Charlie Munger built a multi-billion-dollar fortune not through brilliant speculation or complex strategies but through decades of disciplined thinking, rational behavior, and the relentless avoidance of mistakes.
His wisdom, shared across Berkshire Hathaway annual meetings, Daily Journal shareholder sessions, and countless interviews, reveals a man who treated self-discipline as the foundation of everything worth achieving. Here are ten rules of self-discipline that Munger lived by, drawn from his own words and actions.
1. Focus on Avoiding Stupidity Rather Than Chasing Brilliance
Munger’s most powerful discipline was knowing what not to do. He told Berkshire shareholders: “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
This wasn’t false modesty. He built his entire decision-making framework around eliminating errors rather than swinging for home runs. He stuck to his circle of competence and refused to act when the odds weren’t clearly in his favor.
2. Control Your Temperament Before You Trust Your Intellect
Munger consistently argued that emotional discipline matters more than raw intelligence. He said, “A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw irrational emotion under control. You need patience, discipline, and an ability to take losses and adversity without going crazy. You need the ability not to be driven crazy by extreme success.”
He proved this by enduring multiple 40%-plus drawdowns with Berkshire stock without flinching, panicking, or changing course.
3. Spend Less Than You Earn and Let Compounding Do the Work
Munger laid out his most foundational wealth principle in Poor Charlie’s Almanack: “It’s so simple. You spend less than you earn. Invest shrewdly, avoid toxic people and toxic activities, and keep learning your whole life.”
He and Buffett both lived well below their means for their entire careers. Munger drove modest vehicles and maintained the same Pasadena home for years, not because he was cheap but because he understood that every dollar spent on a depreciating luxury was a dollar that could no longer compound.
4. Become a Learning Machine
Munger treated continuous learning as a moral obligation, not a hobby. He said, “I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up, and boy does that help, particularly when you have a long run ahead of you.”
He read voraciously across every discipline and famously said he’d never met a wise person who didn’t read constantly.
5. Master the Best Ideas From Every Discipline
Munger refused to think inside a single box. He told the USC Law School graduating class: “You must know the big ideas in the big disciplines and use them routinely — all of them, not just a few. Most people are trained in one model — economics, for example — and try to solve all problems in one way. You know the old saying: to the man with a hammer, the world looks like a nail. This is a dumb way of handling problems.”
His discipline was in systematically building what he called a “latticework of mental models” from psychology, mathematics, physics, biology, and history.
6. Eliminate Envy, Resentment, and Self-Pity From Your Life
Munger was ruthless about purging destructive emotions. He said: “Envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity gets fairly close to paranoia, and paranoia is one of the very hardest things to reverse.”
He also called envy “a foolish sin because it’s the only one you could never possibly have any fun at.” There’s a lot of pain and no fun.” His discipline wasn’t just financial — it extended to policing the quality of his own thinking.
7. Wait With Extreme Patience, Then Act With Extreme Decisiveness
Munger described his approach with a phrase that captures the tension of disciplined investing: “Extreme patience combined with extreme decisiveness.” At the 2002 Berkshire Hathaway meeting, he said, “We wait for no-brainers. We’re not trying to do the difficult things. And we have the patience to wait.”
Louis Simpson, who ran GEICO’s investment portfolio, described Munger’s temperament as “unyielding patience, discipline, and self-control — Charlie just doesn’t crack or compromise on his principles, no matter how stressful the situation.”
8. Remove Toxic People Fast
At the 2023 Berkshire Hathaway shareholder meeting, Munger gave pointed advice: “As for avoiding toxic people, look out for those who are trying to fool you or lie to you or aren’t reliable in meeting their commitments. A great lesson of life is to get them the hell out of your life and do it fast.”
This wasn’t just business advice. Munger viewed the discipline of curating your environment — the people you trust, the information you consume, the habits you keep — as essential to long-term success and clear thinking.
9. Use Inversion to Prevent Disaster Before It Happens
One of Munger’s signature mental disciplines was thinking backward. He frequently quoted the mathematician Jacobi: “Invert, always invert.” Instead of asking how to succeed, Munger asked what would guarantee failure, then avoided those things.
His famous 1986 Harvard speech, “How to Guarantee a Life of Misery,” laid out five prescriptions for a terrible life: ingesting chemicals to alter mood, harboring envy and resentment, being unreliable, letting adversity crush you, and refusing to learn from mistakes. His discipline was to do the opposite systematically.
10. Recognize Reality, Especially When You Don’t Like It
Munger demanded intellectual honesty above all else. He said: “I think that one should recognize reality even when one doesn’t like it; indeed, especially when one doesn’t like it.” He also held himself to what he called an “iron prescription”: never having an opinion on a subject unless he could state the arguments against his position better than its supporters could.
This discipline of confronting uncomfortable truths — about markets, about businesses, and about his own limitations — kept him from the self-deception that destroys most investors.
Conclusion
Charlie Munger’s rules of self-discipline share a common thread. None of them requires genius, special connections, or unusual talent. They require rationality, patience, emotional control, and the willingness to do simple things consistently over the course of decades. The challenge was never in knowing what to do. The challenge was doing it year after year without losing focus.
As Munger himself put it: “Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step, you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day. At the end of the day — if you live long enough — most people get what they deserve.”