The Lucky Fool

“It manifests itself in the shape of the lucky fool, defined as a person who benefited from a disproportionate share of luck but attributes his success to some other, generally very precise, reason.” – Nassim Nicholas Taleb, Fooled by Randomness

I think we’ve all met some version of the “lucky fool” at some point in our lives.

Think of a person born wealthy, with their parents giving them every academic and professional advantage, and then believing that they acquired some small measure of success in life through sheer talent and hard work.

Think of a person who happened to be in the right place at the right time and now believes themselves to be a person of immense skill and value.

Think of the business owner who is immensely proud of their keen business sense and strategies when their success lies on the back of a handful of talented and hard working folks.

Think of the person who works for a struggling business and yet still lives a paycheck to paycheck lifestyle because they’ve never been laid off or fired.

Here’s the thing, though: it’s not just those people. Almost everyone reading this site has, at some point in their life, been the “lucky fool,” myself included.

I was incredibly lucky to be born to two parents who genuinely cared about my future and genuinely did the best they could to put me on a solid path. They imbued me with some strong values and character and a lifelong love for learning. I wasn’t “destined for success” from birth, but I sometimes convinced myself to feel that way.

I was incredibly lucky in college to meet three wonderful mentors who did far more than I realized at the time. W., M., and V. were all there for me at key moments in my growth from a lost small town kid to a functional professional, yet I was often convinced at the time that my own smarts and ambition forged that path for me.

I was incredibly lucky in the success of The Simple Dollar. If I had founded the site a few years earlier or a few years later, it would have never become successful. Several of the early choices I made regarding the site were completely off the cuff decisions made in a flash and without any long term consideration, but if I had made different choices, the site would be long gone. Yet, there have been many times when I was overly proud of the site’s success and took it for granted.

I was the lucky fool at those moments and at many others.

So, what’s the problem? The problem is that it’s incredibly easy to overlook the role of luck in what we have, and that makes it easy to assume that our luck will hold in the future.

When we tell our personal story to ourselves, it is really easy to look back on highly fortunate events and believe that those events were much more influenced by our personal traits than they actually were. We weren’t lucky to get that great job – we deserved it. We weren’t lucky to meet that wonderful person – we were just attracted to each other. It can go on and on and on like this.

While there’s definitely an enormous benefit to having personal characteristics that contribute to luck and to taking actions that can increase one’s chances of luck, the fact remains that luck plays a very large role in our success, one that we often downplay when we think about our life.

Yet, at the same time, many of us strongly buy into the idea that bad luck just comes out of the blue and there’s no way we can predict it or do anything about it. Even worse, we also often assume that bad luck just won’t happen to us. Very few people sit around envisioning what will happen if their car doesn’t start or if they get into an auto accident or if they get really sick. It’s not part of the vision most of us have for the future – rather, it’s usually a vision of a relatively straightforward path into a future that’s similar to our current state, maybe somewhat better or worse depending on our outlook, but a pretty straightforward path.

What does all of this add up to? We wander through life strongly underestimating the impact that sheer luck has on our life, both in terms of opening the door for opportunities (which we attribute to personal skill or “deserving it”) and in terms of avoiding pitfalls.

We are all the “lucky fool.”

So, what’s the real actionable idea we can take from all of this? It’s simple: when we put forward effort to increase the chances of good luck and to decrease the chances of bad luck, we actually do make our future brighter. We create a future where we can get away with being the “lucky fool,” seeing fortune come our way and reducing our chances of misfortune.

Creating Good Luck in Your Future

I actually covered this topic in an article several years ago, Ten Tactics for Improving Your Luck. Here are those tactics, which almost universally point toward improving one’s fortune (though some also work to minimize bad luck, which we’ll get to later):

1. Keep a notepad and a pen in your pocket at all times.
2. Keep a reasonable amount of cash on you at all times.
3. Don’t get into a desperate debt situation.
4. Be social.
5. Establish relationships with many people who share your interests.
6. Help others out when they need it.
7. Shop at places where extreme bargains might be found.
8. Have confidence that you can do something challenging.
9. Know the actual value of lots of items in a particular specialty.
10. When you need something significant, tap your social network instead of buying blindly.

All of these strategies are extremely useful when improving your “positive luck,” or the good fortune that might come your way. You improve your positive luck by having useful knowledge, having a lot of relationships, being a positive influence in the lives of others, and retaining your useful ideas instead of just letting them drift away.

In my experience, I’d suggest that three specific strategies stand out head and shoulders above the pack in terms of creating positive luck in my life.

First, cultivate and maintain as many positive personal and professional relationships as you can, but do it in a way where you are giving something to the relationship without expecting something in return. Get out there to social events – personal and professional ones – and get to know lots of people. Follow up with them via email or texting or social media, and make an effort to keep up with that contact. Learn things about them and share things that they might find useful. Simply ask how they’re doing, particularly in terms of the things they seem to care about. If you hear they’re having troubles, check in and ask how you can help. If you can find ways to “multiply help” – in other words, do something that doesn’t require a huge effort from you but is incredibly valuable for them – just do it and don’t worry a bit about being “paid back” or what it will get for you in the future.

I’ve found that the more positive relationships I cultivate and maintain, the more opportunities just seem to open up before me. Not only that, this strategy tends to help a great deal with minimizing bad luck, which we’ll get to in a minute.

