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💰 The Art of Spending Money | Full Audiobook — Transcript

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0:00Most people don't have a money problem,
0:02they have a psychology problem. Welcome
0:04to The Art of Spending Money by Morgan
0:07Howell. Full audio book. A powerful
0:10exploration of why we spend, why we
0:13regret, and why more money often brings
0:16less happiness. This isn't just another
0:18personal finance audio book. This is a
0:20deep dive into financial psychology, the
0:23hidden beliefs and money habits that
0:25shape every decision you make. If you've
0:28ever wondered how to spend money wisely,
0:30how to control your desires, or how to
0:32build true financial freedom, this book
0:35will change the way you think.
0:37Introduction: The Quest of the Simple
0:39Life, condensed to about 5,000
0:41characters. Dr. Dan Goodman once
0:43performed Lasic on a woman who dreamed
0:45of a better life without glasses. Weeks
0:47later, she returned devastated, not
0:49because the surgery failed, but because
0:51it didn't bring the deeper validation
0:53she craved. She expected her husband to
0:55find her more attractive and her
0:56co-workers to think she was smarter.
0:58When nothing changed, she felt
1:00shattered. Goodman gently told her, "You
1:02have a problem I can't help you with."
1:03It's astonishing how often people
1:05finally get what they want, only to
1:07discover it's not what they need. Money
1:10works the same way. You might earn more,
1:12buy more, achieve more, yet still feel
1:14empty because happiness depends less on
1:16numbers and more on psychology,
1:19expectations, envy, identity, and
1:22insecurity. This book explores the messy
1:24gap between money and happiness. Money
1:26can absolutely buy happiness, but
1:27usually indirectly. It can buy
1:29independence, options, and moments with
1:32people you love. But it can just as
1:34easily control you, distort your
1:36identity, and push you into chasing
1:38status instead of joy. When I worked as
1:40a valet at a luxury hotel, I once heard
1:42a man brag about spending $21,000 on a
1:45chair. Seeing our shock, he shrugged and
1:48said, "When you have money, this is what
1:49you're supposed to do." I remember
1:51wondering, "Is that the point of getting
1:53rich? To buy things I don't even like
1:55because society expects it." Many
1:57wealthy people I met were great at
1:59making money, but terrible at using it
2:01to create a meaningful life. They chased
2:03wealth because everyone else was chasing
2:05wealth. They bought things because
2:06society told them they should.
2:08Meanwhile, others with far less money
2:11used it to build rich, fulfilling,
2:13content lives. The truth is, money is
2:16both a tool and a trap. Used wisely, it
2:18supports your happiness. Used blindly,
2:21it consumes you. Carl Young once listed
2:23the foundations of human happiness. Good
2:25health, meaningful relationships, and
2:27appreciation for beauty, satisfying
2:29work, and a worldview that helps you
2:31endure life's hardships. Money
2:33influences some of these, but money
2:35itself isn't one of them. This book
2:37isn't a formula for spending. It's about
2:39the art of spending. How money interacts
2:41with personality, desire, fear, status,
2:44and contentment. A few ideas appear
2:46throughout. Money has two uses. as a
2:48tool to build a better life and as a
2:50measuring stick to compare yourself to
2:52others. Many intend the first but end up
2:55trapped in the second. Money can either
2:57serve you or use you. When it becomes
2:59your identity, it steals your peace.
3:01Money can buy happiness indirectly. The
3:03joy usually comes from independence,
3:06time, and relationships, not the objects
3:08themselves. Lasting happiness is rooted
3:10in contentment. The happiest people
3:12appreciate money, but aren't consumed by
3:15it. More money is an easy goal for those
3:17unsure what they truly want. It's
3:19tangible, measurable, and often a
3:21distraction from deeper needs. Everyone
3:24finds happiness differently. What
3:25delights me may seem foolish to you.
3:27People argue about lifestyles because
3:29they're really arguing from different
3:31experiences. William Dawson wrote in the
3:33quest of the simple life that many
3:35people chasing wealth are actually
3:37imprisoned by it. They wanted freedom,
3:39but their obsession with money stole it.
3:41They owned plenty, but their possessions
3:43owned them even more. As Franklin
3:45warned, "Many think they are buying
3:47pleasure when they are selling
3:49themselves into slavery." Dawson argued
3:51that a simple life isn't about living
3:53cheaply. It's about living deliberately.
3:55Money should serve your life, not
3:57dominate it. The true tragedy is
3:59sacrificing the life you have for an
4:01imagined life you may never reach. Your
4:03own simple life, whatever it looks like,
4:06begins with understanding yourself, your
4:08desires, and the forces shaping them.
4:10That's where we begin next with a story
4:12about making sense of misfit children.
4:15Chapter 1. All behavior makes sense with
4:17enough information. Most debates about
4:19what's worth spending money on are
4:21actually just people with different life
4:23experiences talking over each other. An
4:25important question I love is what have
4:27you experienced that I haven't that
4:30makes you believe what you do? And would
4:31I believe the same if I experienced what
4:34you have? It applies to so many things
4:36in life including money. The most
4:38important topic in spending money, one
4:40that's the cause of so much financial
4:42frustration and disappointment, is that
4:44there is no right way to do it. There
4:46are no universal laws of what kind of
4:48spending will make everyone happy and
4:50fulfilled. What I like spending money on
4:52might make no sense to you. My fears
4:54might be your joys. Your goal might be
4:57the thing I most want to avoid. There's
4:59a saying, never make fun of someone for
5:01mispronouncing a word because it means
5:03they learned it from reading. As a
5:05corollary, never make fun of how someone
5:07spends their money because they learned
5:09it from living. Everyone is a product of
5:12their own unique past. To understand why
5:14people spend the way they do, you have
5:17to dig deep into their life experiences.
