We can all improve our decision-making. One way to do that is to simplify the complex into a tighter set of principles that ground our decisions. These quotes from Principles by Ray Dalio will help you start to build your own set of principles for solid decision-making.
Ray is a billionaire hedge fund manager who started Bridgewater Associates. He now focuses on philanthropy but while at Bridgewater created a set of work and life principles which he shares and explains in this book.
As I often do, I highlighted some of my favorite quotes while reading. Here I’ve pulled those that apply most closely to the search for financial independence and improved decision-making. For that reason, these quotes come primarily from the first half of the book where Ray explores his own story and his life principles. The “work principles” section was great, but more applicable to explorations of leadership and functional organizations.
Here are some of my favorite quotes and short reflections on how they apply to the search for financial independence. I intentionally DID NOT highlight the principles themselves. For those – I suggest reading the book. Instead, I focused on key supporting thoughts. This list was pared down from more than 90 original highlights.
After you read this, check out others in the FI Quotes series:
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Ray Dalio Quotes from Principles
“It seems to me that life consists of three phases. In the first, we are dependent on others and we learn. In the second, others depend on us and we work. And in the third and last, when others no longer depend on us and we no longer have to work, we are free to savor life.”
I had to lead with the quote that most connected to financial independence for me. I’d remove the “others depend on us” portions, or at least acknowledge that strong relationships mean you’re never entirely free from connection to others.
But, the concept that we spend most of our time in the second phase, trying to reach the third, is the real reason I aggressively pursue financial independence. I’m not trying to avoid working – I’m just trying to make sure I have the ability to choose to work, or not.
The earlier you enter that phase, the sooner you control your own choices and can savor life on your own terms.
Which brings us to a category of quotes…
Quotes About Designing YOUR Life
“What does a successful life look like? We all have our own deep-seated needs, so we each have to decide for ourselves what success is.”
“Knowing how one is wired is a necessary first step on any life journey. It doesn’t matter what you do with your life, as long as you are doing what is consistent with your nature and your aspirations.”
“While making money was good, having meaningful work and meaningful relationships was far better.”
“I had always wanted to have—and to be around people who also wanted to have—a life full of meaningful work and meaningful relationships,”
“I cannot say that having an intense life filled with accomplishments is better than having a relaxed life filled with savoring, though I can say that being strong is better than being weak, and that struggling gives one strength.”
“What I have seen is that the happiest people discover their own nature and match their life to it.”
A series of quotes that all resonated with me for the same basic reason: the power of financial independence is the ability to design your life to match your nature and personal aspirations.
It’s why we embrace FIOR (financial independence optional retirement.) For us, it’s not about getting away from work as quickly as possible. An ideal life for us is filled with meaningful work, the ability to explore the world, and connection with interesting people. It’s not a life free from effort, but free from obligation.
Your ideal life may, and probably should, be different.
Discover your nature, then strive to build a life that matches it. Then set goals that work for YOU…
Quotes About Goals
“Because we each have our own goals and our own natures, each of us must choose our own principles to match them.”
“It’s smarter to start with what you really want, which are your real goals, and then work back to what you need to attain them. Money will be one of the things you need, but it’s not the only one and certainly not the most important.”
“Stretching for big goals puts me in the position of failing and needing to learn and come up with new inventions in order to move forward.”
“Remember that there are typically many paths to achieving your goals. You only need to find one that works.”
Another grouping of quotes – all related to goal setting and the importance of aligning your goals with your personal needs and aspirations. I’m a big advocate of setting financial goals because stretching for goals leads one to achieve more. That said, my goals shouldn’t be your goals. And our goals shouldn’t be just about money.
A significant shift I’ve made in the years I’ve been pursuing financial independence is to focus less on the money and more on what the money will allow me to do. It’s not about accumulating a million dollars, it’s about having the amount of money (which could be a million) needed to can make choices about work and travel. That may seem subtle, but you’ll find it motivates you more and lets you sustain your effort.
Keep the numbers goals for the medium and short term. Here are some helpful financial goal examples.
