How to Measure Your Life Effectively (Hint: Not With Return on Happiness)

return on happiness

Mr. Money Mustache, a top personal finance blogger, mentioned on the Tim Ferriss Show that you should optimize your finances for return on happiness rather than the cliche return on investment (ROI) or any other metric.

This triggered a memory of the billionaire Mark Cuban saying on Shark Tank that he makes his decisions based on return on time.

This got me thinking … what’s the best metric to optimize your life around?

Don’t you mean “happiness return?”

First off, Mr. Money Mustache made a mistake on his phrasing. When you say “return on”, the word after is the form of investment you put in.

He wants to measure his life by the total happiness he gets from his investments. So he should call the concept “happiness return” or “happiness on investment” since you’re not investing happiness.

Return on investment, the obvious and popular metric

First off, ROI is clearly not the best metric to measure your life by. I’ve cited countless examples of people who are rich but unhappy in my articles. Wealth doesn’t guarantee happiness because science show happiness comes from sources that owning a pile of paper doesn’t automatically give you, like strong relationships, fulfillment, mental health, or giving back.

Pay particular attention to the various regrets wealthy people have: the sacrifices of health, family, relationships, or bucket list items. While some sacrifices are worth the investment, others are not. Eventual Millionaire has plenty of millionaire interview podcast episodes to prove this point.

There was one particularly sad story from the show I remember to this day. This millionaire said he would have instantly given up the mansion and gifts his dad gave him as a child in exchange for time to spend with his father and his physical health. His dad sacrifices his health so much for wealth that he is bed-ridden and his annual medical costs are higher than most people’s salaries.

That’s one reason Warren Buffett is one of my all-time favorite role models. His life lessons are greater than his business lessons. He encourages people to follow their passion and measure their life by how many people they want to love them actually love them when they die. In a Charlie Rose interview, Mr. Buffett said he never met someone who had children who loved him or her who wasn’t happy. On the other hand, he’s met plenty of crazy rich businessmen who had monuments and buildings named after him who had no one who loved them attend their funeral.

There’s a difference between pleasure and happiness

“Money and pussy are like black holes. You can get enough.” -Dan Bilzerian on Larry King Now

A lot of suffering comes from a misunderstanding between pleasure and happiness. Most assume these two concepts are one and the same, but they’re not.

Pleasure is short-lived. You feel good for 10 seconds, an hour, a week, or maybe even a month — but it goes away. Like a drug, the feeling dies away and you try to get more of it to reach the same level of enjoyment because you’ve grown accustomed to the dose. At a certain point, you stop feeling any increase in how you feel even as you get more pleasure. Just like jumping into a bottomless pit, you never find the end.

Most possessions money can buy (ice cream, shoes, or a mansion) create pleasure but not happiness. This has been documented extensively by science under the term, hedonic treadmill. Scientists theorize that humans evolved this behavior not to acclimate to positive events, but to cope with permanent negative events that occur.

True happiness is resilient and stays with you. It’s a feeling of well-being, not crazy, extreme elation — and definitely not an extended period of stimulation.

Most of us live off pleasure, whether we’ll admit it or not

Kelly McGonigal, author of The Willpower Instinct and a Stanford professor, explains a fascinating experiment in a TED talk.

Researchers found that rats would ignore sex, food, or anything scientists offered them — and would even go through massive pain to their feet to obtain more of a stimuli to a certain area of their brain. The rats would sit there all day pressing a button to get this stimuli when given the chance, even if it starved them.

At first, the scientists thought this area of the brain must be the pleasure center. But after further study with humans, they found that this brain region did not provide any actual pleasure or enjoyment when it was stimulated. Humans said they felt frustrated when it was stimulated, as if something they deeply desired was just a step away. They would fight and beg for more stimulation when it was taken away.

It turns out that this was a region responsible for the promise of pleasure, not the actual pleasure. The rats and humans fought for the expectation of what they thought they would get, not the actual result.

That’s how many of us live our lives. We measure our success by the expectation and chase for what will bring us more pleasure, whether it’s mansions, sex, status, or trips to the Maldives. As shown, this model for living is flawed.

All sacrifice, no enjoyment

On the other extreme, there are men and women who have never done a single activity they wanted to do their whole lives (or close to it). They believe that you get what you want by sacrificing by doing what no one likes doing (working out, eating healthy, staying late to work, etc.). While there’s definitely truth to the idea that second-order consequences often require sacrificing first-order pleasures, that’s not to say none of life should ever be enjoyed.

