much time your money can buy.

Friday Five

New York Times’s Paul Brown on what to do when you have enough

One of the best in the biz provides a personal reflection on knowing when you have enough wealth.

The importance of thinking in a non-dualistic way

Few things in life are black and white, especially when it comes to investing and tackling our behavioral biases. Health researcher and author Brad Stulberg writes about training yourself to stop thinking “either-or” and starting thinking “both-and.”

What a simply facial feature can mean for a person of color

This is the best thing I’ve read all week. It is a powerful, well-written story about how a small thing can represent a much bigger world. Read and learn.

Wilco’s Jeff Tweedy on how to be productive — even during a pandemic

I don’t know any geniuses that don’t also enjoy working hard. I don’t know that many geniuses, I guess. But I also don’t know many people that make stuff that inspires me that haven’t put in the work. If you have this thing you discovered that you love to do in your time on this planet, most people seem to understand that that’s something to be honored.

Friday Fiction: The fall classic, “It’s Decorative Gourd Season, Motherfuckers

I don’t know about you, but I can’t wait to get my hands on some fucking gourds and arrange them in a horn-shaped basket on my dining room table. That shit is going to look so seasonal. 

7 Habits of Successful Financial Writers That Will Improve Your Writing

A bottle of whisky within arm’s reach may make you a great writer. It is not what made Jack London a great writer.

London had a reputation for drinking heavily, as did many famous writers. But what allowed him to write classic books such as The Call of the Wild and White Fang was not alcohol-infused bursts of creativity. It was his habit of writing 1,000 words. Every. Single. Day.

Contrary to the tortured-genius myth, most famous writers were highly attentive to their productivity, using “tools” that we associate with athletes and business leaders. They set daily goals. They followed meticulous schedules. They ferociously shielded themselves from distraction. All to perform at their best.

In other words, writers – the good ones, at least – are creatures of habit.

We are what we repeatedly do. Excellence then, is not an act, but a habit.

WILL DURANT

Of course, this is not limited to the literary world. Most successful financial writers keep their own set of habits. One could argue habits are even more important for financial writers as they grapple with the added pressure to simplify complex topics and help people secure their futures.

Compiled from interviews and articles, here are seven habits of some of today’s best financial writers as told in their own words. There’s no guarantee these habits will make you a successful writer, but they can make you a better writer.

1. Write, write, write…

“I found that if you want to become a better writer there are two things you have to do. One is to read really good writing and most of us try to do that. But the second thing is to write a lot, and so I made the commitment… that I was going to write for an hour a day, every day for the rest of my life.” Barry Ritholtz

Writing is no different from any other discipline. It requires dedication. The more you do it, the better you do it. Consistency is the key to progress. You won’t write by waiting for inspiration to strike, any more than you will lose weight by waiting for the desire to workout. By writing every day you can make it feel as second nature as a morning cup of coffee, to the point you feel bad on the days you don’t write.

You may be blessed with all the writing talent in the world. But it won’t amount to much unless you dedicate yourself to the work.

Talent is insignificant. I know a lot of talented ruins. Beyond talent lie all the usual words: discipline, love, luck, but most of all, endurance.

JAMES BALDWIN

2. Read, learn and let ideas marinate

“If you want to become a better writer, the two biggest things you can do are to write more and read more.Jason Zweig

Ninety percent of my week is reading and going for walks, which is where I do most of my, quote-unquote, “writing.” It’s where all I’m… just thinking… piecing ideas together… and speaking with friends on the phone who are in kind of similar fields [but] have expertise about these things that I don’t… It’s just trying to piece together different ideas over time so that maybe once a week, one of them sticks enough that you can write a thousand words about it and publish it.”Morgan Housel

Reading is part and parcel of writing. Immersing yourself in the work of great writers translates into better writing.

What Housel illustrates is that writing is also a practice of thought, letting ideas sink in and then come together as you sketch out mentally what you want to write.

You read to learn how to do it. And you learn new things so as to connect ideas, whether they come from reading a 1,000-page novel, watching a documentary or listening to a podcast.

If you don’t have time to read, you don’t have the time (or the tools) to write.

STEPHEN KING

This includes criticism of your own work. Zweig framed criticism not as a personal sleight but as a learning opportunity when he wrote: “Every criticism is a chance for me to correct a mistake, improve my reporting, or to learn something.”

