During my bachelor’s degree, I had a course about behavioural finance. The same topic also came up during my CFA studies. There was one concept in behavioural finance that I found fascinating and that was the difference between satisficing and maximising.

Recently, I had a career dilemma that made me think about these two concepts.

First of all, let’s define them so we’re all aligned about what they mean.

Definitions

Satisficing- definition

Based on Investopedia:

“Coined by Nobel laureate Herbert Simon in 1956, “satisficing” is a form of decision making where individuals choose the acceptable option, rather than the optimal one. In essence, it combines the words “satisfy” and “suffice.””

If I tried to simplify it, satisficers are people that stop searching once they found a “good enough” option.
There is no definition of what your minimal standards (or “good enough”) have to be, they can be extremely high standards. However, once a satisficer finds an option that meets his “minimal” (I hate that word in this context) requirements, that’s it.

Maximising- definition

Again, based on Investopedia:

” “Maximizers” aim to find the best possible outcome, often through an exhaustive search of options involving substantial time and effort.”

If I tried to simplify it, maximisers will keep searching until they find the perfect option.

Are you a satisficer or a maximiser?

You don’t have to be one or the other. Satisficing and maximising are forms of decision-making. That means that for some decisions, you might want to satisfice and for other decisions, you might want to maximise.

Personally, I am usually more of a satisficer. Being a maximiser sounds exhausting. Does that mean I have low standards? Of course not, I set my standards as high as I want but once they’re met- I’m happy.

Let’s take Lazy FI Mum, my lovely wife, for example. Is she the perfect match for me? Of course, she is. End of post. Have a great weekend.

Now let’s be a bit more objective. There are roughly 7.9 billion people in the world, roughly half are women… blah blah blah… narrowing it down (I’ll save you the journey) to a few millions (or even hundreds) of suitable partners. Can Lazy FI Mum statistically be my perfect wife/partner? statistically, It is very unlikely.

Are we married because she was the first one that came along? Of course not.

Did she amaze me loads of times throughout our relationship in different situations until I thought “Good enough”? Yes, she did.

I know what you’re thinking, I should write for Hallmark.

In all seriousness, if I only “settled” for the perfect woman, I would be miserable because even if I found her (I did, don’t worry), I would still think “But maybe there’s someone better out there”. As I said- sounds exhausting.

In most aspects of my life, I am a satisficer. I am aware of it and am very happy about it.

Satisficing in personal finance

I read a short story once, I think I read it in John Bogle’s book “Enough”. I want to share it with you:

Joseph Heller (author of “Catch 22”) and his friend went to a Billionaire’s party.
The friend turns to Heller and asks him: “How does it feel knowing that the host makes more money in one day than you’ve made from “Catch 22″?”.
Heller answers: “I have something our host will never have… I have enough”.

End of story.

I think that “enough” is the essence of satisficing and why I’m a big fan of this approach to life.

What is your FI number?

The concept of FI number is pure satisficing. Your FI number is the desired net worth that once reached, you can “retire”. Can you keep on working and earning more? of course you can, you can work until your last day on earth and maximise your earnings. Alternatively, you can stop at “enough” by setting an FI number.

People find this very hard to do and you see that in stories about the “One more year syndrome”. That’s when people reach their FI Number but work one (or two, or three, or ten) more year “just to be safe”. Does that mean they are maximising? I don’t think so. I think they just changed the minimum amount at which they will feel “safe” enough to pull the trigger. Or, more likely, they need time to process and accept that they’ve done it and the race is over.

However, even with the “One more year syndrome”, once you’ve accepted that you’ve won the financial game and that you have “enough”- that’s it, time to focus more on other areas of your life. The money part is done, that’s satisficing the way I see it.

With my FI number, I am going with satisficing. Once I reach it, that’s it. I’m not looking to earn as much as possible (which would be maximising). I may suffer from “One more year syndrome” as well when the moment comes but I think that even pursuing FI is satisficing from a money perspective.

I may be partly maximising my retirement length but even that’s not 100% true because if that were the case, I would cut our expenses even more and look for another job on the weekend.

My career dilemma

Why am I suddenly talking to you about satisficing, maximising, and “enough”?

A few months ago, I had my annual “salary increase” meeting with my manager. I work for a large corporation and my salary increase is based on some obscure formula. If I don’t like my salary increase, I can leave, threaten to leave, move roles, or go for a promotion. Those are my options.