Ground your long-term goals in aspirations greater than money. Then find your path.
And expect that you’ve missed something, made a mistake in planning, or that sometimes things will just go wrong…
Acknowledging Reality & Accounting For Uncertainty
“I learned a great fear of being wrong that shifted my mind-set from thinking “I’m right” to asking myself “How do I know I’m right?”
“Don’t fall into the common trap of wishing that reality worked differently than it does or that your own realities were different. Instead, embrace your realities and deal with them effectively.”
“There are always risks out there that can hurt you badly, even in the seemingly safest bets, so it’s always best to assume you’re missing something.”
“I realized that reality was, if not perfect, at least what we are given to deal with, so that any problems or frustrations I had with it were more productively directed to dealing with them effectively than complaining about them.”
“People interested in making the best possible decisions are rarely confident that they have the best answers.”
“When two people believe opposite things, chances are that one of them is wrong. It pays to find out if that someone is you.”
Too many people think plans are about exact execution instead of about narrowing the window of outcomes.
Don’t build your plans with hard expectations. Instead, set a range of likely outcomes and plan to adjust along the way. Improvise, adapt, overcome as they say in the Marine Corps. Start with the assumption that you’ll need to, and you won’t find yourself resisting reality.
Most of all – don’t assume you’re right. Constantly check your assumptions, keep learning from others, and invite productive disagreement. (Radical open mindedness is one of the Principles from the book that I’m not quoting – but when you read it, you’ll be immersed in the concept.)
This is a good time to point out that I’ve also shared some of my favorite quotes from Thinking in Bets by Annie Duke. That book will help you shift into how you think about actions, uncertainty, and failure. Check out the post and/or get the book! (affiliate link)
Mistakes will happen. Or, you’ll do everything right and still experience failure…
Quotes About Making Mistakes & Experiencing Failure
“I believe that the key to success lies in knowing how to both strive for a lot and fail well. By failing well, I mean being able to experience painful failures that provide big learnings without failing badly enough to get knocked out of the game.”
“One is inevitably going to be painfully wrong a lot, so knowing how to do that well is critical to one’s success.”
“So rather than getting stuck hiding our mistakes and pretending we’re perfect, it makes sense to find our imperfections and deal with them.”
“If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re not maximizing your potential.”
“You will never handle everything perfectly: Mistakes are inevitable and it’s important to recognize and accept this fact of life.”
“You will never handle everything perfectly: Mistakes are inevitable …” is such a powerful and freeing concept. As someone who struggles against perfectionism, embracing this is perhaps the most important thing I’ve done in recent years.
Making solid decisions isn’t about always being right. It’s about being right more often and limiting the downside.
Instead of trying to be always right, or being devastated by failure – build in expectations that things will go against you. Look forward to these moments and use them as learning experiences to improve.
Which leads to…
“I have come to realize that bad times coupled with good reflections provide some of the best lessons, and not just about business but also about relationships.”
This one takes time to really truly believe. Bad times are so painful and when you’re in the middle of one it’s easy to believe you’ll never come out.
After you survive a few, you can see the benefits and start to take advantage. Reflecting on what went wrong, and what let you make it through, prepares you for the next time and makes you stronger.
For financial independence, this is especially true in investing. Expect that your investments will have downtimes. Don’t let it deter you from the plan.
I remember the real financial fears of 2008. During that time, very few people thought anyone would come through unscathed. Ten years later, people were talking about an unprecedented bull market as if the great recession hadn’t existed.
During 2008, I didn’t sell my investments, but I also didn’t put any new money in. A wait and see approach was better than a panic and sell approach.
During the 2020 drop? We continued investing, and even put in a little extra cash we had in our housing fund. The result? We’re better off now than ever.
Bad times can make you better. It’s just hard to believe it. But once you do, building solid principles from what you learned will help you become stronger.
The Importance of Principles
“Having good principles for dealing with the realities we encounter is the most important driver of how well we handle them.”
“Using principles is a way of both simplifying and improving your decision making.”
“We are all born with different thinking abilities but we aren’t born with decision-making skills.”