5:19My brother-in-law is a social worker who
5:21works with kids from the lowest levels
5:23of abject poverty and broken homes who
5:26are pushed in and out of the foster
5:28system. A lot of these kids struggle at
5:30school. Their behavior is poor. They
5:32skip class. They don't pay attention.
5:34They get into fights on the playground
5:36and they can't focus on the future. It
5:38is easy for people to not only criticize
5:40these kids' behavior, but shake their
5:43head in confusion, asking, "Why are you
5:46acting this way? Why can't you
5:47understand that if you behave better,
5:49you'll have a better future? How could
5:51you possibly think that's an okay thing
5:53to do?" But there's a saying inside the
5:55foster care system. All behavior makes
5:58sense with enough information. Once you
6:00understand what some of these kids have
6:02dealt with at home, the uncertainty, the
6:04lack of security, love, and attention,
6:07their behavior begins to make sense.
6:09They're in constant survival mode and
6:11never learn some of the basic social
6:13skills other kids take for granted. You
6:15don't want to encourage or even justify
6:17their behavior. But once you see the
6:19world through their eyes, you quickly
6:21understand why someone would make
6:23decisions that seem foreign to you and
6:25me. All behavior makes sense with enough
6:28information, including behavior about
6:30the different ways we spend our money.
6:32By the late 1920s, America was at the
6:34tail end of a full social and economic
6:37cycle. The devastation of World War I
6:39was followed by a crippling recession.
6:42And then, after a decade of misery,
6:44finally, people got to relish an
6:46economic boom that gave name to the
6:48roaring 20s. Roaring done to it justice.
6:51It was an absolute party. For a good
6:54five years in the mid1 1920s, the
6:56economy was fueled by cheap debt, a
6:58stock market bubble, and bootlegged
7:00liquor. In June of 1928, syndicated
7:04columnist Robert Quillin wrote a
7:06newspaper headline that in 14 words
7:08described something so simple and
7:10important. Nothing can bring you peace
7:13but yourself. Nothing can bring you
7:15peace but the triumph of principles.
7:17That's it. So much of the late 1920s
7:20desire to show off wealth with new cars,
7:23new clothes, new toys, was driven by a
7:26reaction to the poverty and uncertainty
7:28that preceded it. When you at one time
7:30feel held back, then suddenly feel
7:33released, a common reaction is to
7:35frantically sprint ahead to make up for
7:37lost time. Historian Frederick Lewis
7:39Allen wrote about the era, "Like the
7:41suddenly liberated vacationist, the
7:44country felt that it ought to be
7:45enjoying itself more than it was, and
7:47that life was feutal and nothing
7:49mattered much. But in the meantime, it
7:51might as well play, follow the crowd,
7:54take up the new toys that were amusing
7:56the crowd. People seemed to justify
7:58wild, unsustainable spending because
8:00they were making up for being snubbed
8:02and suppressed during the dow years. It
8:05felt as if they were writing a wrong,
8:07like getting revenge. They weren't
8:09spending wildly because they crunched
8:10the numbers and determined it was the
8:12right thing to do. They were trying to
8:14heal an emotional wound. That behavior
8:16is timeless and explains so much. A
8:19close family member grew up extremely
8:21poor and in a broken home, snubbed in
8:23every way. He then became a successful
8:26businessman. When his daughter was
8:27preparing to go to college, he told her,
8:30"Pick the most expensive school you get
8:32into." Sending his daughter to an
8:34expensive school was such a powerful
8:36symbol of what he had overcome that in
8:38his mind it was almost as if he
8:40preferred to pay the most absurd price
8:42he could. High tuition was like a social
8:44trophy that made him feel great about
8:46the arc of his life. If you didn't grow
8:49up snubbed or snubbed in a different
8:50way, that might make no sense to you.
8:53But that's the point. A lot of spending
8:55makes no sense until you peel back the
8:57onion layers of someone's personality,
8:59identifying the specific thing they're
9:01trying to accomplish or the hole they're
9:03trying to fill. How your past influences
9:05your spending decisions can manifest in
9:08different ways with opposite outcomes
9:10depending on the person. Tiffany Elichi,
9:12a former preschool teacher who became a
9:14wildly successful financial educator,
9:17once said that she suffers from
9:18post-traumatic broke syndrome. It's made
9:21it hard for her to spend her newfound
9:23wealth. I was broke for so long and it
9:25was so hard that I'm afraid of going
9:27back there. If you try to make sense of
9:29spending habits, yours or other
9:31people's, you have to start with the
9:33understanding that people don't just
9:34spend money on things they find fun or
9:36useful. Their decisions often reflect
9:38the social and psychological experiences
9:41of their life. And since life
9:42experiences vary dramatically from
9:45person to person, what makes sense to
9:46you might seem crazy to me and vice
9:49versa. Spending a ton of money on a
9:51college degree might feel like a waste
9:53to one person, a non-negotiable
9:55requirement to another, or the ultimate
9:58sign of climbing the social ladder to
10:00another. The same product has very
10:02different meanings to different people.
10:04To someone who grew up in old money,
10:06affluent family, a Lamborghini might be
10:08a symbol of goddy egotism. To those who
10:10grew up with nothing, the car might
10:12serve as the ultimate symbol that you've
10:14made it. No one should pretend that
10:16there's one right answer to these
10:17questions because they fill a different
10:19psychological need for different people.
