The Laws of Learning

This summer, I read The Game by Neil Strauss.

At first glance, this book has nothing to do with financial independence (FI). But it has everything to do with self-improvement and pursuing FI is a path to self-improvement.

Strauss had been unsuccessful with women until his late 20’s. He’d been the archetypal nerd: intelligent and logical but introverted and lacking in confidence and results.

The Game is the hilarious true story of how he turned this around to achieve success attracting women.  If you want to know what worked with Britney Spears and Paris Hilton, read it!

The Escape Artist is a natural sceptic so I did some due diligence and (as far as I can tell) its 100% true.  Whenever I find someone who’s achieved amazing results in any field, I take notice. Check out the video below and watch how Jessica Alba’s body language changes.

I dug deeper into how Strauss achieved this. He learnt about evolutionary psychology, emotional intelligence, neurolinguistic programming and he experimented. By combining the best ideas from others with his own experience, he came up with 14 laws of learning which he sets out in The Rules of the Game.

These laws of learning can be applied to pretty much any field of human endeavour. So I’ve applied them to the pursuit of financial independence and this is the result:

1. Acquire and apply knowledge in small chunks

We FI-seekers need to get our money to work immediately to take advantage of the amazing power of compounding. We can’t afford to wait until we know everything about investing.

Some people are perfectionists, others have a fear of getting it wrong. These people want to gather every scrap of information before taking action. So they get stuck.

The best way to learn is to start on the path now and take it one step at a time. For example, open an online broker account and buy a Vanguard ETF with a token amount of money. You should worry less about whether it’s the perfect choice (who really knows?) and worry more about getting started.

You will learn and make improvements to your earning, spending and investing. But make those improvements after the journey has started and you are on The Path.

2. There is no failure, only feedback

I’ve previously written that There Is No Failure. It turns out I was onto something.

People often get discouraged and give up after a setback. For example, they may have bought an emerging markets tracker then read scary news coverage on China, kick themselves and sell. Or they may miss their saving target for a month.

Never take market movements personally. A stock or a fund doesn’t know or care that you own it.

With savings targets, that is under your personal control. But don’t beat yourself up about it, just understand why you missed the target and do better next month.

3. Its never their fault

Never blame other people for things that don’t go to plan. If you don’t get a promotion at work, its pointless to resent the successful candidate or your boss that chose the “wrong” person. I think it was the wonderful Carrie Fisher* who said:

Holding on to resentment is like drinking a bottle of poison and waiting for the other person to die.

Take full responsibility for your own life. Accepting responsibility is good because it means you’re in control. So demonstrate a willingness to examine yourself and accept criticism without taking it personally. You also need to understand the impact of randomness.

Only then can you accurately determine whether there was something else you could have done, or if the outcome was truly unavoidable.

4. Learn actively rather than passively

Yes, you should read books and follow blogs like this one. But be honest with yourself. You won’t reach FI if you are reading them for entertainment. This stuff only works if you put it into practice in your everyday life.

You must take action to succeed. The more active the learning, the more you will absorb it emotionally as well as intellectually.

5. Don’t rehearse only negative outcomes

Before I buy a share, I ask myself 2 questions. What will I do if this stock doubles? And what will I do if it halves?

If you are driven by fear you may only rehearse the negative outcomes. This may mean that you never buy the stock. Or it may mean you aren’t prepared for a successful outcome: the stock rises 20% and you rush to take profits, missing the bigger long term move.

Don’t just ask yourself: what if I don’t achieve financial independence? Focus more on the benefits of FI and what you will do when you achieve it. There are 2 reasons for this. First, you are more likely to succeed. And second, you’ll need something to do when you get there.

6. Understand how your mind learns

Neurolinguistic programming (NLP) offers a 4 step model of how the mind learns which can serve as a yardstick to help you measure your progress.

  • Unconscious incompetence: You’re doing something wrong, and you don’t even know you’re doing it wrong
  • Conscious incompetence: You’re doing something wrong, and you’re aware that you’re doing it wrong but you haven’t yet fixed the problem.
  • Conscious competence: You’ve learned the right way to do it, and you’re doing it correctly with focussed attention.
  • Unconscious competence: You no longer have to think about something or work on learning it – you automatically do it correctly. This is when you finally become a so-called natural (ie after years of work!).

7. Be willing to push through discomfort and boredom

Most of the time, saving seems boring. For the first 6 or 7 years, it feels like nothing much is happening. If you are sat in cash earning 0.5% per year, nothing much is happening other than inflation is eating away at your stash.

But even if you are fully invested and getting a very nice 10+% per year return, that may still feel really boring in real time. But, as a result of the J curve effect of compounding coupled with regular contributions, after 6 or 7 years saving and investing it ceases to be boring and starts to be pretty fucking interesting.

For consumer suckers, saving is worse than boring, its uncomfortable. This is because they’ve incorrectly framed saving as deprivation. But this is just a learned habit that can be unlearned.  I’ve learned to move towards discomfort and treat it like a compass, showing me the way.

8. Don’t look to colleagues, friends or family for approval

Not everyone will understand the journey you are taking. They may tell you that reaching financial independence is impossible or make fun of you for wanting to improve. That’s normal.