What is the purpose of living if you’ve never done anything you wanted to with your life? Even a nun who has sacrificed so much has at least done something she wanted to by devoting it to a higher cause.

Most of us know this deep down and we devote some free time to something we enjoy, whether or not it makes money.

Invest in what actually brings happiness

Mr. Money Moustache’s point was that your spending shouldn’t be governed by what’s going to make you the most money in the long term.

It’s sometimes better to splurge on what brings happiness. So what actually brings happiness?

Rather than opening it up to subjective debate, let’s turn to science.

Make purchases that will:

  • boost your feelings fulfillment and purpose
  • get you to a first-world country middle-class income
  • improve your long-term strength of your relationships
  • increase the flow and enjoyment you have with your work
  • improve your contribution to your local (or global) community

These are the most peer-reviewed, tested contributors to happiness.

Look for subcategories within each that can improve your decision-making. For example, paying for an experience (like a trip to Paris with your spouse) rather than for an object (like a purse) could improve strength of relationships more.

Living the first half of your life in complete suffering doesn’t work

Return on happiness is too vague a concept. Do you mean happiness throughout your life or after you retire? 

Because the context of Mr. Money Moustache’s interview was on investing and living on $25-27K per year, I’d assume he meant the latter.

I am Asian American so I am familiar with my culture’s ideal of suffering for decades to get a job you hate that promises status and wealth.

I’m also a personal finance junkie so I’m familiar with this world’s ideal of cutting back on expenses tremendously and investing most of your earnings into a nest egg to grow it to millions when you retire through compound interest.

These models of living suck. Literally.

From experience, you end up filled with frustration and resentment, asking yourself, “What’s it all for? To blow on a beach vacation and a gold digger during the last years of my life — assuming I don’t get cancer or hit by a car before then?”

I’m happy that many successful people and influencers have come forward to point to a new model, “following your passion“, that the Technological Revolution has made possible. And there are plenty of success stories to support the theory.

To be fair, not every Asian American or personal finance lover following this philosophy is suffering. Many have found ways to enjoy the journey.

A few preach how they’ve managed to live happily despite being near the poverty line. They talk about how selling their car and biking to work didn’t affect their enjoyment of life. One person on Reddit even told me how he managed to live a great social life off a couple hundred bucks a month by being creative and having parties with simple purchases, like a 6-pack of beers and cheap $5 costumes.

If you can do that, awesome.

Just realize there’s a point when convincing yourself you are enjoying life and happy stops working. I tried to convince myself I loved science and wanted to be a doctor. It worked until I started prepping for the MCAT and was assigned hundreds of pages of reading.

I know a good amount of people in med, law, or some secondary school — and a large percent are Asian Americans. A suspiciously large percent. I wonder how many are still partially caught under that delusion.

You should YOLO some of the time

There are benefits to the “For all we know, we might not get tomorrow” philosophy.

The world is a chaotic place and you might not get tomorrow. You could die young from cancer, a car accident, or a shooting — something completely out of your control and common.

If you’re only optimizing for when you’re old, what if you die before you can enjoy life? Then, all that suffering would have been for nothing.

Not to the extremes I just mentioned, but to the point where you emphasis enjoying and making the most of the present.

Like Charlie Munger says, the extremes are usually wrong. There truth is usually somewhere in the middle.

I believe optimization, in this case, comes from having a moderate amount of fun right now, while preparing for the distant future as if you will live to get there even if there’s a chance you won’t. Specifically, this could mean budgeting and saving some of your money, but also giving yourself some leeway to spend some money or time on healthy activities that you enjoy now (like bowling, shoes, or sight-seeing). At the same time, you build for the future by investing in your education, business, or career, knowing that this will snowball into a vast resource decades down the line (this can be through online courses, podcasts, books, etc).

A more “perfect” level of optimization would be to find a job you’re 100% passionate about (or move towards that direction). That way, your work is 100% productive and building for the future while you are still enjoying the journey. And it would be ideal, from a mathematical standpoint, if all your pleasures outside of work were productive to the point where they were building to greater wealth and free to partake in.

