How Cold Showers Can Help You Achieve Financial Independence

Some days are better than others. A whole bunch of factors go into determining whether any particular day is good, bad, or exceptional, but there is one constant variable for me: whether I get a cold shower in the morning or not. If I do, my odds of a good or great day are much improved. If I don’t, I can be fairly certain that it won’t be a great day. No matter what I do, I’ll feel less energized. 

Here is my daily early-am routine: Shortly after waking up and nursing a cup of coffee (or three) I get a brief but fairly intense bout of exercise. Typically this includes both aerobic exercise (like a run on a treadmill or through nature) and some strength training in the form of weight lifting. The activity varies by day based on how much time I have, but the goal is always the same: break a good sweat. The sweat is critical because without it I can’t withstand the cold shower that comes next. 

First I set the water temp to a reasonably cool point and let it stabilize. The worst thing that can happen is you get in while it’s cool or cold and then it gets warmer. This will kill your cold-shower process. So let the water temp stabilize before jumping in. At this first stage the water needs to be reasonably cool if not moderately cold, but not freezing. If it’s freezing you won’t be able to force yourself in, and if you do, you’ll be out in a flash. 

After two to three minutes I will have completely mastered this “level-one” cold and and I turn the temperature colder. Maybe by a factor of say 15% colder. I get a rush from the lower water temperature, but because I’m already dialed in to the cool-to-cold shower, I quickly master this new “level-two” temp. It takes maybe a minute. Then I ratchet up the cold again. And again I get the positive effect: a rush from the increased cold followed quickly by mastery. I can do this. 

When I’m done I step out and get a final blast of cold from the ambient air. But it feels great. I feel like a million bucks. Exhilarated.

Psychology and Money

I have a background in tax, law, and accounting, so I’m no stranger to the technical aspects of money management. Undoubtedly an eagerness to learn the technical details related to the various forms of tax strategies helped to juice my journey to FI much earlier than someone who didn’t have an ability or interest in learning about the technical issues. I was also innately interested in understanding the mechanics of investing, which probably helped me to avoid making a host of mistakes with my hard-earned money early in the process. 

But in spite of my affinity for and aptitude to understand the technical stuff that goes into effective personal financial management, I am much more fascinated by the “soft” side of money. The psychological and behavioral components. And over time I have become convinced that these soft aspects of money management have a much larger impact on individual results than the technical concepts. Once you overcome the steep learning curve of the technical stuff and gain a basic understanding of the landscape for issues including tax, investing, etc., it’s fairly easy to implement what you’ve learned on auto-pilot. But as individuals we have to deal with the psychological and behavioral components every single day, and every single day presents unique challenges that could derail our future success. 

This is why I spend time thinking about topics like how our psychology related to shower-water temperature could impact our thinking about managing money.

The Nexus of Cold Showers and Money Management

So what do cold showers have to do with money management? At a psychological and behavioral level, a lot. 

First, saving money, living below your means, and (gasp!) being frugal sounds, well, awful to most people. Just like a cold shower. Try this out: bring up in a casual conversation with someone the idea that you are hyper-frugal. You can tell them why or don’t tell them why. Doesn’t matter. Note their response, both verbal and non-verbal. Then try revealing to someone that you routinely take cold showers. (You have to be more careful with this one; giving too much detail could involve law enforcement.) In both cases, unless your audience is particularly enlightened, you’ll see a reaction that resembles someone picking up a smell that is really awful, but trying their best not to let on. (You probably want to try these two questions on two different people, because after you have discussed the first topic you will have poisoned the well; they will think you’re a nut-case.) But as you analyze the responses that you get ask yourself this: have your respondents ever tried being frugal or taking cold showers? And I mean with commitment and purpose, not just once. If the answer is no, why should we pay any attention to what they think?

But we’re more enlightened. We understand that frugality, just like a cold shower, is a tool to achieve a desired future result. 

Applying the Cold-Shower Process to Money Management 

The hardest part is getting started. That first cold shower sucks. So does that first month of letting go of wasteful spending and consumption habits. The critical part is to adopt an entry point that is moderately cold, but not overwhelming. So if you currently spend every penny that you bring in each month (or more), don’t shoot for a 25% savings rate in month one. Maybe try 5 or 10%. Remember: you want it to be cold enough that you start to adjust to something that is not hot, but not so cold that you declare “screw this cold shower crap!” and immediately jump out. Alternatively, if it’s too warm and comfortable you will lose the motivation to press on further. 

Take a minute to adjust to this new environment. To master it. If you have adjusted your settings correctly, the water won’t get warm on you just as your body adjusts to the cold. In the money management context, maybe this means mapping out a budget ahead of time that implements your new 10% savings rate, and you commit to achieving that target come hell or high water. 