3. Schedule time to write

“When I’m in the process of writing a book, the 5:00 a.m. wake-up time can go on for months. It’s something I learned from my mother, who received her master’s degree in educational psychology when my brothers and I were in grade and middle school. She would get her work done before anyone in the house was awake. So, I get up. I let the dog out, make the coffee, let the dog back in, feed him, and then sit down at my computer and type.”Jean Chatzky

Time is not found; it is made. The simplest way to turn writing itself into a habit is to schedule it on your calendar. Make writing a daily appointment. Block off thirty minutes, one hour, two hours – whatever you can do. Use this time to do nothing but write with no distractions.

4. Never worry about what the “market” wants

“The funny thing is that the blogosphere, i.e the market, has its own opinion. Some of what I thought were my best posts generated little or no reaction. Some posts that I thought were simply clever observations, or short takes on topics, garnered a ton of hits. The point is that I have very little insight into what is going to work when push comes to shove.”Tadas Viskanta

When you first open a blank page, the goal isn’t to write a masterpiece. Just let the words flow, without judgment, until you have a first draft. Don’t worry if the words are good or not. You can perfect it later through editing and revising. And never worry about the possible reception of your work. Much like the stock market is to an investor, public opinion is something you cannot control. So, why let it influence what you write? Follow your own voice and style. Often, when you try to write in a way you think everyone will enjoy, you end up doing the opposite.

5. Allow yourself to be vulnerable

“Your audience will connect with you more when you become a human being with interests outside financial matters.”Josh Brown

I’ve said that writing is form of relationship building. Money is an emotionally fraught topic. People want advice from someone who understands. One of the best ways to relate is to show you are human. Let your interests and personality breathe in your writing. Tell us how your hopes, fears and experiences shaped the way you think about money. Write less like a textbook and more like a pen pal.

6. Create a reserve of writing

“A tip I read somewhere that I wish I would have followed: Have pre-written posts in place in case you run into a tight spot and have nothing to post.”Carolyn McClanahan

This habit pertains to those who write a financial blog or column. Especially, if you are just starting to write. Before you first publish, create a reserve of posts while you then work on what comes after. If you can stockpile posts, you don’t have to work under the pressure of a deadline, which can lead to mistakes and half-baked ideas. This gives you more time to think and the freedom to dedicate more time to your bigger ideas.

7. Leave some water in the well

“Life is all about variety; any job gets boring after a while. I love writing books, I love doing finance and writing about it; I also love my grandchildren and enjoy spending two or three months a year traveling. The trick is to do all the things you love — and don’t do too much of any of them.” –William Bernstein

William Bernstein’s sentiment echoes Ernest Hemingway’s famous concept of keeping the momentum by never letting ideas run dry. Hemingway stopped writing when he knew what would happen next in the story. As he explained elegantly in his memoir, A Moveable Feast:

“I had learned already never to empty the well of my writing, but always to stop when there was still something there in the deep part of the well, and let it refill at night from the springs that fed it.”

Yes, write a lot. But remember moderation in all things. Writing will not fulfill every emotional or physical need. If your life is balanced with other things you love or inspire to do, you’ll come to your writing desk happier and more energized.

This is a subjective list. Each writer has inspired me personally in some way. I know there are many great financial writers out there who have their own interesting writing process. So, if you have a favorite habit that you learned from another financial writer, I would be grateful if you shared it in the comments section.

Friday Five

Read Jason Zweig’s speech for his much-deserved Elliott V. Bell Award

I’ve heard other reporters say, “Oh, that’s just service journalism,” as if serving our readers by helping them make better financial decisions were somehow beneath the dignity of people who cover, say, professional sports…or Congress…or the White House.

As a master of connecting things, Tadas Viskanta writes on the virtue of incremental progress

All of this is to say that doing the important things adequately will serve you well. This is true whether it comes to avoiding the worst of the coronavirus pandemic or in your financial life. Too many people, spend too much time, searching for perfection when good will suffice.

Maria Konnikova on building resilience

Perhaps most importantly, the resilient children had what psychologists call an “internal locus of control”: they believed that they, and not their circumstances, affected their achievements. The resilient children saw themselves as the orchestrators of their own fates.

The ideal is to write in a flow state: but how do you reach flow state?

The challenge of the task slightly exceeds your skill set. You are pushed out of our comfort zone. The magic ratio is about 4% harder than you are comfortable with. You want to stretch yourself—not snap.

Friday Fiction: Newly minted Nobel laureate Louise Glück

Matins

You want to know how I spend my time?

I walk the front lawn, pretending

to be weeding. You ought to know

I’m never weeding, on my knees, pulling

clumps of clover from the flower beds: in fact

I’m looking for courage, for some evidence

my life will change, though

it takes forever, checking

each clump for the symbolic

leaf, and soon the summer is ending, already

the leaves turning, always the sick trees

going first, the dying turning

brilliant yellow, while a few dark birds perform

their curfew of music. You want to see my hands?

