How to Ruin Your Financial Life
Yes, you read that right.
I know that title stopped you in your tracks.
So let's go with it.
“How does one destroy their financial life?”
It's simple.
Spend more than you earn each month. Rake up that credit card debt. Double down on loans. And the list can go on and on.
But no one in their right mind wants to ruin their finances, right?
I’m sure you would want to have a secure financial future. If so, you simply have to do the opposite of what you came up with.
That’s the framework that helped me answer my own question: “Am I financially strong?”
Invert, Always Invert
The late Charlie Munger had a line for this:
“Invert, always invert”.
When a problem is hard to solve, flip it.
Instead of "How do I succeed?", ask "How do I guarantee failure?" Then avoid doing that.
In an interview, Munger shares his experience as a meteorologist during the war.
Rather than just drawing weather maps, he identified specific conditions that would mean disaster. By focusing on avoiding these fatal conditions, he became more effective at his job.
Watch the enlightening short clip below:
Why It Works
Asking “How do I succeed?” can sometimes be challenging to answer, as there are many possibilities.
But “What guarantees failure?” has obvious answers.
That is the benefit of inversion: it changes a vague question into a concrete checklist.
When we only focus on what we are doing right, it is hard to actually tell if we are doing well because progress is built slowly.
But flip the question, and it gets obvious fast.
Beyond Money
The inversion technique can be applied to all aspects of life.
For example, if you want to have good health, just stop doing what guarantees bad health: lack of sleep, being a couch potato, and devouring unhealthy food.
The same works for family, career, and other aspects.
It is easier to remove things than to add them, especially when time is tight.