10:21A lawyer who works a 100 hours a week
10:23and hates their job may have an urge to
10:25spend frivolously in an attempt to
10:27compensate for the misery of how their
10:29paycheck was earned. Never have I seen
10:32money burn a hole in someone's pocket
10:34faster than an investment banker
10:36receiving their annual bonus. After 12
10:38months of Excel modeling until 3:00
10:40a.m., you have an urge to prove to
10:42yourself that it was worth it,
10:44offsetting what you sacrificed. It's
10:46like someone held underwater for a
10:48minute. They do not take a calm breath
10:49when they surface. They gasp. A lot of
10:52spending is gasping. Related, I have
10:55noticed that those most capable of
10:57delayed gratification are often those
10:59who enjoy their work. The pay might be
11:01good, but the urge to compensate for
11:03your hard work with heavy spending isn't
11:05there. The important point in all of
11:07this, most debates about what's worth
11:09spending money on are actually just
11:10people with different life experiences
11:12talking over each other. How much you
11:14should spend and why other people spend
11:16the way they do starts to make sense
11:17when you accept that people who have
11:19lived different lives than you have want
11:21different things than you might. I think
11:22it's a sign of deep immaturity to think
11:24that because you like spending your
11:26money a certain way, other people should
11:28too. It's a sign of deep immaturity to
11:30think that because you don't value
11:31something, no one else should either.
11:33That's not how the world work. What's
11:35reasonable and fulfilling spending to
11:37you might seem pointless to me. What's
11:39mandatory to me might seem like a waste
11:41to you. The software engineer Billy
11:43Marcus says, "People are not rational.
11:46They are rationalizing. Once you
11:47understand this simple fact, all the
11:49oddest human behavior will suddenly make
11:51way more sense. It's why spending money
11:53should be viewed as an art, not a
11:55science. There are no universal answers
11:57on how to do it or what's worth it. The
11:59best we can do is come up with a broad
12:01understanding of how varied people's
12:03minds can be and how varied our
12:05preferences are for spending money.
12:07Psychologist Lisa Feldman Barrett
12:09studies where emotions come from. The
12:11classic view in psychology is that
12:13emotions are deeply ingrained at birth.
12:15The result of eons of evolution
12:17dictating that what's scary or funny or
12:19insulting to me should be the same for
12:21you and all humans. Barrett has spent
12:23three decades showing reality is more
12:25complex. Emotions are not built into
12:27your brain at birth. She says they are
12:29built by your brain as you need them.
12:31From the moment you're born, you begin
12:33to learn that this thing is scary, that
12:35thing is funny, or this thing should
12:37make you angry. You're even taught how
12:38to respond. Contort your face this way
12:41when you're angry to get your point
12:42across to another person. The important
12:44thing is that emotions are learned. They
12:46are a product of the culture and
12:47environment we are raised in. Barrett
12:49writes, "Concepts like anger and disgust
12:51are not genetically predetermined. Your
12:54familiar emotion concepts are built in
12:56only because you grew up in a particular
12:58social context where those emotion
12:59concepts are meaningful and useful and
13:02your brain applies them outside your
13:04awareness to construct your experiences.
13:06The wild thing is to contemplate how
13:08different people's life experiences can
13:10be. An impoverished child in Africa
13:12grows up learning to be scared of
13:14different things than a rich child in
13:15California. A kid from Manhattan grows
13:18up learning to seek joy from different
13:19things than a farmer in Iowa. The most
13:22basic and seemingly fundamental feelings
13:24of joy, fear, shame, and pride vary from
13:27culture to culture, family to family,
13:30person to person. Behavior that
13:31embarrasses you might make me proud.
13:33What I fear might be a thrill to you.
13:35Your goals might be my nightmares. And
13:38it's not just emotions that vary. What's
13:40common sense to one culture can seem
13:42absurd and backward to another.
13:44Psychologist Jonathan Height points out
13:46that a 25-year-old son addressing his
13:48father by his first name is perfectly
13:50acceptable in America, but deemed
13:52morally wrong, universally wrong by
13:54other cultures. You find similar gaps
13:56when asking basic questions about food
13:58preparation, hygiene, how to raise kids,
14:01and how to treat your spouse. If you
14:03define common sense as truths that
14:05everyone agrees on, you'll find it to be
14:07rather uncommon, constrained to
14:09scientifically objective things like 2
14:11plus 2 equals 4. Author David Mcrainy
14:14notes that consensus realities are
14:16mostly the result of geography. All of
14:18this leads to extreme differences in
14:20people's views over what is worthwhile,
14:22risk, a fun little experiment, a
14:24harmless guilty pleasure, or a
14:25fulfilling need. Take an extreme example
14:28from the author Rob Henderson, who
14:29cycled through 10 different foster homes
14:31growing up and went on to receive a PhD
14:34in psychology from Cambridge. A
14:35well-healed student at an elite
14:37university can experiment with cocaine
14:39and will probably be just fine. A kid
14:41from a dysfunctional home with absentee
14:43parents is more likely to ride that
14:45first hit of meth to self-destruction.