As empty now as at the first note.

Or was the point always

to continue without a sign?

Journaling for Financial Independence

I can shake off everything as I write; my sorrows disappear, my courage is reborn.

THE DIARY OF ANNE FRANK

The Financial Independence Retire Early movement may not be for everyone. But if there’s one thing it can teach all of us, it’s the art of journaling. Many FIRE bloggers write from a personal space, speaking openly about their hopes and fears and progress toward their financial goals.

Journaling can be a powerful tool for making better decisions, thinking creatively and building resilience. All of which can improve your chances for financial success. Which is why we should all do it.

AUSTIN KLEON: WHY I KEEP A DIARY

As with any dream, financial independence (or retirement, if you’d like) starts as an abstraction.

Abstract thinking is a beautiful feature of the human mind. We do it when we use our imaginations. It is the process of conceptualizing our most important desires. We use it to build connections between the present and the future. It helps us create, find meaning, plan, problem solve and imagine our feelings if we succeed or fail.

Through abstract thinking , we engage in the future while taking a deeper look at the present.

The business world is filled with stories of abstract thoughts becoming concrete realities. The thought, What if we didn’t have to rely on our own two legs or the health of a horse to get around, beget cars. And many more stories are being written today: What if we became an interplanetary species?

How can we turn our personal abstractions into concrete realities?

That is where journaling can serve an important role.

We so often make big decisions in life based on predictions of how we think we’ll feel in the future, or what we’ll want. Your past self is your best indicator of how you actually felt in similar situations. So it helps to have an accurate picture of your past.

DEREK SIVERS

Writing in a journal is a way to exercise our abstract thoughts.

A journal is where we can look at ourselves as an outside observer, as if turning ourselves into characters and guiding them to catharsis. We see ourselves from a distance, which allows us to see what really is rather than only what we want.

Psychologists call this psychological distance. This separation between ourselves and ours goal or challenges can make them more manageable. It helps us make decisions, think outside the box and control our emotions when things go wrong.

Through an abstract lens, we are less reactive and more insightful. We use our memories to make connections from past experiences to solve problems. This builds resiliency.

As it pertains to wealth and financial independence, journaling can be one of those illusive tools to combat our own cognitive biases. It is a way to stay focused and separate the signal from the noise.

A Dominican University of California study found that people were 33% more likely to achieve their goals when they wrote them down their goals and shared them and their progress with others.

As Henriette Anne Klauser, author of Write It Down, Make It Happen, writes: “Writing triggers the [reticular activating system], which in turn sends a signal to the cerebral cortex: ‘Wake up! Pay attention! Don’t miss this detail!’ Once you write down a goal, your brain will be working overtime to see you get it, and will alert you to the signs and signals that […] were there all along.”

Further research suggests handwriting improves learning, memory and idea generation.

So, if you want to achieve financial independence, you may want to start by grabbing a pen and a notebook.

Write about what financial independence means to you. Put down the steps you plan to take to get there. Openly write about your feelings — how you feel now and what you expect to feel in the future. Then keep updating your progress, both the wins and the fails.

Happy journaling!

Friday Five

The empty language of Silicon Valley

The concept of disruption is a way for companies, the press or simply individuals to think about questions of continuity and discontinuity – what lasts and what doesn’t, what is genuinely new and what is just the next version of something older. 

How design shapes the world

Often there’s more than one person in power, and it’s their capacity to collaborate that defines what’s possible.

Jonathan Clements on the simplicity of money — and how hard that is

Figuring out what we should do with our dollars is typically straightforward: We should save regularly, diversify broadly, rebalance occasionally and so on. Instead, the tough part is getting ourselves to do what we intellectually know is right.

Books survive thrive in the time of Netflix

If binge-reading hasn’t fully supplanted binge-watching Netflix shows quite yet, the trend is certainly making strides. In August 2020, year-over-year sales of print books in the U.S. were up 13%, according to NPD BookScan, which tracks book sales across the U.S.

Friday Fiction (or shameless plug): My latest published flash fiction story, 99 Lives

“Why all the cats?” he asked.

I shrugged. It was the question everyone asked. Ninety-nine cats in a single-story house with an old, solitary woman and then, for some time, no one knows for sure how long, a corpse.

Are We Suffering from TMS (Too Much Storytelling)?

This is the part where I’m supposed to regale you with an enlightening, insightful or thought-provoking tale about an ancient Stoic philosopher, or some little known World War II general, or an apocryphal business anecdote featuring Steve Jobs, or my own personal reflection of what I learned running my first marathon.

