Last weekend, I shared on my social media a mental model used by the late Charlie Munger, the long-time business partner of Warren Buffet.
The phrase comes from the 19th century German mathematician Carl Gustav Jacob Jacobi:
“Man muss immer umkheren.”
(“You must always invert.”)
He believed many mathematical problems can be solved by inverting them.
The same goes for other life problems. Many problems are best solved by looking at them backward rather than just forward. Instead of only asking, “How can I succeed?” you should also ask, “What would guarantee failure? What mistakes must I avoid?” This way, you prevent disaster and bad decisions more reliably than trying to engineer a perfect success.
When it comes to having a high FQ in order to live a comfortable and happy life, of course, I want you to start imagining your dream life complete with a mood board, as discussed in FQ Book 3: High FQ By Design. For today’s article, I wish to discuss the opposite side of your mood board. This method is not always welcome in a world of positive thinking but its power lies in making it concrete in your mind where you don’t want to go. Let’s try to apply it.
Your goal: I want to have a high FQ and accumulate enough money to live my dream life.
Instead of just asking, “How can I achieve a high FQ and accumulate enough money for my dream life?” we stand to have a higher success rate by also asking the following question:
“What causes people to go broke? What financial habits guarantee low FQ and financial failure?”
By identifying and eliminating these traps, you elevate your financial intelligence almost by default. Here are other examples of using the “Baliktarin mo, baby!” method:
1. Instead of just asking: “What investments will make me rich?”
Invert: “What investments have ruined people?”
By asking this, you will be reminded to avoid FOMO-driven buys, speculative investments, scams that promise too-good-to-be-true returns, and anything you don’t understand.
2. Instead of just asking: “How do I become financially independent?”
Invert: “What keeps people financially dependent?”
You will realize these are lifestyle creep, high-interest debt, and lack of emergency fund will be on top of the list.
3. Instead of just asking: “How can I increase income?”
Invert: “What destroys income over time?”
These are burnout, poor health, unethical shortcuts, and not upgrading skills.
4. Instead of just asking: “What are great businesses to invest in?”
Invert: “What businesses should I avoid given my situation and that of the investment environment?”
This will remind you of not overpaying and getting into something that you don’t understand. Remember the second basic law of money? Get only into a business you understand and seek advice from competent people.
5. Instead of just focusing on: “How do we beat competitors?”
Invert: “What do companies do that kill themselves?”
Once you outline these things, you can avoid them. These could be engaging in a fierce price war, always focusing on what competitors are doing instead of enhancing your own core competence, etc.
6. Instead of just asking, “How can I succeed and keep this client?”
Invert: “What would cause me to lose this client?”
When you imagine yourself being the client and your own experiences of discontinuing engagement, you will be able to avoid those causes such as poor customer service, unreliability, etc.
Why Always Invert Works So Well
Most of the time, our best goals and dreams in life are not fulfilled because we fail to have clear imprints in our minds what we should avoid. This mental method of always inverting works because of these three elements.
- It’s humble. We accept that avoiding stupidity is often easier than achieving brilliance.
- It reduces bias. As discussed in FQ Book 2: The Psychology of Money, we have many biases that get in the way of having a high FQ. By inverting, we avoid overlooking risks when chasing success.
- It’s preventative. Like good health, good finances come from not doing the wrong things repeatedly.
The takeaway
Having a high FQ isn’t just about learning to earn, save, and invest—it’s about learning to avoid what sinks most people financially. So, next time you set goals about money, career, health, relationships, and other important aspects of life, flip the script. “Baliktarin mo, baby!”
I wish to leave you with some quotes to help imprint the lesson of this mental model in your mind.
Cheers to high FQ…by avoiding stupidity!
ANNOUNCEMENTS:
1. Do you know where you are now in your FQ Journey? Take the FQ Test, click here.
2. Get your copy of the FQ books to start your FQ Journey now. Click here.