14:48This may explain why a 2019 survey
14:50conducted by the KO Institute found that
14:52more than 60% of Americans with at least
14:54a bachelor's degree or in favor of
14:56legalizing drugs, while less than half
14:58of Americans without a college degree
15:00thought it was a good idea. Drugs may be
15:02a recreational pastime for the rich, but
15:04for the poor, they are often a gateway
15:06to further pain. Back to my
15:07brother-in-law, the social worker. He
15:09once told me a story about trying to
15:11convince a poor husband and wife about
15:13the value in saving even a small amount
15:15of money to avoid being evicted from
15:17their apartment the following month. He
15:18said, "They laughed at me." "Oh, you're
15:20a future thinker," he said, laughing
15:22harder. "A what?" My brother-in-law
15:24said, "A future thinker. You have the
15:26luxury of thinking about the future. We
15:28don't. Our vision of the future is the
15:30next 24 hours. Sometimes it's a 5-minute
15:33window, like where we are going to get
15:34the next meal. That's as far ahead as we
15:36think." They were spending every cent
15:38they could as fast as they could. In
15:40part because the entire concept of the
15:42future was different from what yours or
15:44mine might be. There was no common
15:46ground on what might be considered
15:47common sense. Tom Gayner, CEO of Marco
15:50Group, once told a story about having
15:52lunch with his daughter, a public
15:54defense lawyer. Asked about a recent
15:55case, Gainner's daughter described a man
15:57who walked into a restaurant, ordered a
15:59meal, ate it, then tried to pay with
16:01literal monopoly money. Was the guy
16:03stupid or a jerk or trying to play a
16:05joke? Gainor asked, "Daddy, he was poor
16:08and he was hungry." She said, "My
16:10clients are Zen masters of the right
16:11now. There is no past. There is no
16:13future. He was hungry. It's a radical
16:16example, but all of us, you, me,
16:18everyone, live some version of it."
16:21There are so many instances among rich
16:24and poor people alike highlighting the
16:26idea that your values are equal to your
16:29preferences. and your preferences come
16:31from trying to reconcile your current
16:34needs with the lessons learned from your
16:36unique past experiences. Which brings me
16:39to two pieces of advice, both critical
16:41to understanding the art of spending
16:44money. One, don't let anyone tell you
16:46what you should or shouldn't spend money
16:48on. There is no right way. You have to
16:51figure out what makes you happy and
16:53fulfilled. More on that later. Personal
16:56finance is more personal than it is
16:58finance, says financial adviser Tim Mau.
17:01It's one of the smartest money quotes
17:03I've ever heard. A lot of money problems
17:05come from people spending or saving
17:07money in a way they think they're
17:09supposed to, but that doesn't match
17:11their personality. They look for a
17:13one-sizefits-all answer to a problem
17:16that's deeply personal. It's like going
17:18through life forcing yourself to be
17:20someone you're not. Most people
17:21understand if you like Italian food, but
17:24my favorite is Mexican food. Neither of
17:26us is right or wrong. It's just
17:28preference. But that logic can go out
17:30the window when you extend it to what
17:33kind of house you live in, what clothes
17:35you wear, when you should retire, how
17:37often you travel or eat at restaurants.
17:40No matter how you live, plenty of
17:42people, friends, family, co-workers,
17:45online trolls are quick and eager to
17:48tell you you're doing it wrong. It's not
17:50until you acknowledge how personal and
17:52emotional our relationship with money
17:54can be that you realize you're on this
17:57journal alone. Maybe your spouse and
17:59your kids are part of the equation, but
18:01at some point you have to find your own
18:03way, fearless of what others think of
18:05it. Two, be careful judging how other
18:08people spend their money. Comedian
18:10George Carlin once said, "Everyone
18:12driving slower than you is an idiot, and
18:15everyone driving faster than you is a
18:17maniac. It's natural to view everyone's
18:20decisions as wrong when they differ from
18:22yours. There are times in this book when
18:24I criticize other people's spending
18:26decision, but I try to restrain those
18:28criticisms to times when I think it's
18:30obvious that someone is spending money
18:32in a way that's detrimental to their own
18:34happiness. It's one thing if someone
18:36doesn't understand the consequences of
18:38the decisions they make. They might need
18:40help and guidance. It's quite another to
18:42criticize someone's decisions only
18:45because they're different from yours. It
18:47can be hard for some people to
18:48understand why you can't see things the
18:51way they do. I get why this happens. If
18:53I make a decision to live a different
18:55lifestyle than you do, you might view it
18:58as an attack on the decision you've
19:00made, especially if you have lingering
19:02doubts or uncertainty about your
19:04decision, which we all do. The danger is
19:06that if I criticize how you spend money,
19:09I might convince myself that there is
19:12one right way to spend money, the way I
19:14do it. But that might prevent me from
19:16being more introspective about my own
19:18decisions or wondering if I could do
19:20better or trying to understand my own
19:23emotions. Judging others requires
19:25bullheaded confidence which can prevent
19:28you from growing. A healthy financial
19:30philosophy is having respect for others
19:33experiences and appreciation of your own
19:36and an understanding that all behavior
19:38makes sense with enough information.
19:41Now, let me tell you another story about
19:43respect and admiration. Chapter two. May
19:47I have your attention, please? You think
19:49you want nice stuff, but what you really
19:51want is respect, admiration, and
19:53attention. If you're confused about what
19:55a better life would look like, one with
19:57more money is an easy assumption. It's
20:00such a simple idea that influences so
20:02many people. Living a good life is one
20:04of the most complicated topics that
20:06philosophers have debated for thousands
20:08of years. And more money is such an easy
20:11and quantifiable thing to chase. But the
20:14desire for more money and the things it
20:16can buy often obscures what you actually
20:18want. Respect and admiration from other
20:21people. An easy connection to make is
20:23that if you had more money, you could
20:24buy a nicer car and a bigger house. And
20:27if you had a nicer car and a bigger
20:29house, people would respect and admire
20:31you more. Sometimes they will. But let
20:33me share my personal take. I've written
20:35letters to both of my kids hoping to
20:37pass along a few financial lessons I've
20:39learned in life. Something I wrote to
20:41both of them is that you might think you
20:43want a nicer car and a bigger house. But
20:45I'm telling you, you don't. What you
20:47actually want is respect and admiration
20:50from other people. And you think that
20:52having nice stuff will bring it. But it
20:54rarely does, at least as much as you
20:56expected, especially from the people you
20:59want respect and admiration from. I love
21:01the idea of something called the reverse
21:03obituary. Try this. Write down what you
21:06want your obituary to say, then figure
21:09out how to live up to it. It's the
21:10cleanest, simplest way to plot out what
21:13you want in life and what truly matters.
