I firmly believe that a deep understanding of psychology, philosophy, and work ethic can all be combined to shorten the path to financial independence. So far in my pursuit to understand these concepts there have been three books that have strongly impacted my line of thinking:
1. Mindset by Carol Dweck
2. Ego is the Enemy by Ryan Holiday
3. Grit by Angela Duckworth
These three books have helped me develop a loose framework that I follow whenever I set out to accomplish anything. The framework looks like this:
1. Recognize that I am capable. (Mindset)
2. Realize that the process matters more than the results. (Ego is the Enemy)
3. Be aware that I must be gritty to remain in the process. (Grit)
I Am Capable
Carol Dweck’s life work on the psychology of success has revealed that there exist two types of mindsets: the growth mindset and the fixed mindset.
The fixed mindset is the belief that our ability to do something is entirely based upon innate talent. This mindset tells us that the result of our efforts, whether it be failure or success, is a direct reflection of who we are as people. It ties failures to our identity.
Because of this, people with the fixed mindset are terrified of the possibility of failure and cling to their comfort zone like moss on a rock. They avoid learning to protect their identity. They abhor the idea of admitting they lack knowledge.
The growth mindset, on the other hand, is the belief that our ability can be cultivated through effort over time. It tells us that even though we might not be able to do something right now, we are more than capable of developing the necessary skills. People with this mindset love learning, but more importantly they embrace failure. They don’t allow the fear of failure prevent them from pursuing a worthwhile goal since they’re more concerned with learning than they are with protecting their identity.
In all areas of life I attempt to apply the growth mindset. I recognize that I can accomplish something, whether I have the immediate skills and resources to do it right now or not.
This idea of “I can do this” isn’t a temporary in-the-moment burst of motivation either. It takes a long-term approach. It realizes there may be a significant amount of drudgery involved and I might not see any results for weeks, months, or years.
It recognizes that achieving worthy goals might be difficult, demanding, and require a significant investment of time, but my lack of innate talent is not preventing me from
accomplishing my goals.
The hardest part of achieving a goal is taking the first step. If you can take the first tiny step towards a goal, you have already defeated the greatest obstacle of all.
The fixed mindset prevents us from even taking that first step. It prevents us from leaving the starting gates by telling us we are not capable and that the possibility of failure is too terrifying.
The growth mindset, on the other hand, kindly shoves us out of our starting blocks. It reassures us that we don’t need to know all the answers or have all the necessary knowledge right now, that if we simply get started we will learn the skills and grow our ability accordingly.
Once I embrace the growth mindset and recognize that I can do something, the next step is to know where to focus my energy.
The Process Matters More Than the Results
In Ego is the Enemy, Ryan Holiday makes the argument that ego is the greatest adversary to our success. He defines ego as “the need to be recognized excessively”.
Ego is the voice in our head that tells us we need attention and recognition for our work. It tells us that our identity is of the utmost importance. It inflates our significance. It distorts our reality, makes us difficult to work with, and tells us we don’t need critical feedback from anyone.
But more than anything, an uncontrollable ego prevents us from focusing on what truly matters: the process.
Our ego is the voice in our head that tell us to tweet about the new project we’re starting rather than actually starting on it. It tells us to brag about minor accomplishments we’ve experienced rather than putting our head down and doing work that will lead to life changing accomplishments. Ego encourages us to talk about doing work instead of actually doing work. One of my favorite quotes from the book is:
“The only relationship between work and chatter is that one kills the other.”
This book has taught me that the process of doing the necessary work day in and day out is the only way to achieve anything.
My ego will happily sabotage my efforts if I let it. If I become too concerned with receiving recognition, with gaining attention, with seeing immediate results, my efforts will be derailed. The train taking me to my most meaningful goals will be thrown off the tracks.
Another quote that resonated with me is:
“Let the others slap each other on the back while you’re back in the lab or the gym pounding the pavement. Watch what happens. Watch how much better you get.”
It’s all too easy to talk about doing the necessary work, to strategize, to come up with elaborate plans on how to execute. It’s easy to sit and daydream about what life might be like in the future. But the only way to obtain this future is to do the work and become entrenched in the process.
This is why I constantly remind myself the process matters more than the results. Once I come to terms with this, the final step is to simply remain in the process for an extended period of time. This requires grit.
I Must Be Gritty to Remain in the Process
In Grit, Angela Duckworth explains why the strongest predictor of achievement is effort. She even developed a formula to illustrate the importance of effort:
Talent x Effort = Skill
Skill x Effort = Achievement
(Talent x Effort) x Effort = Achievement
When we combine effort and talent, we cultivate skills. Once we have these skills, we again must apply effort in order to reach achievement. Thus, effort shows up in the formula twice.
Over the course of several years and numerous research studies, Duckworth found again and again that follow-through, or the willingness to just keep doing an activity over and over for a long period of time, was the most important predictor of achievement.
In other words, effort matters far more than talent.
Duckworth makes the point that regardless of what you choose to pursue, if you just keep showing up everyday and make any type of progress, it simply becomes a matter of time until you advance. She refers to this behavior as grit.
Grit allows us to stay in the process. To be gritty is to show up every single day and do the necessary work. It is the belief that you don’t have to see overnight success to stay motivated. Grit doesn’t care about motivation, it cares about purpose. Each day we make the choice to work towards our goal we are slowly developing more grit and an immunity to excuses.
Grit isn’t just a nice idea, it’s a necessary trait we must develop to accomplish our goals.
The combination of ideas from these three books is a potent formula for anyone on the road to financial independence. A growth mindset is necessary to even get started on the path to F.I. You must recognize that it’s a realistic goal. You must know that ego – the need to brag, show off, protect your identity – will derail your efforts every step of the way. And you must be cognizant that grit is your best friend on this journey to financial independence. It will tell you to keep pushing day in and day out because the freedom at the end of the road is more than worth it.
I strongly suggest using free financial tools like Personal Capital to track your net worth, spending habits, and cash flow to help keep an eye on your money. The more you track your finances, the better you get at growing your wealth!
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