Yes, it would have made sense to lead with the quotes about why having principles is important. It would have been far too predictable too!
We aren’t good decision-makers in the moment. Emotions impact everyone, especially those who say they’re not impacted by emotion.
You can counter this by declaring your principles and testing/adjusting them over time. Don’t let even your principles become gospel. Remember, expect mistakes and failure.
You can use your principles to make decisions in advance by automating things. You can also write down how you’d act in downtimes with an investor policy statement.
And, your principles should be related to your goals and the life you want to design! Don’t adopt someone else’s principles, though you can use them as a guide. Instead, create your own and ground everything in them.
Some of mine?
- Education is about more than financial ROI.
- Money provides choice and security, but isn’t the goal.
- Lifting up other people will get you farther than stepping on them.
- Savings and investments first, then optional expenses.
“…people’s greatest weaknesses are the flip sides of their greatest strengths.”
“Successful people change in ways that allow them to continue to take advantage of their strengths while compensating for their weaknesses.”
“…beneficial change begins when you can acknowledge and even embrace your weaknesses.”
I’m terrified by/for those who believe (or pretend) they have no weaknesses. They’re usually the most difficult to deal with and always the least prepared for a fall.
It’s so important to recognize and name your weaknesses. Then intentionally work to balance them out. A few examples from my life:
- I’ve got a strong bias for action. This conveys some benefit, but is also a huge weakness. I put intentional time barriers into my decision-making to compensate.
- My sense that I will never have enough money means I could massively over accumulate. I balance this out by setting clear net worth targets and running spreadsheet analysis frequently. This not only lessens the weakness, but has been an incredible strength in my understanding of how our finances change over time and respond to adjustments.
- My introversion can be a professional weakness. The flip side is when I do speak in public, I’m always well-prepared and well-reasoned so this weakness presents to others as wisdom.
Oh, and I still have plenty of other weaknesses I’m working on.
“Because most people are more emotional than logical, they tend to overreact to short-term results; they give up and sell low when times are bad and buy too high when times are good.“
Another great quote that highlights the importance of having an investor policy statement. Write down your goals, your decision points, and your actions. Then automate everything you can, only taking pre-determined actions in times of big market moves.
We can never remove emotion from our decision-making, so disconnect the decision-making from emotions instead.
“..when faced with the choice between two things you need that are seemingly at odds, go slowly to figure out how you can have as much of both as possible.”
I’ve always been guilty of framing choices as win/lose. This is a much much much more powerful approach to dealing with two seemingly offsetting choices.
A common example in financial independence – “sacrificing” to save every penny and reach financial freedom more quickly. The math works – but is it really sustainable? For many, probably not.
Can you slow down a little, identify those things you love to spend on, and cut back on others? Taking the time to figure out how you get both spending and saving will improve the journey, and your overall life – both before and after achieving FI.
“Nothing is ever good enough, and they experience the gap between what is and what could be as both a tragedy and a source of unending motivation.“
I love this quote because it captures how I’ve always approached life. It remains true both in my work as a school principal and in my search for financial independence. I’ve found this drive has set me apart and allowed me to achieve.
Yet, there is a toxic side of “nothing is ever good enough.” I don’t have the answer here, but just asking the question helps – how can we hold high standards while not losing our motivation?
“Figuring out how to best give away money is as complex an undertaking as figuring out how to make it.“
I flagged this one because of it’s personal resonance. Part of designing my ideal life is figuring out how I can give both time and money effectively. I’ve always given while earning a wage, but once I stop earning a wage, how do I make sure that giving remains strong and not sacrifice it for my own convenience?
More importantly – I’ve pledged to give at least half of this site’s profits away. Since it appears revenue will soon exceed costs, I’m starting to explore how to do that most effectively.
Philanthropy as the complex activity following accumulation is an intriguing concept!
