7 Mindsets to Thrive in Financial Independence

In the same way you can optimize your money you can optimize your mindset for life.

Written by Adam on 2020-07-20. Minafi, Blog, Mindfulness, personal, Canonical. 3 comments. Find out how I make money.

The path to financial independence has two main components: money and mindset. The money side is appealing to focus on. You can optimize it, schedule it, plan it, and even complete it! Once you have the money side on autopilot, there’s very little to do.

That’s where having the right mindset matters. There’s not just one mindset that determines happiness; you need many! Some mindsets improve your relationships, others your productivity. Some increase appreciation of life, and others let you make more of it.

Adam at Mill B North Trail in SLC
Adam at Mill B North Trail in SLC

Just knowing that a mindset exists can be a step towards changing your behavior! These 7 mindsets are ones I attempt to foster (sometimes successfully).

1. Compound Interest Mindset

In the money world, we talk a lot about compound interest. It’s what allows people to retire early using index funds, students to become masters, and viruses to spread to entire populations in record speed.

It’s also what allows you to grow your wealth using the blue line on the graph below.

A compound interest mindset isn’t limited to money. Continuous investment pays off in every aspect of life that you want to cultivate.

Continuous learning allows you to become an expert. You don’t need to become an expert in your 20s! You can begin playing violin in your 70s, or switch to a coding career after college. What matters is putting in the work to learn and slowly get better. Just putting in 1 hour a week to get better at your job will cause you to outshine your coworkers who stand still over time.

Continuous investments in relationships allow them to reach new levels. One of the reasons why so many life-long friendships are started in college is because we put in the time. It’s more difficult to do that later when life gets in the way.

Continuous giving allows your efforts to grow. You may start volunteering somewhere and realize everyone is helping you. After a few times, you may be training others and begin to see your efforts to help multiply.

James Clear calls this “The Power of Tiny Gains”. The difference between getting 1% and 1% worse daily for a year is 1259 times! Getting 1% better every day may be unrealistic after a point. Nothing says you can’t strive to get 1% better every week, or every month.

ChooseFI calls this same approach The Aggregation of Marginal Gains. The difference between doing the tiniest bit of effort and nothing at all doesn’t show in short term. It’s only when kept up long-term that it pays off.

One thing I’m currently attempting to get 1% better at is Japanese. I’ve been an anime fan since high school, took a class in college, and visited twice (including for our honeymoon). I’ve attempted to learn a few times, but never stayed with it.

What I realized was that I was trying too hard. What was important wasn’t making the most progress in the shortest time. It was making sustained progress. That’s the key to compound interest. You find a way to keep going. You do by not making it suck.

Since I discovered that, I’ve scaled back how much time I spend trying to learn Japanese. I’ll do some spaced repetition using WaniKani, do a Kanji/Hiragana drill every few weeks and occasionally try to read a kids book. This is a pace I enjoy, and even look forward to!

The same trap happens with money. So many people (myself included) learn about financial independence and cut their spending to a level so low they no longer have anything to look forward to. Time after time I read about people reaching this point then splurging on large expenses – a new house, a luxurious trip.

I prefer this approach – finding my limit. It allows me to understand how far is too far. The next step is the important one: figure out how to make sustained progress. That, more than anything, is how to develop a compound interest mindset.

2. Growth Mindset

Growth mindset and fixed mindset have gotten a lot of attention lately. The quick explanation of the difference between these two comes down to this question:

Do you believe your personality, personal limits and boundaries are set in stone? Or do you believe they’re whatever you make of them?

Those that believe that you can break through these limits in anything in your life follow a growth mindset. Those that believe they can’t follow a fixed mindset. (note: this is a within the boundaries of what you’re physically capable of).

Growth mindset and fixed mindset aren’t all-encompassing. You may believe in a growth mindset for almost everything in life, and still have a few “fixed mindset” areas.

