Read this first to understand the purpose of these Rules, how they fit with the Principles and Triggers, and how reading them in isolation from the rest of Part One is a waste of your time.
Though presented as lists, these Principles, Rules and Triggers are like the fruiting mushroom bodies sprouting from the underground network of a gigantic fungus. Each idea in this book is inextricably linked to all the others via the magical and mysterious web of human wiring and the societies in which it expresses itself.
This list is subject to change as I write the rest of the book.
Filter first, process second. The cleverest filing system, and fastest filing fingers in the world are an irrelevance if what you’re filing should’ve been shredded, or better yet, ignored in the first place. Before accumulating any new material or mental possessions, or organising existing ones, ask yourself: is it adding enough to my life to justify the space it’s taking up in my head or my home? For example, seeing all investments as gambles makes all fancy stock-picking analyses pointless. Storage solutions are more valuable than living in a mess. But living without clutter is better yet. And living in a way that doesn’t produce clutter in the first place is best of all.
Circumstances are an uncontrollable flow of meaningless events. All meaning you attach to them is supplied by you. Confusing the two is at the root of most mental troubles. Unfusing them is at the heart of all therapy. Focus on what you can control. These things are smaller in number but far greater in power than you act as if they are. Your choice of interpretation, your ability to beat self-deception, and your breath are all the power you need to live a Good Life. Money is always circumstances.
Achieving goals is simpler than setting them. Achieving goals requires running the appropriate algorithms for environment control and behaviour change and following the rules until you get there. And getting there feels so good. Which is precisely why it’s so dangerous. Because it focuses us on tangible short-term isolated things to tick off, rather than cultivating an interconnected system of living that continually reminds us that we have limited resources and one life to serve with them. The Good Life happens as a side-effect, but that doesn’t mean it shouldn’t guide our goal-setting; it’s the only thing that should. For example, you may know you value generosity and get a heartfelt kick from helping others, but spend as much on a new car as transforming tens of thousands of lives.
If you find yourself using ‘success’ without quotation marks, question what you mean and whether it’s true. There is no objectively best anything, and there’s especially no best investment. But there is a best investment for you.
The reason financial advice should be centred on neuroscience. There’s no such thing as ‘just this once’. Every action makes one pathway in your brain easier to travel down next time, and another one harder. Think of your life as a system, not a series of snapshots: don’t waste your willpower on doing stuff Present You is already sufficiently motivated to do. Use it to give a helping, environment-controlling hand to the Future You who doesn’t have enough.
Process outranks product. Your relationship with money is a process. Of continually remembering who you are becoming, and refining the actions that are taking you there. Turning this into a performance for others sends you in a completely different direction.
There’s an all-too-fine line between a healthy lifestyle and an unhealthy preaching about it. If you need others to follow you to justify your choices, they’re not your choices. To obsess over tactics without understanding how your system works is to willingly distort your life story. To go through the motions is to go with your blindness, not against it. Remember Principle #2: There is only one goal. Focus on your intention and your attention, not on the impressions of your expressions.
There are two types of money problems: not having any, and not having any good ideas what to do with it. More money solves the first type and exacerbates the second. The second type are solved by philosophy.
Don’t waste energy in sieging what is better side-stepped. Don’t fight your wiring. Rethink it. Reframe it. Examine. Observe. Look from different angles. Cultivate a state of being in which action aligns effortlessly with your nature. Create your own conditions for flow, and go with them.
Your expenditure is a more honest guide to who you are than your income. Aligning it with your values is the easiest heuristic for living a Good Life. And it can start immediately. You can’t out-earn shitty spending habits. Let the examination of your expenditure (of money, time, and energy) determine your income, not the other way around.
More is, by definition, not enough. It is also not the safety net it is mistaken for. Beware too those by preaching that money does not equal happiness think themselves safe from the mistake of more. Such preaching is born of the same belief that more is inherently ‘better’, as opposed to an occasionally better direction of error.
Remember the pineapple. Do not use objective price to signal subjective value. Value to you is not the same as cost for the world to provide and profit from.
If you find yourself thinking ‘when X is sorted, then I will be able to do Y and feel Z’, then stop. You’re wrong. Be it a bigger house, a job title, a family situation, or even an investment reaching or returning to an arbitrary value, it is in every instance irrelevant to the goodness of your life.
Do not own what is better rented. Do not own or rent what is likely to increase only the cost, rather than the quality, of your life.
Your Good Life is determined by what you want, not what is available. What is your motivation? Good Life or greed? Flourishing or fear? Want or addiction? External approval or internal peace? Are you thinking about you, or thinking about other people thinking about you? Whether you can afford something is only ever a reason not to do something.
