Get Rich…Holistically

If you’re gonna build wealth, a lot of things need to go right.

There are four pillars to achieving financial freedom:

  • Earn more
  • Spend less
  • Invest the difference wisely
  • Know How Much Is Enough

If we want to build wealth AND be happy, we must master each of these 4 pillars.

Everyone has a favourite…but this can be a problem if we overlook the other pillars.

Earn more : There are high-earners whose spending just keeps rising with their income. This is the trap of lifestyle inflation. It doesn’t matter how much you earn if you don’t create a surplus to save and invest. These high-earners & spenders are still broke; but just in a more elaborate way.

Spend less : Then we have the penny pinchers: super-frugal people obsessed with saving pennies when they could be focussing some of that energy on earning and investing more. They still have a scarcity mindset, operating from a place of fear. This is penny wise, pound foolish. 

Invest the difference wisely: I have met high-earners and business owners that did not understand the stock market, the power of compounding and so they had never set up their compounding machine. Often they were paying ridiculous fees to wealth managers. They could not believe how easy investing with a global tracker fund was…until I showed them.

Know how much is enough: I have met people who didn’t think they had enough (when they did) and had no idea what to do outside their City career. They had come to identify as their professional status and – even after they had enough – were scared to move on to other things. 

None of the above is a criticism of anyone. I’ve had all these blindspots myself at different times in the past.

No one comes out of the womb just knowing all this stuff. I had to go through a lot of pain, looking for my blindspots so that I could fix them. First for myself and then helping other people.

Why is it so hard to build wealth and get life we want?

Because mastering each of the pillars can be hard and because balancing them all is hard. The journey involves not just hard work and learning…but also self-awareness.

We need self-awareness to avoid falling into common traps such as procrastination, burnout, workaholism and career blow up.

Speaking from experience, it is often not possible for humans to be fully self-aware and accurately calibrated on this subject. You can’t see your own blindspots.

A Fox or a Hedgehog?

Hedgehog can do one thing (roll up in a spiky ball to protect themselves) really really well.

Foxes are much more versatile. They can do lots of things pretty well.

To build wealth, you need to be a fox. You need to combine a range of skills and do them reasonably well.  You don’t need to be perfect!

I started my financial coaching because it always struck me as weird that conventional financial advisers did not cover all four pillars. No one seemed to be helping the foxes!

Why? Simple economics. Most financial advisers sell investment product plus insurance on % fees and commissions because that’s how they make most money. But does that work for the client?

The problem with selling just one of the pillars is that those salespeople promote their own pillar…and ignore the other 3 pillars.

If you want to build wealth and be happy, you must integrate all of the 4 pillars.

All of the magic happens outside your comfort zone

You see it quite a lot in the personal finance space. You have a person who has their compounding machine set up but still spends their precious free time with endless hours on the internet consuming investment content. This leads to a natural tendancy to over-trade, churn and over-complicate their portfolios.

Speaking as a finance nerd myself, I get it. Learning about investing was fun for me. I can see the temptation to to stay in our comfort zone and focus on the minutae of investing.

But other important things (like people skills, sales, negotiation, persuasion, public speaking) were all scary to me. These were my limiting factors. Without mastering these workplace skills, you miss out on promotions and cap your career earnings and progression.

Once you have mastered the basics of investing, time devoted to increasing the amount that you earn & save is, for most people, a better use of your time than time spent researching the latest hot fund or other esoteric investment (and yes I say that as someone interested in crypto!).

I’m an introvert by default. Yet my corporate finance job required me to meet new people every day, to pitch to new prospects and understand the concerns of clients. I had to do a lot of conflict resolution (corporate finance involves endless negotiation and disputes).

Developing people skills is work for introverts (by definition). Introverts can be social around other people…it just takes more energy from them.

It is a cheat code (especially working in tech or finance) to be social, friendly and have a sense of humour. Why wouldn’t you take the easy wins and play the positive sum games?