For me, I’ve struggled with a fixed mindset in a few areas in particular:

I’m not an athlete. I grew up with rather severe asthma. I couldn’t run a mile without an inhaler and a gasping break. It wasn’t until I joined CrossFit and slowly saw my strength increase over years of action (compound interest) that I began to realize this was a fixed mindset. I could still be an athlete with asthma.

I’m not that smart. I finished 104th out of 106 in my high school class. That wasn’t because I was dumb. It was because I was lazy and never learned how to study. Many people (especially millennials) make it through high school and college without much work. When they get into the real world they realize that it’s not about being “smart” – it’s about “doing the work”. I came to this realization when I created my first successful website in college (if you’re curious it was about the game Dance Dance Revolution). It was only then I began to realize the difference between book-smart and real-world knowledge.

I’m an introvert. This is the one I hear the most. Thinking of yourself as an introvert can be a fixed mindset! You may still draw energy more from being alone than being around people (as I do), but that doesn’t mean you can’t also be outgoing! I was extremely shy in high school outside of my close friends’ group.

It wasn’t until much later that I realized how much I enjoy many “extrovert” activities in the right situations. As a product manager, I interviewed hundreds of people to learn more about how to improve products I worked on even though I sometimes have struggled to hold a conversation. I’ve given hundreds of presentations about topics I’m passionate about; even though I hated giving presentations in school. At FinCon I talked to so many people I realized I’d chatted with 1% of all conference-goers.

For me, I found that one of the reasons I considered myself an introvert was because the conversation wasn’t about things I cared about. As soon as it was, I could chat all day with other passionate people.

Me giving a talk at FinCon ’19

Paula Pant did an episode recently about how Personality Isn’t Permanent which is a great introduction to growth mindset if you’re curious to learn more.

3. Abundance Mindset

How do you react to limitations and obstacles? Those with an abundance mindset turn road-blocks into fuel, propelling them to find an even better route than they could otherwise. This leaves them excited and motivated to solve the problem in front of them. They believe there are other solutions out there.

Those with a scarcity mindset do the opposite. They throw their hands up, and think “what now?” or “why me?” (which is more of a victim mindset – but that’s another story). Rather than trying to find a way around the problem, they wallow. They hold onto what they have because they worry there’ll never get anything as good ever again.

In the simplest terms, the scarcity mindset is the belief that there will never be enough — whether it’s money, food, emotions or something else entirely — and as a result, your actions and thought stem from a place of lack. Instead of believing that you have enough, and there is plenty to go around, you cling to everything you have out of fear of coming up short.

Scarcity mindset

Scarcity mindset and abundance mindset are often trained from an early age. If you grew up in a house where you heard “no” over and over, it’s possible to begin your life like this. You hold on to everything you have because you don’t know when you’ll ever be able to get it again.

It’s why hoarders pack their houses with stuff, why many millionaires and billionaires don’t give much to charity, why people stay in bad relationships, and why some people withdraw from striving for a better future.

One of my favorite words in a non-English language is lagom. It loosely translates to “the understanding that I have enough”. It’s not about abundance, or just getting by. It’s the exact amount you need.

There’s no English equivalent to this. That alone shows how much we struggle to find “enough” in the US.

There’s buying enough space in your house, saving enough money, investing money, and taking enough risk. How much money is “enough”?

My guess is that you don’t need to be in the top 1% to be happy. If you need a private jet to take you to a private island to be happy I suspect there are other issues. How much is enough?

There’s having enough relationships, buying enough things – even optimizing enough (I can go overboard optimizing).

In my career, I worked to optimize profit. That involved releasing programming courses and content that were at the intersection of fast, good, and on a subject that people were interested in.

Now though, what I’m optimizing for isn’t money – and it’s been weird. I’m 18 months into retraining my brain to optimize for happiness. It’s part of the reason why I initially priced The Minafi Investor Bootcamp at $229 before lowering the price to “pay-whatever-you-want”. It took a while for me to realize I had enough and I didn’t need to claw back every dollar by maximizing the cost.

