You may be thinking …. “Jake, stick to writing about money”. What could fitness and personal finance possibly have in common?
I was thinking the same thing when this idea first came to mind. But then I reflected on my past 10 years of lifting, cycling, investing, and frugal living.
I noticed that multiple critical themes lace through both fitness and finance.
Plus, I kind of need to write this post…. I love picking things up (and putting them down). And I love finances.
First, I’ll share my fitness approach for anaerobic (strength) and aerobic fitness.
First, I use compound lifts for strength training. That means squat, bench, deadlifts, barbell rows, and pull-ups. These guys have been part of my weightlifting arsenal for over 10 years.
To ensure aerobic fitness, sprinkle on some cycling to work, road/gravel bike rides, and the odd run.
This reflects my system to produce and sustain fitness.
Table of Contents
1. Fads Come and Go, Fundamentals Remain
Fitness fads are all over the place. They all offer easy solutions. These fads explode in popularity. Then they die into nothingness just as rapidly.
Diet pills and the shake weight are good examples. Have a look at the box on this thing…
“Get ripped in 6 minutes a day”. This easy solution is attractive. But it fails. It doesn’t work.
Like fitness fads, investors who chase easy money fail in the long run.
Fueled by exciting stories, investment opportunities spool up the excitement of the herd (of humans).
This attracts even more speculators who seek easy and quick money. The feedback loop of hype results in a rapid increase in asset prices.
Prices become detached from fundamentals. Eventually, asset prices implode. Most investors jump in at the peak, buying high and selling low.
Speculation is nothing new. It drove the tulip mania in 1636. Human behavior hasn’t changed.
A more recent example is Crypto. The contagious story was that a finite supply of bitcoin would provide a perfect inflation hedge. This has obviously failed.
The ARKK fund led by Cathy Wood is another example. It invested in innovative firms, driving stories and hype.
ARKK had tons of hype throughout 2021. It then proceeded to deflate.
Investment speculation and fitness fads are like supernovas. They burn bright and die fast.
Fitness and finance share a similar reality. Chasing easy money fails to build wealth. Likewise, chasing easy fitness solutions will not make you fit.
Investing, like weightlifting, requires a consistent focus on the fundamentals. Success is slow. And it is hard.
While GME, crypto, and tech were ballooning, you could find me on the side investing in my boring total market index funds.
Similarly, compound lifts remain my foundation as fitness fads come and go,
Although boring, successful systems are rooted in the consistent execution of the minimum viable solution.
You can’t circumvent the requirement for self-discipline. Shortcuts do not exist.
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2. The Minimum Viable Solution
What is the most simple way to accomplish a goal? This is a natural question for those who value their time and energy.
The answer is the “minimum viable solution”.
Also known as Occam’s razor, the minimum viable solution applies to fitness, finance, and life.
So, what is the minimum viable solution for strength training?
The answer is Calisthenics, from an equipment standpoint. All you need is gravity and something to hang from.
But from a muscle activation standpoint, I love compound lifts. All you need is a rack, a barbell, a bench, and a pair of running shoes.
To see why they are the minimum viable solution, consider how many weight machines you’d have to visit to hit all the muscles worked by the deadlift.
For aerobic fitness, I view running as the minimum viable solution. Shoes are the only requirement.
But when considering time efficiency, I argue that cycling is ideal. That’s because cycling can be bundled with commuting. For more on this, see 10 Ways Cycling To Work Can Enhance Your Wealth.
Now I’ll show how this same pursuit of simplicity motivates frugal living and index investing.
The Minimum Viable Investing Solution
When you pursue the minimum viable investing solution, I bet you will land on a total market index investing approach.
A total market index is a collection of all stocks in a stock market or all bonds in a bond market. Any investor can access these at super low cost with index ETFs or index mutual funds. You can learn more about this in my post Understand Index Funds.
Under this approach, I periodically invest and let my wealth compound in the background. I then proceed to live my life.
It me about 5 years of dabbling in individual stocks to learn a lesson. It was not worth my time to try to beat the market.
Eventually, I settled on index investing.
