The Four Burner Theory: Life Is A Trade-Off & What You Can Do About It.

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Other than personal finance and investing, I occasionally follow bloggers who write about other genres.

One of my regulars include James Clear who writes about health, happiness and productivity.

He does not post often, but when he does, it is always an intriguing read.

Last week he wrote about the Four Burner Theory.

The theory is delightful in its simplicity.

Imagine that our life is depicted by a stove with four burners on it. One burner represents our family, another our friends. Our work is symbolized by the next, and the final one burns for our health.

In order to be successful, James writes, we have to cut off one of our burners. In order to be really successful, we have to cut off two.

When I got to this point in James’s article, I started mentally searching for people who have managed to be extremely successful in all aspects of their lives. I was indignant and no matter how logical and how truthful the theory sounds, my initial reaction was to reject it. There must be a way to excel at everything, I thought.

Perhaps it was just fear manifesting itself as disbelief. The fear of losing health in order to do well at work, or not achieving my full potential at work just so that I can be in the healthy company of family and friends, or even losing friends and alienating family just so that my other fires remain burning strong. These are dreadful thoughts indeed.

Life is a Trade Off

Yet, if we can put these depressing thoughts aside and snap out of denial mode, we will be able to access one simple truth.

As the article so clearly points out, life is full of trade offs. In fact, our entire life is a trade off. Our resources are limited and our wants are plentiful.

And the modern world we live in demands a lot of us and our time. In fact, it demands more than we can ever hope to supply. We have to learn how to juggle the demands in order to live a balanced life.

Outsource, Constraints and Seasons

James goes on to share three ways of approaching the theory.

One, we can outsource. We outsource parenting by sending the kids to childcare.

We outsource work by adding more people to our team. In outsourcing, we free up more of our time for what matters to us most.

Two, we should accept and embrace the constraints. Instead of always lamenting about not having enough time, we should channel our energies into achieving more with the limited amount of time we have.

Rather than working harder at life, we try to work smarter at life.

Finally, James suggested another way to approach this dilemma. Rather than trying to do everything all at once, we could break our lives down into seasons. When we are younger we might choose to focus more on work before dropping the intensity subsequently to focus on the family and health as we get older.

You can (and should) read his entire article here.


My friends have told me that I have this uncanny ability irritating habit of translating everything I read into stuff that is investing/personal finance related. Guilty as charged. In that vein, allow me to build on James Clears’ thoughts.

Outsourcing our Money Problems 


We do that extensively actually.

When we want to purchase insurance, we go to a financial adviser who puts everything together in an easy to understand package tailored according to our needs. When we need a home loan, we reach out to a mortgage broker to compare across the many packages. It saves us time, it saves us effort.

To push the boundaries a little further, even the consumption of personal finance blogs such as this is an act of ‘outsourcing’. Rather than reading journals and reports, navigating complex databases, we make a beeline for blogs or attend investment courses to seek out easy to understand information and analyses. The job is now delegated, and the task of understanding is made simpler. Our time is freed up.

A word of caution on outsourcing though. Best practices in the corporate world dictate that only ancillary functions be outsourced. Core competencies of the organization should be kept in-house as much as possible.

In investing, we can outsource the analyses and the execution but the decision making has to remain in house.  We can seek all the advice we want but the eventual decisions will always be our responsibility. If we make right decision, we reap the rewards. If we make a bad investing decision even if it is on the basis of outsourced advice, there is no one else but ourselves to blame.

In other words, do not assume that you can outsource personal finance and investing entirely.

It is your money, and no one will care about it as much as you do.

Understanding our constraints

I believe that this is what separates successful investors from the unsuccessful ones.

  • Successful investors understand their constraints and work around them. They know what is possible and what is not. Unsuccessful investors on the other hand, are totally unaware of their constraints.
  • Successful investors know that they can never buy at the lowest or sell at the highest. They do not try to. Unsuccessful ones do not understand this as a constrain and they try to do it all the time.
  • Successful investors understand that they are not fund managers who spends 8 hours a day thinking what stocks to buy next. Time is a constraint. Unsuccessful ones believe they can pick better stocks than the professionals.
  • Successful investors understand that fees are a drag on performance and they try to minimise action. Fees are a constraint. Unsuccessful ones are not aware of this tenet and they overtrade.
  • Successful investors believe that tracking their portfolio performance is a necessity. Lack of performance feedback is a constraint. Unsuccessful investors do not see it and they just muddle along without an accurate sense of how well (or how badly) they are doing.

Seasons of investing 

Our experience with retail investors who attend our classes is that they tend to be in their forties and fifties.

Perhaps we were all too busy enjoying our youth to be thinking about money and investing. Perhaps we were too engaged in building our careers, establishing a family, raising kids to have the capacity for investments.

Yet, the power of compounding paired with conventional wisdom suggests that the earlier it is that we start investing, the better it will be. Unfortunately this seems to be hardly the case.

If you are reading this as a young man or lady still in school or fresh out of school, good on you. Your investing season has come earlier than most others. Given the runway you have ahead, you will find success.

If you are in your thirties and forties, there is no time to lose. Take some time out to think about money and investing now.

If you are in your fifties and is new to investing, do not fret. You might have to approach it in a more conservative manner, but it will be rewarding nevertheless.