21:15Everyone's self-written obituary will be
21:17different. But I suspect most people
21:19would want theirs to say, "You were
21:21loved. You were respected. You were
21:23admired. You were helpful. You were a
21:25good parent, a good spouse, a caring
21:27friend. You were an asset to your
21:29community. You made a contribution to
21:31your industry. You were wise, funny, and
21:34smart. Now, realize what's not in there.
21:36Almost no one in this exercise would
21:38think about their obituary mentioning
21:40how much horsepower their car has, how
21:43many square feet their home is, or how
21:45much they spent on clothes. Your salary
21:48would not be mentioned, nor how many
21:50carrots are in your wedding ring, nor
21:51that you redid your kitchen with
21:53imported Italian marble. I like nice
21:55things. I have some fancy thing, but I'm
21:58always struck by the contrast here of
22:00what people want versus what they aspire
22:02to. The reason few material things would
22:05make their way into your ideal obituary
22:07is because you inherently know those
22:09things don't actually matter. In his
22:11book status anxiety, Alen Dehuton writes
22:14that the predominant impulse behind our
22:17desire to rise in the social hierarchy
22:20may be rooted not so much in the
22:22material goods we can acrue or the power
22:24we can wield as in the amount of love we
22:27stand to receive as a consequence of
22:29high status. We view nice stuff as the
22:32ticket to what we actually desire,
22:34attention. This is not a modern
22:36realization. It has little to do with
22:38social media or people becoming more
22:40materialistic. It's a deeply human
22:43reaction. The great economist Adam Smith
22:45wrote in 1759, "To what purpose is all
22:48the toil and bustle of this world? What
22:51is the end of avarest and ambition of
22:53the pursuit of wealth, of power and
22:56preeminence? Is it to supply the
22:57necessities of nature?" Of course not,
22:59Smith reasoned. Because even low-wage
23:02workers in his time had food, shelter,
23:04and families. What drives them? Smith
23:06wrote was that to be observed, to be
23:09attended to, to be taken notice of with
23:11sympathy, complacency, and appribation
23:14are all the advantages we can propose to
23:16derive from it. It is the vanity, not
23:19the ease or the pleasure, which
23:20interests us. It's an astonishing
23:22statement. We value the attention money
23:24brings us more than we value the comfort
23:27and convenience of stuff that money can
23:29buy. This idea applies to different
23:31people with different intensities. And
23:33even if you accept that the desire for
23:35nice stuff is a strategy to gain
23:37attention, I think it's fair to say, "So
23:39what?" If respect and attention is what
23:42I desire and having an awesome car
23:44provides it, what's the problem? Maybe
23:46there's no problem. But let me make a
23:48more nuanced point. There are cases when
23:50people's desire to show off fancy stuff
23:53is because it's their last remaining or
23:55even only way to gain respect and
23:57admiration. If you struggled to gain
23:59respect and admiration through your
24:01intelligence, humor, empathy, or
24:04capacity for love, you might default to
24:06the only remaining and least effective
24:08lever, your stuff. Look at my car. Beep
24:11beep. Voom voom. The three most
24:14important variables when seeking
24:15different ways to get people's
24:17attention, a prerequisite for them to
24:19respect and admire you are, how
24:21effective is it, how durable is it, and
24:23who's paying attention to break down
24:25eat. How effective is it? Spending money
24:27on nice things might be the quickest way
24:29to get someone's attention because it's
24:31visible, public, and doesn't require
24:34talking to anyone. How durable is it? If
24:36I'm impressed with your car today, I
24:38might give you a little attention, but
24:40tomorrow the shock wears off a little
24:42bit. A month from now, I yawn when I see
24:44your car. A year from now, I couldn't
24:46care less. Who's paying attention?
24:49Mostly strangers. And even then, there's
24:51a subtle point that when a stranger
24:52notices your car, they're gawking at the
24:55car, not at you. Does your spouse notice
24:57your car? Your parents, your close
24:59friends, your kids? Of course. But it's
25:02probably the last thing they use to
25:03measure how much they respect and admire
25:05you more. They tend to care much more
25:07about how kind, funny, intelligent,
25:10helpful, and loving you are. So spending
25:12money is probably the fastest way to get
25:14attention, but it's not durable
25:16attention, and it's probably the least
25:18effective toward the people's respect
25:20and admiration you actually desire. It's
25:23like junk food. Very tempting,
25:25immediately satisfying, but long-term
25:27damaging. The point is not to say,
25:29"Don't bother trying to gain attention
25:31with your car, home, or clothes." Social
25:34signaling is important to fitting in and
25:36doing well in life. But once you view
25:37spending money on stuff to gain people's
25:39attention as the junk food of respect
25:42and admiration, the desire to keep
25:44spending on things that just show off
25:46how successful you are diminishes. My
25:48guess is that if your favorite comedian,
25:50actor, or athlete turned out to be
25:52broke, your opinion of them wouldn't
25:54change that much. It wouldn't impact how
25:56much you admire them because you admire
25:58them for talents money can't buy. Former
26:00football player Chad Johnson once
26:02explained why some people think he's
26:04cheap. There's no need to show off your
26:06material wealth when your name is so big
26:09that people already respect and admire
26:11you for your talents alone. If you can
26:13get to a point in your career where your
26:15name becomes bigger than anything you
26:17can purchase, there's your value. There
26:19is nothing I can buy that is bigger than
26:22my name alone. So, it made no sense to
26:24buy jewelry. I'm me. It's pointless.