The main reason for this is market efficiency and the fact that a total market index fund will outperform over 80% of active mutual funds.
Frugal Living Is The Minimum Viable Material Solution
The minimum viable solution, when applied to life, results in a minimalist frugal living approach.
Contrary to popular belief, frugal living does not mean cheap things. Instead, it means buying a small number of quality material goods that meet your functional needs.
For example, a frugal home gym can look like a squat rack, a bench, a barbell, and a pull-up bar. That’s the minimally viable solution.
Frugal living also looks like a house that isn’t too large, with a reliable economy vehicle in the driveway.
A frugal approach results in fewer things. And these things last a long long time.
A less cluttered environment. Naturally, this leads to a less cluttered mind.
In addition, it means less time/energy allocated to organizing, maintaining, and disposing of stuff. I call this the “stuff lifecycle”.
Extra future freedom is a nice side effect of frugal living, based on the savings that can be invested for compound growth.
For more on frugal living, you can read my post 13 Frugal Living Tips To Save Time, Money, and Energy.
3. Hard Things Are Good For You
Fitness requires self-induced hardship. This increases your resilience.
This capacity for hardship spills over to all other aspects of life, including fitness.
Sitting feels nice after a hard set of squats. Otherwise, sitting is boring (hard).
Cycling on the flats is a break after climbing a big hill. But biking on the flats can be hard when just leaving the house.
Hardship is relative to a baseline. By doing hard things, activities that were once hard can become pleasurable.
This concept is known as the pleasure-pain balance. It has strong academic roots and is discussed in the book Dopamine Nation by Dr. Anna Lembke. The book is an awesome read.
Almost everything related to your finances involves delayed gratification. It involves sacrifice.
For investing, self-restraint is critical to prevent emotion-driven decision-making that hurts investment returns.
It’s hard to sacrifice today’s spending to invest in the future. And it’s hard to stay invested during market downturns.
And like the fads above, it’s hard to stay the course with boring index investing when others are getting rich quickly.
Finally, it’s hard to sit down and review your spending every two months.
Overall, fitness builds your capacity for hardship, and that permeates outside of the gym walls. It can make you better with finances.
4. Fitness & Finance: The Bad Days Make Winners
There are lots of days when I feel zero motivation to work out. On these days, my preference is to go home and snooze.
About 95% of the time, I do the workout anyways. It’s often a slog and feels terrible. It is hard.
The other 5% of the time, I fail. This means I don’t go to the gym.
In these cases, I have some self-compassion, but I never let myself fail two days in a row. Self-compassion and self-discipline are tricky balances.
The capacity to grind through the hard days is critical to sustaining your habits. When you do fail, the key is bouncing back.
What you do on the bad days separates you from the rest of the people. Anyone can hit the gym when they feel like it, just like anyone can remain invested when the market is on a bull run.
The Hard Times And Personal Finance
How does this concept apply to finance?
Stock and bond markets have bad days too. They even have bad years.
Successful investors remain invested during hard times. Not only do they remain invested during these times, but they continue to invest more.
Panic selling on the bad days ruins returns. These are the most important days to be invested. You must tolerate the bad days to access the returns on the good days.
Another way of looing at this is that stocks literally pay you for enduring pain. This is because stocks compensate you for taking on investment risk.
If you are human, your spending is susceptible to bad days too.
You and I are similar in that we both make the odd impulse buy. Or we slip up and get takeout instead of preparing something healthy.
The key is not to eliminate all bad days, but instead to enable resilience to bounce back. This prevents bad habits from leeching in and reinforces your strong habits.
How we address these bad days is what matters.
To learn more about resilience, check out my post on 9 ways to improve your financial resilience.
This brings me to the next point… habits.
Top 8 Books To Build Wealth
5. Habits Are Key To Fitness And Finance
What do drive-thrus, meal prep, the gym and investing have in common?
They are all habits.
Meal prep is my favorite example. It bundles healthy eating with financial savings. And it can have a huge effect, as you can see in my post on Pareto distributions, where I show how a meal prep habit can make you a millionaire.
Once a habit is set, it runs in the background autonomously. You can then focus your efforts on other things, like new habits.