Second, build up some areas of useful specialized knowledge. By “useful,” I mean things that others are willing to pay for or things that you can use to make money with some regularity. For example, having a specific marketable skill in your professional life falls into this category, as does having some plumbing or electrical or carpentry skill, as does having an intimate knowledge of the value of certain collectibles so you can easily “flip” them if you have the chance.

The more areas of knowledge that you have with which you can help others or identify opportunities for profit, the more luck will shower down upon you.

Third, don’t let the good ideas in your head float away. If you have a good idea that would be useful at all to revisit in the future or to share with someone else, get it out of your head immediately and into some sort of system where you’ll see it again soon.

My system for this is a pocket notebook and/or the Evernote app on my phone and/or the Reminders app on my phone. If I have an idea or thought that deserves any kind of follow-up whatsoever, I write it down in one of those three places immediately, and then I’m able to deal with it at a later time by either taking some personal action on it or passing it along to someone who finds it useful.

I write down things I want to think about later. I write down potential article ideas. I write down noteworthy things I learn about people I meet. I write down upcoming sales that might be of interest to me or to a friend. Then, once a day, I revisit all of this stuff and do something useful with it.

I could write detailed posts about each of these things – and I have, over the years, though my systems for doing each keep evolving over time.

Minimizing Bad Luck in Your Future

On the flip side of that lucky coin is the “bad luck” side – the unfortunate events that you never see coming in life. When we look ahead into our future, we almost never see the unexpected bad event coming. We can’t imagine those things happening to us. Yet, they happen to people all the time.

People lose their jobs. People get a pink slip. People get seriously ill. People get in car accidents. People get depressed. People get dumped. People get divorces. It happens over and over and over again in the world.

There are lots of strategies for how to respond to those things, but I want to discuss five specific strategies that you can do now to minimize the chances of negative events as well as minimize their impact.

First, have a strong emergency fund. Ideally, you should have an emergency fund that equals several months of your living expenses, but if you’re just getting started, aim to have $1,000 set aside in a savings account. Remember, cash is king – it can come through for you when you don’t have any credit and your credit cards are maxed out. It can come through for you when your identity’s stolen. It’s pretty much the safest asset you can have, and that’s why it’s perfect for emergencies.

My personal recommendation is to automate an emergency fund. Set up a separate bank account to hold your emergency fund at another bank, then set up an automatic transfer of $10 or $20 a week into that fund and never turn it off, and then never touch the emergency fund until a genuine emergency hits. $10 a week puts $500 a year into your emergency fund; $20 puts $1,000 a year. You can do more than that if you’d like, but that’s a great start.

Second, cultivate lots of strong and stable friendships in your life and stick with them even when the other person is struggling. The friendships where you come through for people when they’re struggling are the friendships where others are likely to come through for you when you’re struggling. It’s never a guarantee, of course – I’ve experienced some people simply abandoning me during times of trial – but I’ve found that if you stick with someone during their life changes and difficult moments, they’re likely to have your back when you’re down, and that can make all the difference.

This is probably the single best strategy there is for simultaneously cultivating good luck and preventing bad luck, because it helps with both types of luck. Strong friendships can open opportunities. They can also stand with you when the chips are down.

Third, stay healthy and get adequate sleep. Eat a healthy diet with a lot of vegetables and fruits. Get at least some exercise. Get plenty of sleep each night. These simple steps derail so many illness and health related misfortunes that the benefits can’t possibly be overstated. It also helps you to feel good in the present so that you perform well at whatever life throws at you.

Fourth, keep your resume strong and keep your skills fresh, no matter how secure you think your job is. If the government shutdown has taught us anything, it’s that even the most stable of jobs are never a lasting guarantee. It took less than a month for federal employees to go from incredibly stable jobs to missing paychecks and considering career changes.

You can prevent this kind of outcome from happening to you by keeping your skills fresh and marketable and keeping your resume updated at all times. Keep an eye on the skills that are desired in your field in other positions. Sharpen those skills that you currently have and learn the new ones that come into your field. You want to be in a position such that if your job disappears, you can easily apply successfully for another position and have a strong chance of getting it quickly.

Finally, minimize your debts. Debt not only swallows your money in the form of interest and finance charges, it also increases your total monthly bills, meaning that you’re forced onto a financial tightrope where you have to keep a high paying job just to keep the balls in the air. This means that even the slightest career misstep or health misstep or relationship misstep can send things quickly into chaos. The fewer debts you have, the smaller your total monthly bills are and thus the easier it is to stay afloat when things get rough.

The key to this in the short term is to cut back on your unnecessary spending and put that money toward eliminating as many of your debts as you can. Take little steps like making coffee at home instead of stopping at Starbucks and buying a lot of store brand nonperishable foods and household supplies. Consider bigger steps like cutting out cable and just using Netflix or Sling for home entertainment or shopping around for a better cell phone plan. Take even bigger steps like shopping around for better insurance or moving to a more cost-effective place to live. The key is to cut back on your spending just enough that you’re not reliant on credit cards any more and can instead start paying them off (and funding that emergency fund from the first tactic).

Final Thoughts

Overlooking the role of luck in our life story is a mistake we all make. It only becomes a problem when we refuse to consider how luck will impact us going forward, in both a positive and a negative sense.

Step back and really consider how both good luck and bad luck brought you to where you are now, and then consider what your path forward will be like if you adopt strategies to increase the chances of good luck and decrease the chances of bad luck.

That way, you can truly be lucky, but no longer the lucky fool.

Good luck!

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