“My perspective was influenced by my own journey through life, which took me from having nothing to having a lot. That taught me to struggle well and made me strong.“
“Since life brings both ups and downs, struggling well doesn’t just make your ups better; it makes your downs less bad.“
I’m not sold on the idea that poverty conveys some kind of financial superpower. That said, I know my childhood of being raised by a single mom who struggled financially has led me to appreciate the incredible privilege of choosing frugality.
I personally still feel the downs, but do appreciate the ups more than my friends and colleagues who have never seen the real bottom. I’d rather have the perspective that brings, so in the end, struggling well is a benefit.
“But right now I’m not thinking about the dying part; I’m thinking about how to live freely, and I’m excited about it.“
As someone who got interested in personal finance relatively late, it’s never been about early retirement. Instead, it’s about getting to financial security as soon as possible and making choices without the constraint of financial insecurity.
I’m most excited by the freedom it brings rather than by any concept of slowing down or lying around.
“Though most people think that they are striving to get the things (toys, bigger houses, money, status, etc.) that will make them happy, for most people those things don’t supply anywhere near the long-term satisfaction that getting better at something does.“
“Once we get the things we are striving for, we rarely remain satisfied with them. The things are just the bait. Chasing after them forces us to evolve, and it is the evolution and not the rewards themselves that matters to us and to those around us.“
A set of pure FI quotes here. Understanding that the modern drive to acquire more stuff is ultimately futile and won’t improve your happiness is one of the first switches to flip in your pursuit of financial independence.
If you can set a different reward – time freedom – instead of the newest consumer toy, you’ll find yourself making rapid progress to financial independence.
“I’ve come to see that people who overweigh the first-order consequences of their decisions and ignore the effects of second- and subsequent-order consequences rarely reach their goals.“
“This involves playing different scenarios through time to visualize how to get an outcome consistent with what you want. To do this well, you need to weigh first-order consequences against second- and third-order consequences, and base your decisions not just on near-term results but on results over time.”
In both my personal financial life and my time as an education leader, I’ve seen just how much difference this makes in the chances of success. Too many of us are only able to solve the problem right in front of us – and the resulting solution is too often short term or creates larger negative consequences.
Take the time to think through your actions and how they’ll cascade down through time. The obvious point here is that spending now costs you far more in future earning because you can’t invest and experience the joy of compounding returns.
“What you think is attainable is just a function of what you know at the moment.“
This applies directly to our journey to financial independence. Originally, we set our goal 12 years out. Then we kept learning. New knowledge (like discovering the 457b plan) combined with specific actions (like downsizing our house) means we reached our goal in only 5 years.
Another important reason to keep learning and constantly adjust your goals – your sense of what is possible will grow over time.
“Listening to uninformed people is worse than having no answers at all.“
Enough said. Listen to those who have done it.
“Be an imperfectionist. Perfectionists spend too much time on little differences at the margins at the expense of the important things.“
I’ve written before about overcoming perfectionism. Don’t stress about trying to get every little decision right. Focus on the big ones. You may squeeze out a few extra dollars of return, but it’s far more impactful to reduce your monthly housing expenses by 80%.
It’s better to take action now and then adjust as you go. It’s far too easy to get stuck in analysis paralysis while seeking perfection.
“Think of every decision as a bet with a probability and a reward for being right and a probability and a penalty for being wrong.“
This frame literally changed how I approach decisions, and is key to avoiding the perfectionism mentioned above. As I mentioned earlier, check out Annie Duke’s Thinking in Bets for a deep dive into this.
“I have found triangulating with highly believable people who are willing to have thoughtful disagreements has never failed to enhance my learning and sharpen the quality of my decision making.“
This is the biggest benefit of the online financial independence community. There are so many voices and sources out there. Find the ones you trust, seek believable ones that you may disagree with, and use their information and examples to sharpen your own decision-making!
If you’re an educator, start with my list of educators writing about personal finance.
If you haven’t read the book yet, I highly recommend Principles: Life and Work. It’s worth it just for some great Ray Dalio quotes, but you may also find yourself adopting some of the principles for yourself. Buy the book (affliate link) by clicking below, or check it out at your local library!
From here, I recommend checking out 15 FI Quotes from Thinking in Bets!