26:26Even when Amazon was huge and
26:28successful, Jeff Bezos used to drive a
26:30Honda Accord. Today, he has a $500
26:33million yacht. Is he respected and
26:35admired more for it? Not in the
26:37slightest. He could ride a cheap bicycle
26:39and people would admire him for being
26:41the greatest entrepreneur of our era
26:43because that's what he is. Steve Jobs
26:45lived in a home that didn't have any
26:47furniture. It didn't matter. He was an
26:49icon. These are all famous people.
26:51Extreme example. But for us ordinary
26:53folks, there's so much to learn from
26:55this. If you gain your respect and
26:57admiration for who you are rather than
26:59what you own, the desire to spend more
27:01money on flashy things plunges, the same
27:04is probably true for the people you
27:05admire most. I love and admire my
27:07parents, and let me tell you, it's not
27:09because of their clothes. Isn't there so
27:11much to learn from that? Shouldn't
27:13gaining respect and admiration through
27:15what you do instead of what you own be
27:17the goal? In her book, Never Enough,
27:19author Jennifer Brena Wallace writes
27:21that pride can be felt two ways.
27:23intrinsically when you're authentically
27:25proud of yourself and exttrinsically
27:27when another's opinions tell you how you
27:29should feel. What psychologists call
27:31hubristic pride. So much modern spending
27:33is an attempt to foster the latter. But
27:35so much of the deep fulfilling pride we
27:37naturally crave comes from the former.
27:39Being proud of who you are and what
27:41you've done more than what you're
27:43wearing or driving. Perhaps most
27:44importantly, psychologist Tim Kaser once
27:47pointed out that those who most value
27:49exttrinsic pride have less bandwidth to
27:51pursue intrinsic pride. It's like those
27:53chasing junk food, material status, have
27:56less remaining appetite for nourishing
27:58food, family, friends, intelligence,
28:00humor, love. In long-term studies, those
28:02who valued exttrinsic pride the most
28:04were more likely to end up anxious,
28:06depressed, and to abuse alcohol. The
28:09desire to show off can be so natural.
28:11I've noticed that the people who most
28:12aspire to own fancy sports cars tend to
28:15be young people, especially young men.
28:17Perhaps when you're young without much
28:19life experience, your ability to gain
28:21respect through your wisdom,
28:22intelligence, and love is lower than it
28:24will be later in life. So you naturally
28:26gravitate to your last remaining opt
28:28material possession. I have felt this so
28:30clearly in my own life. My dream to one
28:32day own a Ferrari with high when I was
28:34young, dumb, had zero social skills and
28:37even fewer job skills. Today I am
28:39completely content with my more modest
28:41car and aspire to gain respect and
28:43admiration by being a good father,
28:45husband, and decent writer. things I had
28:47no chance of offering the world when I
28:49was 20 years old. The danger comes when
28:51you underestimate what people actually
28:53value you for. I have a good friend I've
28:55known for decades. He's one of my
28:56favorite people. He also happens to earn
28:58a decent but not substantial living. It
29:00bothers him and he often talks about how
29:02it makes him feel lesser than some of
29:04his peers. One day I told him, "If
29:06you're a good dad, a good husband, an
29:08honest person, a hard worker, a helpful
29:11friend, and a funny joke teller, you've
29:13probably earned 98% of the respect and
29:16admiration that I am capable of giving
29:17you." If you also happen to be rich and
29:20successful, I might bump that up to 99%
29:22or something. But let's not pretend that
29:24it makes much difference. I like you for
29:26who you are, not how much money you earn
29:28or the car you drive. Once you see
29:30people being respected and admired for
29:32reasons that have nothing to do with
29:33material possessions, you begin to
29:35wonder why you have such a strong desire
29:37for those possessions. Everyone's
29:39different. All behavior makes sense with
29:41enough information. But I tend to view
29:43my own material desire as a loose proxy
29:45for the inverse of what else I have to
29:47offer the world. The higher my desire
29:49for fancy stuff, the less real value I
29:51have to offer for things that actually
29:53make me happy. It's a simple idea that
29:55keeps my priorities in view. Whose
29:57respect and admiration do I want? Mostly
30:00my families and close friends. What do
30:02they pay the most attention to? How I
30:04make them feel, how I treat them, and
30:06how helpful I can be. Do they care about
30:08my nice stuff? Not so much. It's so
30:10easy. Two things I try to keep in mind
30:12here. One, observe what actually makes
30:15you happy and maximize that. Like many
30:17people, I've seen a range of income
30:19during my career. What strikes me is
30:21that the things that make me happy with
30:23a higher income are the same things that
30:25made me happy with a much lower income.
