The late investor Charlie Munger was known for his prolific wisdom.

Perhaps his wisest insight of all came when he was asked to reflect on the source of his own happiness:

“The first rule of a happy life is low expectations. If you have unrealistic expectations you’re going to be miserable your whole life.”

His words echo an old aphorism, which says that low expectations are the key to life.

My friend Morgan Housel once ​wrote​:

“Actual circumstances don’t make much difference…What generates all the emotion is just how big the gap is between expectations and reality…Everyone, everywhere, doing almost any task, is just in pursuit of finding some space between expectations and reality.”

So, by definition, if you keep your expectations perpetually very low, you’ll always be happy.

Right?

The science does seem to support this general idea:

In a series of ​brain imaging experiments​, researchers at the University College London found that happiness isn’t driven primarily by how well things are going, but by whether outcomes exceed or fall short of what was expected.

In my experience, this model is mostly correct, but it feels incomplete.

A small personal experience last week helped crystallize what was missing:

I had a speaking engagement scheduled for Tuesday morning in Aruba.

It was going to be 18 hours, in and out. I’d miss Monday night dinner and be back in time for Tuesday dinner.

That was my expectation.

I got out of the talk (which was a lot of fun), checked my phone, and saw the bad news. The inbound plane hadn’t left yet and was in a series of rolling delays.

(Every frequent flyer knows what it means when you start seeing the delays stacking on top of each other…)

I was gutted that I wouldn’t be home for dinner with my wife and son. My reality had fallen well below my (admittedly high) expectation. Just as the model predicted, my happiness plummeted.

My expectations also reset to a much lower level: I resigned myself to the fact that I probably wouldn’t make it home until the following evening.

And then, unexpectedly, an alternative flight emerged. Despite the inbound flight experiencing similar rolling delays, it wasn’t cancelled. I moved quickly, snuck through on standby, and made it home at midnight—well after my wife and son were asleep, but home nonetheless.

As I sat in the kitchen eating a reheated dinner alone, I realized I had the biggest, most genuine smile on my face.

Maybe low expectations really are the key to life, I thought to myself.

But then I paused. Something about that conclusion felt wrong. Life can’t just be about keeping your expectations low on all things at all times.

It’s too passive. It completely ignores the role of agency. Your capacity to take action to shape the world around you.

Happiness isn’t passive. Agency plays a clear role.

Yes, I had low expectations for the weather. For the airline. For the system. I assumed nothing would work.

But I had high expectations for myself. I spotted the chain of events early. I scrambled to identify alternatives. I moved quickly when a door cracked open.

So, here’s the model that feels more complete (to me, at least):

• Low expectations for things outside your control.
• High expectations for things within it.

You should never have low expectations for yourself—that is anti-agency.

You don’t control the hand you’re dealt, but you always control how you play it. Low expectations for the hand, high expectations for what you do with it.

That doesn’t mean it’ll always work out. Sometimes you’ll do everything within your control and life will insist on doing life stuff.

It does mean you’ll be at the wheel on your own journey to happiness.

I’ll conclude by offering my own version of Charlie Munger’s timeless wisdom:

The first rule of a happy life is low expectations for things outside your control and high expectations for things within it. If you have high expectations for the world and no expectations for yourself, you’re going to be miserable your whole life.

Not quite as pithy…but I’ll be damned if it doesn’t ring true.