In other words, this is where I begin a story.

There’s a trend for bloggers and content marketers – especially in financial writing – to make large claims of how some event or phenomenon or another – war, sports, business, brewing beer – explains the human condition or duly deconstructs complex concepts – investing, tax codes, retirement – into intuitive parts.

This is storytelling. It works to great effect. Except when it doesn’t.

Many blogs now take us on a journey to a point rather than just a step. Meanwhile, the average reader spends less than 15 seconds on a page.

It’s hard not then to wonder if we’ve gone too far. Has the desire to tell a great story gotten in the way of delivering the message?

Have we hit peak storytelling?

This week, Doug Boneparth – sharp thinker, good writer, coffee connoisseur, media personality, sartorial tastemaker, master of Twitter sarcasm, the lesser half of a talented podcast team and, oh yeah, president of his own firm Bone Fide Wealth – raised the issue with this tweet:

It’s funny cause it’s true; it’s equally hurtful cause it’s true.

As several people responded, I, too, am very guilty. A sinner of wrapping up the message in a long, overly detailed narrative.

Boneparth brings up a very good point. Why do we often obscure the message behind an at times irrelevant story when readers want specific answers to important finance questions?

Why we tell stories

Storytelling in blogging and content marketing is nothing new. It’s often at the top of every digital marketing best practice list. And storytelling as a means of persuasion goes back to even before the written word. It has arguably been a decisive part of all major historical events.

Consider Benjamin Franklin’s use of pseudonymous newspaper letters prior to the revolution to express his political views. When Franklin purchased the Pennsylvania Gazette in 1729… shit, sorry!

There are two primary reasons storytelling is an effective tool.

One, as we talked about, is that people gravitate toward stories. They create relationships between customer and business, client and advisor, author and reader, etc.

Brands aren’t logos. Brands are promises. If Nike opened a hotel … with your eyes closed you could figure out what it would be like. But if Hyatt came out with a brand of sneakers, no clue! Nike has a story.

SETH GODIN

The other is to serve the almighty god we call search engine optimization. Google ranks pages higher when they have a certain word count (the minimum is typically considered to be 300 words and the sweet spot between 800 – 1,200 words). Additionally, a story gives you more opportunity to input those all-important keywords.

It’s easy as the writer to read our work as the writer and forget to read it as the reader. Especially with financial writing, we can miss the forest for the trees and forget the purpose, which is to provide helpful information to help people make a decision.

Seemingly, too many of us have gravitated toward historical anecdotes to make us look smart.

Making storytelling work

I’m not advocating for the abandonment of this storytelling style. There are many writers that are great at it. The stories are enlightening and entertaining.

Plus, I would argue consistent content is more important than style. If writing in a storytelling style keeps you going, then don’t stop.

However, I do think we could all use a gentle reminder of how to use storytelling effectively.

The story weaved through your article should be in some obvious way relevant. If a reader must stop and ask what does this all mean, revise it.

Never let the story bury the message. This is where form comes in. Use short paragraphs and put the message in scannable way – bold, highlight, italics, big obnoxious arrow – so people can bypass the story as needed.

MOST IMPORTANT: Storytelling doesn’t mean you need a story. The point is to use the story structure to answer who, what, where, when, why and how. Do that consistently and with authenticity, you will tell a great story.

Make every blog three sentences or less to answer one specific question and you tell the story of how much you value other people’s time.

A story is as much about what you don’t say as it is about what you do say.

What do you think? Have we jumped the storytelling shark?

Your answer may decide what you write next.

Friday Five

Finance blog godfather Barry Ritholtz with 10 useless finance phrases

Study them. Never write them.

My favorite: “The stock market hates uncertainty.” This could be the 2020 phrase of the year. It is not merely wrong, it reflects a fundamental misunderstanding of what drives markets.

Using today’s technology to go back in time and learn from the past

Farhad Manjoo shows how the audio and visual records of history available online can not only help us learn but experience the past as if in real time. You just might find a new story idea!

This is why it’s so hard to find dumbbells right now

An example from Alex Abad-Santos of how you can write about a problem you have that likely affects many other people, too.

RBG’s advice for living

What enabled me to take part in the effort to free our daughters and sons to achieve whatever their talents equipped them to accomplish, with no artificial barriers blocking their way? First, a mother who, by her example, made reading a delight and counseled me constantly to “be independent,” able to fend for myself, whatever fortune might have in store for me.

Friday fiction: Phil Klay reads an excerpt from his new novel, Missionaries