30:27Spending time with my family, doing
30:29things outdoors, a long chat with a
30:31friend. If flying first class to a
30:33five-star resort and building sand
30:34castles on the beach with my kids is a
30:3610. Playing Legos with my kids on the
30:38living room floor of a small apartment
30:40was still a solid eight or nine. I love
30:42nice vacations, look forward to them,
30:44and spend more on them now that I have a
30:46higher income than I did a decade ago.
30:48But once you identify what about those
30:50vacations makes you happy, the thing
30:52you're pursuing might subtly shift in
30:54ways that put you closer to your
30:56ultimate goal. In this case, from I
30:58should spend more money on vacations to
31:01I should spend more quality time with my
31:03family. Two, show off the inside of your
31:05house, not the outside. You don't have
31:07to take that idea which I borrowed from
31:09author Robert Green literally. But the
31:11concept is helpful that if you want to
31:13be proud of your success and display it
31:15with nice stuff, make it most visible to
31:17those whose respect and admiration you
31:19desire the most. I love the idea that my
31:22friends and family can benefit from the
31:23nice things I've purchased. I care far
31:25less about what strangers might think if
31:27they happen to see those things. Another
31:29important point here, you might think
31:31that displaying your success to
31:32strangers is bringing you attention and
31:34admiration, but often the emotion it's
31:37actually stirring up in others is envy.
31:39Ben Franklin used to say that one of the
31:41tricks in life is realizing that people
31:43will admire you more if they aren't
31:45jealous of you. It can be hard to tell
31:46when the transition between admiration
31:48and jealousy takes place. And it's
31:51common for a flashy person to think they
31:53are being admired when they are actually
31:55envied. This is especially true when
31:56what made you rich was some form of
31:58advertising your success in a way that
32:00made others want to help and support
32:02you. When admiration turns to envy, that
32:05support dwindles and people's tolerance
32:07for your errors shrink. Keep that in
32:08mind if you race up the social ladder
32:10seeking attention along the way. Are you
32:12in the process making others envious of
32:14you? And is that a liability you are
32:17overlooking in your blind quest for
32:18more? Dutch political philosopher Yan
32:21William Vanderight has a good saying
32:22here. The appetite for applause counts
32:24amongst the lowest of human character
32:26traits. Columnist David Brooks once made
32:28the distinction between ré virtues and
32:31eulogy virtues. Ré virtues are things
32:33like salary, job title, net worth, and
32:36how fancy your possessions are. Eulogy
32:38virtues can be boiled down to how much
32:41people actually respect and admire you.
32:43I've always thought it to be a profound
32:44point when choosing what to pursue in
32:46life and thinking about that reverse
32:48obituary. Warren Buffett, one of the
32:50richest men in history who could
32:52literally buy anything, once said, "When
32:54you get to my age, you'll really measure
32:56your success in life by how many of the
32:58people you want to have love you
33:00actually do love you." He went on,
33:02"That's the ultimate test of how you
33:04have lived your life. The trouble with
33:05love is that you can't buy it. You can
33:07buy sex. You can buy testimonial
33:10dinners. You can buy pamphlets that say
33:12how wonderful you are, but the only way
33:14to get love is to be lovable. It's very
33:16irritating if you have a lot of money.
33:18You'd like to think you could write a
33:20check. I'll buy a million dollars worth
33:22of love, but it doesn't work that way.
33:24Maybe you already have enough. One of
33:26the most powerful money tales is the
33:27parable of the Mexican fisherman. An
33:29American businessman visits Mexico and
33:31meets a local fisherman. The American is
33:33shocked to learn the fisherman only
33:35works a few hours a day. What do you do
33:37with the rest of your time? Asks the
33:38American. I sleep late, hang out with my
33:41family, read, take naps, and play guitar
33:43with my friends. The fisherman says,
33:45you're doing this all wrong. I have an
33:48idea, says the American. You should work
33:50all day, borrow money, and buy another
33:52boat. Hire more fishermen to work for
33:54you. You could make so much money,
33:56you'll be retired in 10 years. What
33:58would I do in retirement? asks the
34:00fisherman. You could sleep late, hang
34:02out with my family, read, take naps, and
34:05play guitar with your friends, says the
34:06American. Chapter 3. The happiest people
34:09I know. If your expectations grow faster
34:12than your income, you will never be
34:14happy with your money. When you dream
34:16about being happier in the future,
34:18you're probably imagining yourself being
34:20content with what you have. Maybe you
34:22imagine yourself enjoying a new house
34:24and an expensive lifestyle. But what
34:27you're actually doing is imagining
34:29yourself being content with those
34:30things, expecting nothing more and
34:33enjoying what's in front of you. That's
34:35what feels good. That's the feeling
34:37you're chasing. When actual experiences
34:40create less joy than you anticipated,
34:42it's often because the moment you
34:44acquire something new, you immediately
34:46jump to desiring whatever else you don't
34:49have. True happiness is when you stop
34:52asking what else you need to be happy.
34:54When you think of it like that, you
34:56become eager to spend less time asking
34:59what's missing and more time enjoying
35:01what you already have, regardless of how
35:04much or how little that might be. You
35:06realize that the key to happiness is
35:09being content with what you have. And
35:11its antidote is focusing on what you
35:14don't. Marcel Prow once told the story
35:16of a young man who spent his day in
35:19envy, dreaming about the lives of the
35:21rich and famous aristocrats. The young
35:24man would go to museums and gawk at
35:26pictures of mansions, luxury, and
35:28splendor, agonizing over the life he
35:31didn't have. Pros then told the young
35:33man to spend his time focusing on the
35:35artist Jean Simeon Shardan. Shardan
35:38painted scenes of everyday life, food,
35:41animals, nature. The point was to learn
35:43to appreciate objects that the man
35:46already had in front of him. To learn to
35:48appreciate the life he had rather than
35:50to dwell on the dream life he didn't.