As soon as you have mastered this level of cold—and that may take a month . . . or six months—you ratchet it up slightly. Increase the cold. Maybe you move from a 10% savings rate to 15%. It’s not too much more than where you were before, but it’s noticeable. Not overwhelming. Too much too soon could lead to a backslide. Instead, set a challenge that you can meet. Be diligent. Patient. And master it. 

Then repeat. Each time making small incremental gains. By the time you’ve gone through the cycle 4 or 5 times, you’re taking cold showers with absolutely no discomfort that ordinary Working Joes couldn’t stand for 30 seconds. You’re even enjoying it. You’re saving 50% of your earnings every month. You’re a cold-shower-taking, cash-stashing badass. 

The End-Result Psychology

Hot showers feel GREAT when I first get in. But when I get out I feel lazy. Slow. Exhausted. Cold showers feel not so great at first. But then it feels better. And eventually it feels awesome. When I get out I’m ready to run a marathon. I’m charged for the day. 

Similarly, spending money on sh*t that you don’t need at Costco (or the Range Rover dealership) feels great at the moment. But after you’ve brought the crap home for a few months and impressed all of your shallow neighbors, you feel bored. Wasted. Empty. 

Alternatively, not buying that crap leads to a future (pleasant) realization: instead of an 80” high-def hunk of depreciating circuits and silicon on your wall (or a 5-door block of depreciating circuits and steel in your garage) you purchased an ever-appreciating pile of shares in the most profitable and innovative companies in the most robust economy in the world, and that will one day throw off enough cash to allow you to do whatever the F you want.  

This is a good feeling. You’ll feel like going and earning more—even if you hate your job. But you will feel compelled to add to that productive pile, all the while knowing that you are making progress toward a tangible goal. 

Manage Expectations: This Will Likely Suck Total Ass at First

When I face a tough task, I think it’s absolutely ridiculous to be an “optimist” and lie to myself by saying “this is going to be great! You can do it!” I guess I’m not a good enough bullsh*tter to lie to myself. Instead, I want to have the unvarnished truth. “This is going to suck total ass. Now go get after it.”

So I encourage you to go into both of these exercises with realistic expectations. When I first started taking cold showers I was happy to have done them, but I didn’t enjoy doing them. But the return that I received after completion in the form of increased energy and mental acuity was so high that I kept at it. Enduring and looking past the short-term pain. But now, after a couple of years of doing it every day, I actually enjoy doing the cold shower. I look forward to it every day. 

You’ll go through a similar process with saving money. At first you’ll feel good only after having done it; not while doing it. Foregoing wasteful consumption that you previously relished in will be painful, and you’ll feel deprived. Maybe even a little bit stupid if you’re surrounded by a cohort that is continuing to spend with abandon. But if you can get through the moment of pain, after the fact you will feel good having done the saving. 

And eventually something will change. You will get to a point where you actually feel good in the act of doing the saving. Skipping the wasteful consumption won’t feel painful. It will feel virtuous. And when you get to this point, you will have created an unstoppable snowball of wealth accumulation (presuming that you put in place the basic technical blocking and tackling of regularly investing, not timing the markets, reducing investment fees, minimizing tax drag, etc.).  

But you have to start somewhere, and you have to expect difficulty at first. Fight through that first cold shower. Yell and scream if it helps. Mild or even extreme profanity may prove valuable here. But then revel in the first completed challenge. And use that sense of accomplishment to do it again the next day. And the next day. And the next. If you master the cold shower, you can use the same principles to master the management of your money. 

One Final Tip

I mentioned that the critical first step in improving my odds of having a great day are breaking a sweat. Of course exercise brings a series of positive side effects in its own right, but here I’m focused on its role in preparing my mindset for the cold shower. The increased body temperature that brings on the sweat is the condition that makes the cold shower possible. Without this increase in temperature I wouldn’t have the proper motivation to get through the temporary adversity. 

With money, you have to do the prep work of determining with clarity why you’re going to endure the short-term pain (if in fact saving money causes you pain, which I’ve been told is the case for some). Why do you want to forego the consumption now? What is your ultimate objective? It needs to be tangible. Understand with great clarity what you are trying to achieve, and keep that long-term vision at the front of your mind in order to endure the adversity of today. 

For me, I hated my daily work obligations with a burning passion. I wanted to stop doing it as quickly as possible. The prospect of achieving that goal gave me a level of motivation that would have allowed me to run bare-foot across red-hot coals. And it created a mindset that drove me to save with militant commitment. Without this motivation, abnormally high savings rates (for most) will ultimately seem to be pointless self-denial. For those frugal-DNA types like me, the tangible motivation served to keep me on track and to super-charge my accumulation phase. 

So if you are not happy with how you spend your days, get up tomorrow and go for a run. If you are short on time, just sprint for long enough to work up a moderate sweat. And then go take a moderately cold shower. Get through it any way you can without turning up the heat. See how you feel when you step out, and how you feel for the rest of the day. 

Then do it again the next day. You will likely find that the short-term pain is a small price to pay for the long-term benefit.