I still consider myself a minimalist. To me a minimalist someone who strives to have enough. It’s someone who’s constantly questioning what they have and asking if it’s too much or not enough. It’s that constant improvement towards lagom that’s the journey.

Developing an abundance mindset takes time. I still have a ways to go.

4. Ranged Mindset

The ability to think in ranges is a professional superpower.

When someone asks you how long you think it’ll take to accomplish a task laid out in front of you, how do you answer?

Do you say 4 hours, about 4 hours or “between 2 and 8 hours“.

I’ll be honest: giving your manager ranges for time estimates rather than exact guesses may annoy them. Another option is to say “between 2 and 8 hours. After 2 hours I can let you know a better estimate.”

One of my favorite books on the topic is Software Estimation: Demystifying the Black Art. It’s seriously worth a read if you’re a software developer. It focuses on shifting your mindset to think in ranges defined by the unknowns.

The greater the unknowns, the larger the range. As you learn more about a problem and how to solve it, there are fewer unknowns and the range decreases. Eventually, the high and low estimates intersect. That’s the actual time.

We’re taught in school to give precise answers to questions. Later in life, many answers aren’t quite so black in white.

The same is true for your money.

Rather than thinking of your Financial Independence Number as a single number, try thinking of it as a range. The low end is lean FI and the high end is Fat FI.

As you learn more about what you want out of life, you may realize you need more money than your lean FI number to be happy. Or you may realize that the high-end of Fat FI is overly luxurious and not worth it. That helps to focus in on your real number – or your FIO number.

5. Slow and Steady Mindset

You could call this another part of the compound interest mindset. I have an approach I use whenever I work on anything. It looks like this:

Maximize effort early, sustain effort later

I start off by getting extremely invested in a subject (obsessed would be a better description). I put in a ton of work in up front and try to make it over The Dip (as Seth Godin calls it). If I do, I keep going, but at a balanced pace.

Once you know how to make progress, the next question is how can you continue making progress with less work? This is the programmer in me trying to optimize for time – something you can never earn back.

This coast mentality is the same approach countless others advise to grow wealth. Rather than trying to figure out how much you can do, try to think about how little you can do.

The amount of progress you make may be different. If you practice learning an instrument 1 hour a day, you’ll progress a lot faster than if you only practice for 30 minutes. The difference is how many years you practice for. A fast pace doesn’t matter if you don’t keep going.

A few years ago I tried to learn how to play the piano. I went to weekly lessons for months and practiced at home at night. It wasn’t my intent to become a master, but I did want to be able to play some Beatles covers and music from Final Fantasy.

Eventually, I gave it up. It wasn’t because I stopped wanting those things, but it was because I hadn’t found a way to enjoy practicing. I had spread myself too thin between various projects and I hadn’t taken the time to get past that initial bump.

When trying to grow a skill or anything else that takes time, find a way to enjoy the journey.

6. It’s Not About You Mindset

Back when I worked at Code School we did a week-long leadership training course. There were long days, sharing of feelings, and a lot of crying (sooo much crying). There’s one phrase that stuck with me even after the week ended:

It’s not about you, it’s about them.

When someone says, posts or tweets something that rubs you the wrong way, remember: this isn’t about you, it’s about them.

When someone tweets about “how <insert life> isn’t retirement”, or “everyone should invest in Tesla”, or “only lucky people can retire”, it’s their point of view based on all of their life decisions up until this point. It’s not an argument, it’s just their point of view – and you don’t need to try to change them.

Not getting defensive when you’re provoked is a skill and one I’m very far from myself. By approaching provocation from a position of “why” rather than “you’re wrong”, it helps get to the heart of their issue. It starts the conversation from attempting to understand their point of view.

