I’m going to let you into a secret. Most people don’t want to be rich.
Oh, I know they say they do. But humans are complicated and they say lots of things.
Generally, if you want to know what people really want, look at what they do rather than what they say.
What most people mean is that they want to spend like they’re rich (or, more accurately, like a rich person on their way to becoming poor).
People may want the outcome of being rich but most don’t know what the process is to get there. Or if they do, they aren’t willing to go through that process. This was confusing for The Escape Artist who, when he said he wanted to be rich, actually wanted to be rich. As in…wanted it enough to get a job and start saving.
When I set out, saving was only vaguely related in my mind to becoming financially independent. Back then I had more immediate goals in mind. Like not becoming homeless. You might say that’s irrational…but whoever said people were rational?
After I had the emergency fund covered and the mortgage paid off, I worried less about being homeless. But I pushed on anyway and the summit of the mountain of financial independence started to hove into view.
I’m not gonna lie, there were struggles along the way. I lost count of the number of
arguments discussions with my wife about why we were doing this saving lark when no one else was etc etc. I lost count of the late nights in the office and the cars I didn’t buy.
So yes there were struggles, but it was never about deprivation. I never saw it that way. That’s because I enjoyed the process of wealth building.
Geek alert: I enjoyed updating my net worth spreadsheet once a month. I enjoyed (parts of) my job. I enjoyed the promotions (a little) and pay rises (a lot). I enjoyed learning about investing. I enjoyed seeing my salary hit my bank account. I enjoyed the process of going into the bank, over-paying my mortgage and getting a slip of paper with the new (lower) monthly payments. And I enjoyed seeing my dividends roll in.
What if you don’t enjoy that stuff now?
I’m glad you asked. You can learn to enjoy those things. Over time, the things we work for (and eventually get good at) are the things we come to love.
To make this easier, I used conditional rewards. Conditional rewards are deals that you do with yourself. Things like: if I can survive this week at work, I’ll get drunk on Friday evening. Or if I can do my tax return this weekend, I’ll get me some chocolate. I used these “carrots” to motivate myself…as if I was the donkey and the jockey. So, along the way, I spent more on things like booze and holidays than I need now (yes, I’m still on the wagon of Dry February despite being surrounded by temptation).
Don’t get me wrong. The Escape Artist is all for grit, determination and willpower. It’s just that there are limits to how far they can take you. With a base level of fitness, you can run a marathon on grit…its just a few hours.
But with financial independence, we’re talking about 19 years at a 50% savings rate or 7 or 8 years at a 75% savings rate. Grit and determination work for hours, days and weeks. For years and decades? Not so much.
The way to make this much easier is to enjoy the process.
Imagine 2 different ways of motivating yourself:
- focusing on the outcome
- focusing on the process
Focusing on the outcome is the conventional approach. You often hear people bang on about goals. Goals are like diets, budgets, weather forecasts and New Year’s Resolutions. In theory they’re a good idea. Its just that in the real world, the failure rate is shocking.
I’m here to tell you that detailed goal setting is vastly over-rated and mostly a waste of time. It doesn’t work for something like financial independence that may be 20 years away when you start.
It’s great to have a vision. So by all means begin with the end in mind (#2 of The Seven Habits of Highly Effective People).
But you don’t need detailed and specific goals. Your “plan” doesn’t need to be some “death by powerpoint” business plan nor some Stalinist 5 year plan to double tractor production in The Ukraine.
Detailed multi-year plans are basically Communism. Did I mention that Communism is a bad idea? Communism is a form of authoritarianism like Nazism. And Nazism is BASICALLY HITLER.
Scott Adams writes about goals versus systems in How to Fail at Everything and Still Win Big. He illustrates with how he and his friend approached girls at high school. Scott had a goal-based approach which involved developing a crush from afar on one specific girl, putting her on a Goddess pedestal as teenage boys often do.
His friend had a system-based approach which involved action; talking to a bunch of girls and seeing what happened. Do I need to say that his friends approach was much more successful? Yes, I probably do.
Or imagine the example of a new blogger. If they focus on a goal of having a massive readership, they may never even start. The risk of failure will seem too high. If they do start, they’ll avoid controversial subjects to avoid offending anyone. Result: something bland and boring.
Better to focus on the process of writing and enjoy creating content. If you write because you enjoy the process, you are WAY more likely to keep going if you hit a difficult patch. Or if your blog stats go down one month…which they will (January 2018 was my best yet but its never a straight line upwards).
With blogging you don’t need goals. I have values that I support: environmental awareness, freedom, social mobility…that sort of thing. But I don’t have any specific goals for my blogging. When I started, I had an idea it would be nice to get a million page views. But I never took that goal too seriously. And when I reached a million page views (according to WordPress) and then 2 million, I didn’t stop. I focused on enjoying the process of writing.
A goal based approach involves focusing on far away outcomes. It often leads to endless analysis, prediction, procrastination and other things that don’t involve doing something useful RIGHT NOW.
If your goal based approach hasn’t lead to you taking action then its
fucking useless ineffective. So whilst having a goal of being financially independent is a good thing, its only a start. You must take action that drives you closer to where you want to get to.
Now I’m sure this all sounds obvious to you but its often overlooked. When I see someone with a spreadsheet where they’ve spent ages modelling future outcomes in 30 or 40 years time, they’re probably too focused on the goal and not enough on the process.
Financial independence in general (and investing in particular) is a game where you can’t control the outcome. You can only control the process. Its fine to have a goal like “become financially independent by 40” as a goal. But things happen that can knock you off course (things like market crashes…or kids).
As Mark Manson explains in The Subtle Art of Not Giving a Fuck, a lot of the fear of failure comes from paying too much attention to (the wrong) goals. For example, if your goal is to make everyone like you, that’s setting yourself up for failure. You’ll be anxious because success is out of your control.
Better to focus on your own actions, your values and your process. For example: be responsible, be decisive, be more honest. These are all process orientated values and they are all within your direct control.
It won’t always be easy to live your values. But struggle is an essential part of the process. Here’s Mark:
Who you are is defined by what you’re willing to struggle for. People who enjoy the struggles of a gym are the ones that have chiseled abs and can bench-press a small house.
People who enjoy long workweeks and the politics of the corporate ladder are the ones who fly to the top of it. People who enjoy the stresses and uncertainties of the starving artist lifestyle are ultimately the ones who live and make it.
This is not about willpower or grit. This is not another admonishment of “no pain, no gain”. This is the most simple and basic component of life: our struggles determine our successes.
I’ve written a lot about how buying more shit is not the route to happiness. But, after you are financially independent, even better outcome metrics (like net worth for example) aren’t really the point. Does Warren Buffett get a big adrenaline rush when a general market rise pushes his net worth from $53bn to 54bn? I doubt it.
I do know however that Warren Buffett continues to enjoy the process of wealth building. Not only does Buffett get up and go to work, he’s written about how he feels like he’s “tapdancing to work every day”.
Remember life is about the journey not the destination. That must be true as we all end up dead. And what is financial independence if not a way of life?
Enjoy the ride!
p.s. As another example of process > goals, I prioritise the process of getting new blogposts out over the goal of making them 100% perfect. So I publish articles first, then tidy them up later.