Anyway, I was told that despite a high inflation year, I wasn’t getting any salary increase this year. I asked if there was anyone I could talk to about this and I was told there wasn’t. I was shocked, offended, and I basically felt very unappreciated. My initial response (in my head, I didn’t say it) was “I’m out of here!”.

I talked to Lazy FI Mum and we agreed that I’ll look for another job (no harm looking) before making a decision. As part of my search (based on Lazy FI Mum’s advice), I asked one of my previous managers (who doesn’t work for that company anymore) if we could talk. She agreed, I told her about my situation and asked for her opinion.

She didn’t tell me what to do. Instead, she gave me a few things to think about:

First, she said that she knows I value time with my family. As she knows the market way better than me (this is me saying that, not her), she thought I could find jobs that pay better but it will be longer hours and more days in the office.

Second, she mentioned that after more than 2 years in my role, I’m unlikely to learn a lot of new things, it’s “more of the same” and she asked if I was OK with that.

That call really made me think

My decision- satisficing

After a few weeks of soul-searching about what I wanted out of my career I decided to stay.
Despite limited learning opportunities and no salary increase (and probably no increase next year as well) I still decided to stay.

Why did I do that?

First reason- I earn enough

Yes, earning more might get me to FI a bit quicker but we’re saving more than 50% of our income, that’s “good enough” for me.

I wrote a post a few years ago about “enough” and “diminishing marginal utility” (you can read it here). Essentially, the more you earn the less you enjoy or value the next pound. Winning a £100,000 prize would add a lot more to my happiness compared to Bill Gates winning the same £100,000 prize (I doubt he’d even care).

Earning more won’t make me a lot happier, especially if it means less family time, which brings me to the second reason.

Second reason- work-life balance

My job offers great work-life balance and that is super important to me. I am a very involved dad, I spend a lot of time with my kids. My job also allows me the time (and permission) to teach Excel, which I love.

Third reason- I don’t get satisfaction from my job

This one’s confusing because it sounds like a reason to leave, not a reason to stay. What I mean is that I’m very satisfied with my life, I am very very happy but my happiness has almost nothing to do with my job.
I have an amazing family, that I adore, I get to do what I love (teach Excel), and I earn enough, that’s “good enough” for me, pure satisficing.

Is there a better job for me out there? 100%, no doubt.
Do I want to spend weeks or months looking for it and risk the time I have with my family? No way in hell.

I know that for some of you, this might seem sad. We spend almost half of our waking hours at work (now that’s sad!) and here I am telling you that I don’t really enjoy my job. I love hearing talking to people who are passionate about their work (Lazy FI Mum is one of those people). For me, my job is a means to an end and that’s it. I’m OK with that. My job is just not a significant part (in importance) of my life.

Don’t worry, I’m very passionate about teaching Excel, personal finance, my family, and about Shawarma (not necessarily in that order).

Fourth reason- I learn outside my job

Before my call with my previous manager, I never thought about the aspect of (probably) not learning anything new on the job. I love learning.

However, after a few weeks of thinking I got to the conclusion that of course, I’ll learn. I will always learn! It just might not be through work.

I learn new Excel formulas all the time. These formulas make my job simpler, I love it.

I learn about tax rules and how to play with NI. You can read about it here and about my mistake here. Funny enough, I even learned from that mistake.

I’m also learning other skills, like self-defence or even how to spend (thanks to Ramit Sethi’s amazing podcast).

As you can see, I learn all the time, it’s just not through work, and that’s fine for me.

Conclusion

As I mentioned, I decided to stay. I’ll probably stay until we move to Israel, in 3 years.

What I want from a job is:

• To earn enough to save 50% of our income
• Enough time to spend with my kids (and wife)
• The ability to teach Excel alongside my full-time job

These are my minimal (still hate that word in this context) requirements and as my job meets all of them- that’s “Good enough”. Please notice that “feeling appreciated” is not on that list, I just don’t care about that. Feeling appreciated at home is the one that counts for me.

Your minimal requirements can be completely different. Yours can be a 7-figure salary, managing people, being respected in your industry, and a pony in the office on your birthday (no judgment). Your “good enough” can be on an extremely high standard but once that’s met- why keep looking for something better?

I went with pure satisficing with my career and realised I have “enough”. I am happy.