If our small minds, for some convenience, divide this universe, into parts — physics, biology, geology, astronomy, psychology, and so on — remember that nature does not know it.

Richard Feyneman

Money is super-important

It’s super-important to take control of your money.

If you do not master money, you will always be a slave to The System.

It’s super-important to educate yourself about compounding, investing and how wealth creation works.

But, once you have done this and are building wealth, it’s obviously a mistake to overlook everything else in your life.

It’s not enough to have only money. Many guys get there but sacrifice everything else: health, relationships, family, personality. What is the point of being rich but living in a mental prison?

Money can buy freedom

Money is just a tool that gives you the power to control your own life

Money can be used to buy your freedom, more options and buy you the lifestyle that you want.

It’s possible to live an amazing life with less money than people often imagine.

The more you have, the better…at least up to a point. But there comes a point where additional units of money, bring less happiness (or less marginal utility as an economist would put it)

The Diminishing Marginal Utility of Money

Extra runway provides huge benefits in the early stages. It’s a huge deal to get out of consumer debt. It’s a huge deal to have a cash emergency fund. It’s a big deal to have enough to allow you to retrain.

But what actual difference will it make to your lifestyle to go from having $111m to $112m? Not much (I assume).

This is the law of diminishing returns. One ice cream is fun to eat but you don’t get a lot of extra value from your 25th ice cream of the day.

This is why I say that once you have enough runway (whatever that might be for you) and are happy working on your own terms, you have won the game.

Financial independence is not binary

Don’t get me wrong, full financial independence is nice; it’s great to have a full belt & braces plus safety harness in the form of never needing to do paid work again.

But the more time that has passed since I hit financial independence (and the more successful transitions I’ve seen) the more I’ve realised there are many different ways to achieve the life that you want.

One of my good friends (that I met after quitting my job in corporate finance) is a self-employed plumber. He is master of his own diary and his own destiny.

He answers to no boss, he attends no pointless meetings. He can choose his clients (he doesn’t respond to rude people). He has most of the benefits of full financial independence…without the full 25x stash.

You’re only as strong as your weakest link

If you have solved your financial problems whilst ignoring your health problems…then are you really rich at all? 

One of the reasons I quit my job in corporate finance was because I was aware of the price I was paying in terms of health.

I was going into “health overdraft”. You can get away with that for a while but I was headed for a blow up.

Great health is a fundamental to reaching your full potential. The problem with being run down or burned out is that you are like the fish that does not know they’re in water. You just assume that it’s just the way things are.

If you are rich and are not laughing and enjoying life every single day…then are you really rich at all? Discuss.

You can’t focus on everything. But it’s always worth asking ourselves: What is my weakest link at the moment?

Context matters…always

The situation that you are in (where you live, where you work, your age, your family circs) always matters for the advice that is best for you.

How frugal should you be? Well it always depends. If you are young, in debt and too soft, a period of Monk Mode is in order.

But if you are older, richer and more spartan…then maybe it’s time to ease off and buy that thing you always had your eye on?

This is where the *FOLLOW THIS SIMPLE FORMULA FOR RICHES* approach falls down.

What worked for one person won’t work for everyone else. There is no one single true path: this is personal finance not religion.

This is why, in my financial coaching, I *meet people where they are*.

People often beat themselves up about not getting a grip on their money sooner. I get it. But we are where we are. What matters now is your trajectory and where you are headed.

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  1. […] Get Rich…Holistically. [The Escape Artist] — “There are four pillars to achieving financial freedom: earn more, spend less, invest the difference wisely, and know how much is enough. If we want to build wealth AND be happy, we must master each of these 4 pillars.” (Submitted by J. Money.) […]

  2. […] Get Rich…Holistically. [The Escape Artist] — “There are four pillars to achieving financial freedom: earn more, spend less, invest the difference wisely, and know how much is enough. If we want to build wealth AND be happy, we must master each of these 4 pillars.” (Submitted by J. Money.) […]

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