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Core Principles Of The Financial Samurai

Started by Sam, September 29, 2018, 07:46:46 AM

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Hello Everyone,

A number of you have asked over the years, "What does it take to become a Financial Samurai? Do you have a set of core principles to follow?"

Thank you for making me think about these questions, especially since launching the FSF.

Financial Samurai is a way of life, not a level one finally obtains. The follow five core principles and 11 objectives are what will guide those of us looking to achieve financial independence and live our best life.

The Core Principles Of Financial Samurai

1) Never fail due to a lack of effort because effort requires no skill. You can fail because of superior competition, bad luck, or poor execution, but you cannot fail because you didn't try your best. When you look back on your life, your biggest regrets will be the things you didn't do and the things you half-assed. Get on that 6am bus!

2) Always maintain an abundance mindset instead of a scarcity mindset. There are trillions of dollars in the world for the taking. There is no reason why you can't build your own fortune. Focus on wealth creation through investing and entrepreneurship rather than just being frugal. There is only so much you can save and an endless amount you can make.

3) Depend on no one but yourself to succeed. Nobody will save you, so you must save yourself. The world can be a very difficult place. We will inevitably face hardships along our path to financial independence. Most people are too busy fighting their own fires to help fight yours. By accepting that nobody will bail us out, we will end up doing our best work because we have no other choice.

4) Know that you only deserve what you have earned. There is no better feeling than working hard for your success. Pity the people who have everything given to them. Let go of your need to compare. You will never fully know how hard they tried or didn't try to achieve their results. Eradicate entitlement.

5) Always give without asking for anything in return. Give your time. Give your money. Give your kindness to those in need. You never know what someone is going through, so keep your judgement locked away. Constantly smile and you will find that strangers will smile right back. Eventually, people can't help but want to help you succeed.

By embracing these core principles, you will adopt the way of the Financial Samurai.

Specific Goals Of The Financial Samurai

1) Save until it hurts every month. If the amount of money you're saving each month doesn't hurt, you are not saving enough. Once your savings amount stops hurting, it's time to save a little more. Your mission is to then invest the majority of your savings in risk-appropriate asset classes.

2) Always max out all pre-tax retirement accounts. There is no excuse not to take full advantage of tax-advantageous vehicles. You will adjust to your paycheck. Tax is your greatest ongoing liability. Your goal is to defer and minimize taxes for as long as possible.

3) Build a net worth equal to 20X or greater than your average gross income. Once you have built a net worth of such magnitude, you will finally feel true financial freedom. Your average gross income over your career should come close to your steady state income where you are living a comfortable life.

4) Generate a passive income stream that covers 100% of your best life expenses. True financial freedom can also be attained when all your expenses are covered, whether your net worth is 20x your annual gross income or not.

5) Never quit, get laid off. When it's time to finally leave your job, negotiate a severance instead of quitting. If you quit, you are not eligible for unemployment benefits, WARN Act pay, a severance, or subsidized healthcare. Given pensions are becoming rarer, you must create your own pension. The abundance mindset is key to achieving a successful negotiation.

6) Live a life of purpose as soon as possible. Financial Samurais do not just sit passively and let life beat them up. Instead, they take action to make life better, no matter how uncomfortable the path. No job is worth doing if you don't give it at least a 7 out of 10. Take career risks. Start a business on the side. Constantly be exploring new opportunities. Never settle.

7) Work while others are playing. Instead of watching sports all weekend, use that time to do something productive. Instead of sleeping in until 7am, wake up an hour early to build your business. Instead of going on vacation during the summer, use that time to get a Master's degree, then go on vacation in the fall when it's cheaper and less busy. If you can consistently work while others are playing, one day you might never have to work again.

8) Empower those who are struggling or feel forgotten. In every city and town across the world, there is someone who needs a helping hand. Roughly 20% of people have disabilities that makes their lives a little to a lot more difficult. Despite being one of the wealthiest nations on Earth, the poverty rate in the US is still between 11 - 15%. A Financial Samurai does not turn a blind eye, but instead finds ways to help every single week.

9) Fight ego by practicing Stealth Wealth. It's only natural to want to shout from the rooftops how much you make, how much you are worth, and how successful you are. Instead, do so in moderation, preferably only when explaining a situation to help someone else. Never fully reveal the full extent of your wealth or success, no matter how big or small it is. You will only make others feel bad and attract unwanted negativity by overly boasting about your wealth.

10) Never confuse brains with a bull market. Always differentiate between luck and skill. In a long bull market, it's easy to think you are the greatest investor on Earth. In a bear market, it's easy to think yourself a fool and discredit all your hard work. The luckier you are, the harder you should work and give back. Eventually, your luck will turn, so you will need to be prepared.

11) Create a perpetual giving machine. Establish something that will keep on giving long after you are gone. Perhaps it is by creating an archive of podcasts for your daughter and her daughters to listen to. Perhaps it is by creating a scholarship fund at your school. Or maybe you are willing to open up in an article about a personal difficulty that can help others overcome their own grief. Giving is the most pure form of joy you will ever experience.





Thanks a lot I'm new to this forum but I am very eager to learn I'm not making as much as you all but gotta start from somewhere so I'm going to try my hardest to follow these principles and be on my way to wealth and more fun times in life❤️💯😘


I'm not sure if this is the correct place to ask this question but unless I've missed it, I don't see any discussion about self directed IRA's.

A self directed IRA, especially one with checkbook control, is a great tool for the investor who wants to invest in alternative investments and not have their retirement funds be limited to what the Fidelity's, Vangard's, etc. have to offer.

I have used one for over 6 years and have been extremely pleased with the investment options it has provided.

Among other things, I developed a subdivision from raw land, funded entirely by cash from my self directed IRA.  The development is now almost sold out and has returned far more than any conventional IRA investment option.

I'm curious if there are others with similar experiences.

Somewhere In Between

Completely agree with this list, and would add two dimensions:

1. A FS's first focus is the care and support for relationships with family and friends.
2. A FS's ensures their mental and physical health are also a top priority. 

I've learned that without these two elements, there's not much point pursuing the financial goals. 


Thanks for posting this Sam! My favorite principle is #1. It's so true. I always sleep better on the days I know I tried my hardest even if I didn't get all the results I wanted. And my favorite goals are #7 and #9. I was much better at #7 before I became a FT mom, but I'm still trying. As for #9 even though I earned much more in my 30s than 20s, I didn't really change how I spent that much. Even now I still shop at discount stores vs expensive places. I have no desire to display wealth; I prefer to save and invest it.  :)