This is why habits compound, like money. They layer on top of each other.
The aggregation of small habits can result in massive outcomes. That is the core message in the book Atomic Habits by James Clear.
With strong habits and systems, you can do seemingly hard things without huge demands on self-discipline.
Eventually, hitting the gym becomes fun, although you still have to press through the bad days.
Similarly, investing the gap between your income and expenses becomes a natural habit over time.
It can even be automated with some brokerages, where a set amount of money is invested in an index fund on pay-day.
Habits are critical to fitness earning, investing, and expense management. They underlie all three pillars of wealth.
6. Fitness and Finance: An 80/20 Attitude
Life is too short to obsess over details that don’t matter.
By understanding the Pareto Distribution, you will see that 80% of your outcomes come from 20% of your tasks. Therefore, it is sensible to focus on the 20% of tasks that really matter.
When it comes to strength training, squats, deadlifts, bench and rows are those lifts that will generate 80% of your results.
You can be very strong if you do these and nothing else. The same can’t be said for the array of isolation exercises like bicep curls, triceps extensions and lateral raises.
Personal finance is similar. A large portion of your results come from a small number of money decisions.
The most important two money decisions for most people are where you live and what you choose to drive. These two decisions have a massive impact on finances.
In addition, a small number of money habits produce most of your results. For example, expense/income tracking, consistent investing and the habit of cooking at home.
Here are some resources to help with critical personal finance decisions and systems:
7. Fitness Increases Your Capacity To Earn
Wealthy people exercise more often than the average person..
Mandolesi et al, 2018 finds that Physical Exercise induces changes in the brain that improve well-being and cognitive functioning. This refers to both cardio and strength training. I believe you need both.
With increased energy levels and cognitive functioning, you are better postured to improve your knowledge and skills.
That increases your human capital and will improve your ability to provide value to others.
Such value can be provided indirectly through an organization, or directly to individuals, like this blog.
By providing value to others, income will naturally follow. Plus, you will retain your earnings power for longer as your cognitive decline is mitigated.
Fitness makes your brain better. And a better brain results in more earnings.
8. Time: A Critical Resource In Fitness And Finance
Ahh. Time. Your most undervalued resource.
I’m sure you or someone you know has taken a 10-minute detour (each way) to save $5 on gas. Time is valued at $10/hour in this case.
Humans tend to undervalue the time and overvalue money. Very normal.
Personal finance and fitness are similar. You can be successful in both domains with limited time allocation.
Squats, deadlifts, and bench are the natural solutions for those who want to squeeze the most out of their time.
For even more time savings, I like to superset bench-press with barbell rows and ride my bike to work.
I avoid supersets with deadlifts or squats. That’s too hardcore for me.
Money and time are tightly linked. It takes time to earn. Plus, investing snowballs economic value through time (Ben Felix).
Spending and time are correlated. One of the best ways to spend money, for example, is to outsource unpleasant activities. Newly found time can be allocated to family or other enjoyable activities.
Many things that save money also save serious time. Living close to work is the main option. A smaller hour means less cleaning. A frugal live means less time allocated to the “stuff lifecycle”.
Placing high value on your time can drive your approach to fitness and finance.
Conclusion: Simple, But Hard
Fitness and personal finance are both simple, but hard.
Both are susceptible to over-complicated solutions. Such solutions distract you from the unavoidable reality:
- Both fitness and finance require consistency over time.
- Fitness and finance are both hard.
- Habits and self-discipline are required for success.
When you value your time and energy, you will likely implement the minimum viable solution for both fitness and finance.
But I don’t want to overhype simplicity. Compound lifts and index investing are more complicated than they seem on the surface.
There is much to learn about the technicalities behind why index investing is useful.
In addition, compound lifts can be extremely technical regarding form.
Finally, personal finance is about earning, spending, and investing in a way that improves well-being. Likewise, fitness is a critical part of living a wealthy life with many parallels to personal finance.
Fitness and finances are related in other ways as well. For example, you can reduce income, and hours worked, to permit time for fitness. Or, you can outsource tasks like cleaning to permit time for working out.
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