Is this a personal relationship with someone that’s in jeopardy, or just an internet argument? If it’s a personal relationship you can jump on a call, ask them how they’re feeling, why they’re feeling that way and try to learn more.

If it’s an internet argument…. do you really need to respond? If it’s a subject you’re passionate about I’d encourage it. Some people are MUCH better at this than I am.

The approach when facing someone with a differing opinion isn’t the same as someone with a racist or bigoted mindset. Differing opinions can be ignored, but racism must be confronted.

In a professional environment, or in your personal relationships, when someone does something that rubs you the wrong way – seek more context! Ask them about why they feel that way. Empathize and understand how they came to that conclusion.

Try to understand your own defense mechanisms. When confronted do you act defensively? Do you try to rationalize your decision? Do you avoid the confrontation altogether? Do you passive-aggressively shut down the talk? None of these help, and now you have two problems.

Trying to get to the root of disagreements comes from understanding why, not by proving your innocence.

7. Now Mindset

Have you ever said the following phrase, either out loud or in your mind:

I’ll do it when I leave my job and have more time.

It’s an alluring trap to fall into. You dream of a future when you have enough time to learn new things, explore new places, and take on those some day projects that just thinking about give you butterflies in your stomach.

A now mindset looks at these dreams and asks “what can I do right now?”. You break down a large project into steps and find out how to make progress on it now.

One example I love is hiking the Appalachian Trail. It takes roughly 6 months to do and would not be possible for most people working a full-time job.

Overnight backpacking trip to Amethyst Lake outside of Salt Lake

Those with a later mindset would put off the hike until they leave their job. At that point, they buy all their gear, tear off all the tags, head to Springer Mountain in Georgia where the trail starts, and begin their hike. They’re also more likely to give up.

The reason they give up is that they’re starting at the end. You wouldn’t run a marathon without training for it, so why expect yourself to survive a 6-month hike?

Someone with a Now Mindset will find ways to make progress while they’re working. They go on weekend hikes and backpacking trips. They test their gear today and iterate based on what works. They may even realize they’d rather go on a week-long trip than a multi-month odyssey.

I romanticized the idea of a long hike, but quickly found I’d be much happier with a weekend trip with friends. I’m happy I realized this now rather than while on the trail. It’s one reason why my July theme is Vision.

The same can be done with your “when I retire” projects. Why can’t you learn that skill/language/instrument now? What’s stopping you from achieving those fitness goals today? Why can’t you make that change in your spending now?

It’s a running joke that with everything happening in 2020, it isn’t the year to make progress on anything.

I’d challenge you to think about it another way: when you need a break from the endless news cycle, what do you do? Is there something you could work on now?

The answer might be no. Some people are navigating unemployment while teaching kids at home and trying to make ends meet. It’s only after you’ve taken care of your mental health that you can begin to consider personal growth (and improving mental health is personal growth!)

If you find yourself in a downward spiral of checking news and twitter on repeat, then you have room to tackle a long-term project now. Try pausing news to take time to figure out what project you want to work on. Research it, get inspired about it – and then do it.


Hi, I'm Adam! I help millennials invest to reach financial independence sooner than they ever thought possible. Want to see what you could do to reach FI sooner? You're in the right place!


Why not add to the conversation below? Your voice is welcome!

I love all of this. So many of these have helped me on my own journey to FI, but I particularly love this quote, “Not getting defensive when you’re provoked is a skill and one I’m very far from myself. By approaching provocation from a position of “why” rather than “you’re wrong”, it helps get to the heart of their issue. It starts the conversation from attempting to understand their point of view.” My mom did a wonderful job of teaching me to put myself in someone else’s shoes. It’s a tough skill to learn, but such a valuable one to bring people together rather than tear them apart! Great content as always.

My mom did a wonderful job of teaching me to put myself in someone else’s shoes.

That’s a great one to learn at an early age for sure. It’s a whole different skill to do it when you’re an objective observer and when you’re being personally attacked too.

Great read! Thank you!

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