When Oprah lost weight, she lost friends. This surprised her until she learned that being fat had given them an excuse to feel better about their own bodies. She found she became a threat to others limiting beliefs and complacency about their own shortcomings.

There are two ways to deal with this. Either keep your FI goal to yourself or hang around with other people into self-improvement.

I chose a mixture of these strategies. I never discussed financial independence with work colleagues. But I did discuss getting rich with friends. Its interesting that my oldest friends all started with the same as me (i.e. nothing) and have since either got richer than me or have started their own businesses and are on their way.

9. Be willing to test new ideas

The essence of FI is exploring a path that is different from the mainstream. So, you are going to have to test ideas that seem new or counter-intuitive.

Its fine to be a sceptic, but to achieve FI we must avoid cynicism and writing off new ideas that don’t immediately seem obvious or logical to us.

For example, it was not obvious to me that cutting spending so much was possible and so powerful. I didn’t understand lifestyle inflation and didn’t realise that growing your income faster actually delays getting to financial independence if you don’t increase your savings rate.

Remember The Principles of Life Hacking. We are looking for lots of experiments with asymmetric payoffs where the costs of failure are small and the rewards of success are potentially great.

10. Once something works, figure out how and why

A good example of this is optimism. I used to wonder why deluded optimists often seemed often to get good results in life. This puzzled me.

Optimism does not work because it creates karmic energy beaming around the universe, nor because of magic crystals, force fields or other superstition.

Optimism works because optimists try new stuff and they persevere. Other people prefer to be around optimists. So there’s no mystery why they often succeed.

11. If you don’t know what to do, don’t quit

Successful people don’t always know what to do or what the future will look like. But successful people learn to operate outside their comfort zone and act despite uncertainty.

Right now, you may think that the outlook for the Chinese economy, for government debt and S&P 500 earnings are unclear and that you should hold off getting invested until the next Fed meeting or the next full moon.

Well guess what…the outlook is never clear, other than in hindsight. We have to decide how to invest based on today’s uncertain reality.

12. Spend time with a mentor

According to Strauss, getting a coach or a mentor is the single best way to improve in any area. We evolved to learn throughout history by observing successful people around us. Your mentor doesn’t have to be the top expert in the world, just someone who has more skill / experience than you currently do.

For example, when I was preparing to cycle Mont Ventoux, I rode with a group of cyclists that were better than me.  They didn’t tell me my goal was unrealistic because they’d done it themselves.  I learned from them to raise my game.

Why do you think every top sports star in the world has a coach?  If you don’t have someone in your life to coach or mentor you (formally or informally), go out and find them.

13. Make sure your ratio of results to effort is improving

Make sure you are increasing not just your knowledge but also your results.

As time goes by, the aggregation of marginal gains means that your results should improve quicker with less effort.

So every six months or so, its worth taking stock of the progress you made and giving yourself a mark like a school report. If you’re not getting the results you hoped for, take some time out to review these rules, examine what you’re doing and make changes.

14. Finish what you begin

According to Strauss, people can accomplish just about anything within the realm of possibility.  Despite this, most never realise their dreams.  Either they quit before they reach their goals (usually with a seemingly good reason) or they don’t change their strategy when something’s not working.

The lesson of Man’s Search for Meaning (written by an Auschwitz survivor) is that when people find purpose in life they can overcome the worst circumstances. So know what is at the top of the pyramid of financial independence for you.

*If you haven’t read Carrie Fisher’s hilarious book Wishful Drinking, you are in for a treat


  1. fibrarian · · Reply

    Sage advice as always and I think I’ll be having a read of that book at the first opportunity.

    I am certainly guilty of standing on the edge and not wanting to make the leap myself. I spent months and months reading blogs and books on investing before I finally went out and bought my first index tracker fund. Am I glad I did my research? Sure and I’d have been stupid not to do at least some due diligence but there comes a point when you’re going round in circles and procrastinating rather than actually just doing what you know is the right thing to do. It’s that fear of being wrong or embarrassing ourselves which often holds us back. Those deluded optimists you mentioned have no such fears and whiz past oblivious whilst we’re still kicking ourselves and bemoaning our hard luck.

    The other points all resonate very strongly with me as well. I’m a firm believer that If you want something you can get it. The “when” just depends on how much you want it and how hard you are willing to work.

  2. Awesome reading,

    I love this – “We are looking for lots of experiments with asymmetric payoffs where the costs of failure are small and the rewards of success are potentially great”

    I think it’s really easy to succumb to the first point, where the world of investing is so huge it can be completely offputting, especially when combined with the general un-needed level of complexity and peoples general aversion to the subject of finance (especially their own).

    What I find hard is trying new things. Not that I don’t want to try new things, but that I find the initial period of learning almost crack cocaine like. So I tend to bounce around between things, never mastering anything. It’s not quitting because it gets tough, but because something else looks interesting. Happily it hasn’t happened to my trek towards FI.

    It’s amazing how resistant the majority are to different ideas, resistance is futile?… You must have experienced it while accumulating wealth and not buying BMWs for your ponies like everyone else. I quite like it though, kind of reinforces that I am doing the right thing! Stubborn bastard.


  3. Excellent post!

  4. I don’t have anything terribly insightful to add but I did enjoy this post, so cheers!

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