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It seems that there are a set of common principles in the universe that can apply to various aspects of our lives.
Core philosophies that work in one discipline are often in play in other disciplines, so what works with one often works for the other.
There is a strong correlation between the world of personal finance and the world of personal fitness, for example.
I thought it would be a fun exercise, pun intended, to shed some light on not only how similar these worlds are, but also how they are some differences.
Principle 1: Starting Is the hardest part.
In my post about Sir Isaac Newton, I mentioned that it is very hard to overcome inertia.
A body at rest tends to stay at rest and this applies to both the personal fitness and personal finance worlds.
I choose being a couch potato over jumping on the elliptical every time.
The only way I make being on the elliptical more palatable is by playing some Jedi mind tricks.
Starting out on an exercise program is especially hard in the beginning.
You are at your least fit state, you tire out easily, and feel that becoming healthier and burning off those excess pounds is futile.
It is hard to see much change in your appearance early on as any increased muscle mass may be hidden by layers of fat.
Therefore it very easy to get discouraged and then quit.
A similar concept happens in the personal finance world.
Those who finally want to start their financial journey to wealth often find themselves under a mountain of debt.
Saving what money you can early on and throwing it at this mountain also feels futile and it is this stage where people are likely to give up.
Early on my financial journey the mountain of debt I had built felt insurmountable.
I have previously mentioned that I was at least negative $850k in debt at one point in my life (I truly believe the amount of debt I had was even larger as I did not keep great financial records previous to this).
Throwing an extra $100 or even $1000 dollars at this debt every month felt trivial.
Those early years were indeed tough because I did not have immediate results.
Nowadays we have become too impatient as part of the “fast food” culture.
I hate it when it takes me a min to start up my desktop, forgetting that it used to take 7 minutes or more to just to get online with dial-up.
Making your body healthier and your wallet wealthier is a long game.
Making your body healthier and your wallet wealthier is a long game. Click To Tweet
The key is to first make the commitment to start and then have the perseverance to continue when the early progress seems slow.
Principle 2: Positive feedback loop.
After that initial period, where it seems all your efforts and sacrifice have not produced the results you are desiring, the next phase begins when things become truly transformational.
In the personal fitness world, this stage begins when you get to the tipping point in beneficial lean mass percentage.
Muscle is far more metabolically active than fat.
As your body becomes more muscular, your basal metabolic rate will rise.
This results in your body burning more calories at rest, the metabolic equivalent of passive income in the personal finance world.
At this point you will start to notice physical changes that will spur you on even more.
Clothes become looser and you begin to appreciate definition starting to appear in your body.
This creates a desire to buy clothes in smaller sizes to accentuate these changes.
Soon friends and colleagues start complimenting you on your new appearance.
And just like that you are hooked, wanting to continue doing what you are doing to keep this positive feedback loop going.
The world of personal finance also has a similar positive feedback loop at this stage of the game.
At that point I knew that money coming into my household was mine to do what I pleased with and not already claimed by some lender.
I loved the way I felt, much like I loved the way I looked when I started exercising, when I became debt free and I wanted that feeling to continue.
I therefore was highly motivated to continue the process that got me there.
This time, however, I was focused on building a nest egg instead of paying down debt.
Principle 3: Less effort to achieve similar results.
In the personal fitness world, if you are lucky, you get to the desired physical result you were striving for initially.
You can then enter what is called maintenance mode.
You are no longer pushing your body to the extremes to add on more muscle.
Rather the goal is to keep what you have.
Fortunately it is much easier to maintain this muscle mass and achieve a steady state with less effort than what was originally needed to get there.
The same principle applies in the personal finance world.
At one point your investment portfolio or passive income machine generates enough cash flow to support your household expenses and you can officially proclaim that you have reached FIRE.
Sure you can always add more capital to your stack to boost returns even more, but you would do just fine if you never added another penny to the system.
The effort to keep your investment portfolio or passive income machine going is quite minimal, potentially only requiring a periodic rebalancing to keep it running in peak condition.
Where the world of personal fitness and personal finance diverge.
While there are indeed a lot of similarities between fitness and finance, as demonstrated above, there are some differences which I feel favor the world of personal finance.
Although in the above principle 3 section I mentioned that it is far easier to maintain a steady state regarding body composition it still does require more effort when compared to what is necessary to maintain a financial steady state.
There are times when life interfered and I fell off my lifting weights regimen.
After an extended period had passed I tried to restart lifting weights and found that I lost the majority of the muscle I had previously gained.
I had go down several weight levels to start up again, which was quite demoralizing.
Extended periods away from your investment portfolio will not only not harm your financial outlook, it may actually improve it.
Active vs Passive.
Another difference is that in the world of personal fitness you have to be an active participant.
You have to dedicate time to physical exercise which can take away from other life projects.
No one is going to work out for you.
In the personal finance world, once you have established passive income streams, you continue to get gains even while you sleep.
Each dollar of capital acts as its own tireless worker, working 24/7, 365 days a year without break so that you can reap the rewards.
It is hard to hide the changes in your appearance when you are into fitness.
People around you will notice your new healthier look as you slim down.
In the personal finance world it is not often in your best interest to broadcast how financially successful you are.
You can be targeted by many who feel like you have deep pockets.
Fortunately you can be very wealthy and still be incognito, a practice referred to as Stealth Wealth.
The Millionaire Next Door gave the public insight on how the majority of people who are truly wealthy are the ones that did not crave the outward appearance of wealth.
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
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