To be against something is still to be defined by that something. Play a different game. To denounce money is not to have a healthy relationship with it; it’s a different sort of abusive one.
Get rich quick schemes are a subset of get fixed fast schemes. They are in every case as useless as they are tempting. Buying a holiday home doesn’t make for better holidays. Paying for a personal trainer doesn’t make you fitter. Nor do diet pills or overengineered gym equipment. If you think you can buy an answer to your problem, your problem isn’t what you think it is.
The difference between pain and discomfort is how you feel afterwards. Discomfort makes you grow, pain makes you break. Much long-term money pain is a direct result of avoiding short-term money discomfort. Adding extra padding to a support a poor position doesn’t improve your posture, it accelerates its decline. Hire advisers who make you squirm, who teach you to swim rather than promising you needn’t worry about the tide.
Most people die at 25 and are buried at 75. Most people believe that retirement is the end of a job and the beginning of waiting to die. Despite likely having more potentially productive time left than has elapsed. And more wisdom to know what they want do with it (though these will still change again, and again, and again). And more money to fund those wants. Remember this when undertaking any cash-flow modelling. When you think you’re at a peak. Check. Look up and around. There’s a higher peak hidden in the clouds. Having to go down before you rise higher is not a hardship. It’s a privilege.
Remember Principle #1: we’re using our resources to live our version of a Good Life. This is built on self-knowledge. Because we’re so good at self-deception, we can benefit from help with this. However, most advice is incentivised to increase the deception, not overcome it. This book aims to help you better understand what advice is helpful, and how to go about getting it.
Classical finance is based on the assumption that when you buy an investment, you stop being a human. It’s so pervasive that most investors don’t even think to challenge it, even to the extent of thinking they’re someone doing it wrong if they find themselves having feelings about their money. You don’t need to ditch your feelings. You need to ditch the belief that they can be ditched, and work with them instead.
Being rich, like being intelligent, or skilful, or influential, or to possess any other abundance, is to have responsibility. To be made of money is not a good thing. There’s nothing that more drives a mind away from the comforts of compassion than to attach every aspect of being to the bank. Be made of values and virtues.
If you have value to give to the world, the world is likely to give you money for this. In the financial plan of your life, just because this money is not yet in your bank or investment account it does not mean it’s all that different from the stuff that is. Your future financial comings and goings affect the right thing to be doing with your current money just as your current ones do. It’s harder to quantify these, but that doesn’t mean it can’t, or shouldn’t, be done.
In physics, the observer effect is the theory that the mere observation of a phenomenon inevitably changes that phenomenon. It can screw with your system of goals too. Start focusing on goals and they change before your eyes. As per Principle #2, and Rule #3, the only goal is the Good Life. If a subgoal isn’t taking you towards this, it’s a shitty goal, however shiny and however much short-term status it promises. True, sustainable, status is a side effect of mastery of the basics. A narrow-minded focus on the measurement changes the goal to the metric, not the meaning.
The lack of rewards for breaking beyond a certain threshold of wealth is a great disappointment to those that do so. To alleviate this disappointment, an industry of storytellers have spun tales of a secret kingdom of rich-people benefits, from ‘better’ experiences, ‘better’ goods, ‘better’ services, and ‘better’ investments. They are all bullshit. See Trigger #1: Do not confuse better with simply more expensive. In investments, more than anything else, Michelin prices do not stop you receiving McDonald’s quality. Treat ‘alternative’ investments like ‘alternative’ food sources. The eggs of a sturgeon are not better than those of a hen.
If you don’t know what you’re paying for, you will default to whom you trust the most, which means the appearance of trustworthiness is the most incentivised quality for an ‘adviser’ to possess. And the people best at appearing trustworthy (because they have no actual product to sell, not even a crappy one) are conmen. Know how to manage your money yourself before deciding if you want to pay someone else to do it for you. This is why Part Three of this book (How to Invest Like a Non-Idiot) comes before Part Four (How to Get Help that’s Actually Helpful).
Investments tend to go up eventually. Even those picked by a dart-throwing chimp. We tend to compare how much they go up against what we know. If you know only cash, or the value of your house, any return – and by extension the person who ‘got’ it for you – is likely to look great. If you know the return you could get from the simplest (and sanest) default investment option, it’s likely to look less great. Also, whatever the return was over the probably excessively short time period you’re looking at it does not tell you if it was or is the right thing for you to be invested in any more than a one-off winning bet tells you you should become a professional gambler.