7 Investing Principles to Enrich your Love Life
Love and money seem to be completely disparate topics that tend to conform with gender stereotypes. Women love to obsess about love. Men love to obsess about money. But what if these two topics have more in common than we think? What if lessons from investing could be applied to one’s love life? Here’s a thought experiment of how some key investing principles might inform one’s love life:
Develop curiosity and compassion for your own and others’ stories: People are irrational. We do stupid things when afraid. We panic easily. All the cognitive errors - confirmation and hindsight bias, anchoring, and misinformation - apply to love and money. For example, I don't understand why affluent Chinese retirees cut coupons and eat the reduced-fee lunch at community centers, nor do I understand why poor people habitually buy lottery tickets. I also don't understand why women go for jerks and narcissists, nor why men place such high value on a woman's physical appearance.
When it comes to love and money, everyone behaves irrationally, but everyone has a story. This story informs their worldviews and values and, ultimately, how they handle love and money. And given the backdrop of those stories, people's financial and romantic behavior make sense. Background, temperament, and culture have outsized effects. A friend once took me and my parents to an expensive restaurant, and my dad, who grew up an impoverished child in Hong Kong, couldn't enjoy the food. Chinese people love saving money and as my dad would put it, "Cheap food tastes better." Poor people buy lottery tickets because it's a small price for a sliver of hope. Hope is what helps us get out of bed in the morning. Women date jerks and narcissists because they're bold and evoke strong feelings. We all want to feel. As far as physical appearance, an attractive woman is like a tropical vacation - her beauty transports a man somewhere else. And we all love to travel.
Everyone has a story for why they behave the way they do. It may be irrational but it makes sense in the context of their story. Approach people with curiosity about their story. Exploring and telling our own story also engenders humility. Awareness of our own weaknesses and limitations can help us appreciate the gift of another person. Curiosity and compassion can go a long way towards understanding why someone behaves the way they do. This means our snap judgments about people may not be accurate and it’s often worthwhile to second-guess our instincts and stick with someone a little longer to dig deeper into their story.
Determine your objectives and don’t get distracted by other games: Long-term vs. short-term investing are completely different games. Getting rich quickly is the Margot Robbie of investing. Maxing out one's 401(k) is the Judi Dench. Getting rich slowly is like watching paint dry. Retiring at 25, 35, or 45 is a completely different ballgame from retiring at 55, 65, or 75. Likewise, in dating, everyone wants Ken or Barbie (or both), and short-term mating has churn and froth that counts for nothing over the long term. It’s the difference between a booty call, friends with benefits, girlfriend, or wife. Each relationship type has pros and cons, and your goals and timeframe determine what game you're playing. Don't compare yourself or learn from people who are playing a different game from you. Marriage is the best long-term game out there. For those looking for a spouse, it means giving time for “the spark” to build. Think crock pot versus microwave.
Watch what people do, not what they say: Speaking of stated values and reality, there is a huge gap between what people say and what they actually do. For example, according to a Charles Schwab survey, when it comes to saving for retirement, respondents said they needed on average $1.3 million in order to retire. However, on average, those same respondents (even those in their 60s!) had saved only $113,000. That simultaneously baffles and fascinates me. Likewise in dating, research indicates that people's stated preferences about dating across race doesn't match up to their actual behavior. This comes as a surprise to precisely zero Asian men (or Black women) who have used dating apps. They understand the real world of bias and limited information and how the deck is stacked against them. That’s why it’s helpful to take a person’s words less seriously than their actions. We rarely do what we say and I pay high respect to those who strive to align their behavior with their values, recognize the inevitable gap between the two, and receive and extend grace for it.
Positive outcomes do not necessarily correlate with high activity: Famed investor Warren Buffet says, “The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.” In the game of long-term investing, "doing nothing" for months and even years is normative. I have peers who claim to be long-term investors but actively trade based on daily market fluctuations. They're swinging at lots of pitches - in no small part because peers and media noise are yelling, "Swing, you bum!" Likewise, in dating, our culture rewards action and numbers. Date as many people as possible. Work constantly on yourself in terms of diet, exercise, wardrobe, and social skills. Ingest loads of dating self-help content. And yet all that direct activity may not translate into deep and meaningful relationships (assuming that's your goal). Don't get me wrong—this is not an encouragement to behave passively (I'm talking to you, men). I'm saying consider carefully how to align your goals, execution, and activity. For example, many Christians loudly proclaim how they’re looking for a partner who loves Jesus. But how much does Jesus speak into your own life? How do you love your neighbor and make disciples? Spiritual activity doesn’t directly relate to dating, but it has everything to do with your stated values.
Confidence and receptiveness are key: A recent Freakonomics episode looks at why few people give attention to personal finance advice from economics professors, whereas millions will flock to "untrained" professionals like Suze Orman and Dave Ramsey. Take Ramsey's "debt snowball" concept, for example. A person pays off the smallest debt balance first, regardless of interest rate.This doesn’t make financial sense. You minimize total cost by eliminating the highest-interest debt first. But overcoming debt is less about being financially rational and more about the psychology of momentum. It makes no difference if you reduce overall cost if you call it quits after two weeks. Ramsey understands the way people operate - confidence is key. If a person sees the progress she made by getting rid of a debt, it provides a positive feedback loop to keep the snowball rolling. And when it comes to dating, confidence and encouragement are what keep people in the game. That's why dating gurus encourage their clients to see every dating failure as an important lesson and to persist. Staying in the game and having a positive outlook make a big difference down the line. Receptiveness means having a growth mindset to persistently adopt a learning attitude. You don’t have to swing at every pitch but when the right pitch comes along, don’t be afraid to swing!
Like interest, relationship patterns compound exponentially: The marvel of compound interest is the ability for a small amount of money to grow into a life-changing sum over the span of years and decades. Relationship patterns work similarly. “How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually, then suddenly.” from Ernest Hemingway’s “The Sun Also Rises”. You can lose and gain large sums of money through patterns of spending or saving. You can fall in or out of love through interaction patterns or as Gottman calls it “positive sentiment override”. Our beliefs manifest themselves in our behavior and the things we repeat have exponential power to compound over days, months, years, and decades to alter our financial and relational futures. As they say, the best time to start investing is today. That goes for both money and relationships.
Rewrite your story: When someone rewrites their story, it's evidenced in how they treat love and money. My parents rewrote their childhood scripts of both love and money. For my dad, it was easier to rewrite his love script because he had no example of marriage to emulate. He was raised by his mother and had no relationship with his dad. In early childhood, I remember frequent arguments and my dad’s withdrawal from my mom’s temper tantrums. Their love narrative took a turn after they attended a Catholic retreat called Marriage Encounter. When they became Christians years later, they grew their ability to navigate conflict and fully accept each other.
We all have stories to rewrite. Our personal narratives helped us survive but they also contribute to irrational behavior. My dad had an impoverished upbringing so his money script has been the toughest to change. And yet today he gives away a significant portion of his retirement income to churches, non-profits, and his children and grandchildren.This is the man who peppered me with questions about the purpose, usefulness, and educational value of a LEGO space station I wanted when I was ten years old. In the end, investing and love are about values. And as I teach and model for my children, it is possible to rewrite one's story and have the effect reverberate across generations.