But as Dave Ramsey says, real life isn’t just a math equation. Not all of us are like Warren Buffett as a child, who studied stock market books for fun. Few people are going to find this right out of school or have completely built this dream job even in several years in the workforce. And most likely, your hobbies and interests will require you to spend money and doesn’t seem to clearly pay off in any way financially in the short or long-term.

So what’s the TLDR of this rant? The optimal return on happiness solution is one where you optimize for a balance of the highest average of happiness throughout your whole life by enjoying the present, while still budgeting reasonably and investing for growth for the future.

I argue it isn’t a seamless straight line you’re aiming for. There will be wiggles in the line. Sometimes, there may be small periods of 2 to 4 years (say college) where it may pay off overall to suffer a little bit more on average for a higher absolute return on happiness.

So are you saying delayed gratification isn’t good?

I’m saying that if it’s obvious that you are hating what you do and living in quiet desperation for most or all of your days everyday and see this to continuing for the first 50 years of your life, that’s a bad sign.

Delayed gratification is fantastic! A lot of the success in the world is because people gave up what they could get now to get much more in the future. If it wasn’t for delayed gratification, there would be no investing or ROI in the first place. We would all be indulging in whatever was in front of us.

Moreover, it’s uncommon. 

The groups I mentioned are minorities. Most people don’t delay gratification. Instead, they are short-sighted.

They chase get-rich quick schemes and fast fat loss plans. They want everything now and that impatience costs them because true success is built in the long-term.

Most young people my age I meet don’t care about personal finance. They like buying clothes, food, movies, and vacations. Living pay-check-to-paycheck is okay.

In fact, most top athletes and entrepreneurs talk about how they’re successful because they did what others are unwilling to — and how it wasn’t always fun. There is even a scientific study that tracks kids who are better able to resist taking candy for the promise of more candy to adulthood, which found that these kids were more successful.

Find the right vehicle

The distinction is that inside the outer shell of “doing what you don’t want to sometimes” is an inner shell of doing what you love.

Gary Vaynerchuk may not always enjoy every second of the grind of entrepreneurship on his 17th straight hour of work but he loves the overall sport. Michael Jordan may not have always enjoyed the extra hours he practiced late into the night but he enjoyed the overall sport of Basketball. Will Smith may not have enjoyed the candlelit into the night where he had to work with an unagreeable coworker but he enjoyed the overall process of acting.

When you pick the right vehicle for what you want to do, you’ll still have moments of displeasure but your overall love for what you do will keep you tap dancing to work.

Optimizing for too much short-term pleasure is disastrous (but you knew that … right?)

Consider the reckless male teenager who lives a (You-Only-Live-Once) YOLO lifestyle. He does everything that pleasures him now, no matter the costs.

He parties. He drinks. He does drugs.

What are the potential long-term costs?

He doesn’t study, which reduces his chances of getting into a good college and having a profitable career.

He makes decisions he regrets by behaving foolishly to people he knows while drunk.

He gets addicted to drugs that cost him money on a recurring basis, forcing him to devote money and time that he could have invested elsewhere.

The problem with that is that he’s sacrificing potentially larger parties, possessions, and fun in the long-term for short-term pay-offs.

On return on time

This is a good metric. But also too vague.

Focusing on time as the main investment you base your decisions is genius. But what are you focused on returning?

To answer this, it’s important to thoroughly decide on your values and priorities.

If you don’t think this through, you live to regret not doing more of an activity. To give you some ideas, common priorities missed include:

  • family time
  • health
  • fulfillment
  • purpose for your work
  • leaving a legacy
  • finding work you enjoy
  • leaving a positive impact (contribution)

Wealth is the one priority that most people don’t forget. The problem is that people forget about other priorities in the pursuit of money — until it’s too late.

So get out there and get going.

If I had to sum this article up in one sentence, it’d be:

“Enjoy the ENTIRE journey intelligently so you live a fun and abundant life throughout the process on average while expecting up’s and downs.”

Conclusion

What’s the best metric to optimize how you live around?

It can’t be bottled down to one phrase but if I had to, I’d say: Highest average happiness and fulfillment throughout your entire life (not just the end or beginning) with minimization of regret.

Some can add the factors contribution, strength of relationships, and/or legacy to this metric towards the end of their life.

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By Will Chou

I am the the founder of this site and I am grateful you are here to be part of this awesome community. I help hard-working Asian American Millennials get rich doing work they love.

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