35:53When you walk around a kitchen, you will
35:55say to yourself, "This is interesting.
35:57This is grand. This is beautiful." Like
36:00a Sha Prrow wrote, "Appreciating what's
36:02in front of you rather than dwelling on
36:05what you don't have." What a wonderful
36:07analogy for money, too. The happiest
36:09people I know are the most content. Not
36:12necessarily the richest, the healthiest,
36:14the most beautiful, or the most
36:16successful. Just whoever gets to a point
36:19of saying, "I'm good. I'm satisfied with
36:22what I have and who I am." That's
36:24Nirvana. That's who takes the happiness
36:26crown. Many of these people do have a
36:29lot of money. Some of them spend a lot
36:31of money and live incredible material
36:33lives. But I often think about my
36:35grandmother-in-law who spent three
36:37decades in retirement with very little
36:40money, living off a meager social
36:42security check and nothing else. She was
36:44technically on the verge of poverty. But
36:47in her head, she had everything she
36:49needed and wanted. She was perfectly
36:51content in her small garden and reading
36:54books from the library. She had little
36:56but wanted even less. And she was one of
36:59the happiest people you could have ever
37:01met. I've met half a dozen billionaires
37:03in my life. Not a single one was as
37:06happy as my grandmother-in-law. It was
37:08so easy to see why. Her low expectations
37:11gave her a sense of contentment, which
37:14in turn became an enormous source of
37:16psychological wealth that some of the
37:18richest people in the world lack.
37:20Psychological wealth is such an
37:22important concept. And with money, it
37:24comes from proper expectations.
37:27Happiness is contentment. Contentment is
37:30what you have relative to what you want.
37:33Everyone's life follows that formula in
37:35one direction or another. All happiness
37:37in life is just the gap between
37:40expectations and circumstances. The
37:43person who has everything but wants even
37:45more feels poorer than the person who
37:48has little but wants nothing else. How
37:50could it be any different? That's not a
37:52plea to live like a monk. You can have a
37:55huge house, an expensive car, take
37:57incredible vacations, and be content
38:00with all of it, appreciating it, and
38:02desiring nothing more. That can be an
38:05amazing life. The key is realizing that
38:08happiness is the state when nothing is
38:10missing. Regardless of the lifestyle
38:12you're living, the more you say to
38:14yourself, "I would be happier if I had
38:17this new car," the more you're just
38:18focusing on the fact that you're not
38:20happy right now. Desire is a hidden form
38:23of debt that must be repaid before you
38:26get to feel any happiness. Irish
38:29novelist Iris Murdoch brilliantly framed
38:32the curse of not appreciating what you
38:34have. People from a planet without
38:36flowers would think we must be mad with
38:39joy the whole time to have such things
38:41about us. But are we? Of course not.
38:43When you don't appreciate what you
38:45already have and only focus on what's
38:48missing, nothing ever feels good enough.
38:50Happiness remains elusive. There's a
38:53stoic saying, "Not needing wealth is
38:55more valuable than wealth itself." So
38:58much of the art of spending money and
39:00being happier with your money is taking
39:02that wisdom to heart. Nothing is as
39:05desired as much as the thing you want
39:07but can't have. In fact, for most
39:09people, there's a hierarchy of spending
39:12that goes something like this. If you
39:14don't want something and don't have it,
39:16you don't think about it. If you want
39:18something and have it, you might feel
39:20okay. If you want something and don't
39:23have it, you might be motivated. If you
39:25want something and can't have it, you
39:28drive yourself absolutely mad. Consider
39:31this idea from the financial adviser
39:33Peter Maluke. It hardly matters what the
39:35something here is. A glass of water to a
39:38thirsty person is more valuable than a
39:41private jet is to a billionaire who has
39:43two others. This all makes sense when
39:45you understand what your brain wants. By
39:48and large, your brain doesn't want nice
39:50cars or big homes. It wants dopamine.
39:54That's it. Your brain just wants
39:56dopamine. I'll leave it to the excellent
39:58book, The Molecule of More, to describe
40:00the process. Dopamine is the chemical of
40:03desire that always asks for more, more
40:06stuff, more stimulation, and more
40:09surprises. In pursuit of these things,
40:11it is undeterred by emotion, fear, or
40:14morality. From dopamine's point of view,
40:17it's not the having that matters. It's
40:19getting something, anything that's new.
40:22Your brain doesn't want stuff. It
40:24doesn't even want new stuff. It wants to
40:26engage in the process and anticipation
40:29of getting new stuff. This is similar to
40:31Will Smith's description of fame.
40:33Becoming famous is amazing. Being famous
40:36is a mixed bag. Losing fame is
40:39miserable. The change, not the amount,
40:42is what matters. You can see this so
40:44often with money. When you're young, you
40:46dream about having a car. Any car. When
40:49you get a $10,000 car, you dream of the
40:52$20,000 car. When you get the $20,000
40:55car, you dream of the $50,000 car. If
40:58you get the $50,000 car, you dream of
41:01several $100,000 cars. There's almost no
41:04end to this. The millionaires look at
41:06the centillionaires who look at the
41:08billionaires who look at the deca
41:10billionaires who look at the
41:12centillionaires. And what do the
41:14centiionaires want? Immortality. It's
41:17always just what's next? What's missing?
41:20How can I get to the next level? That's
41:22what you do because that's what your
41:24brain wants. After winning gold medals
41:26or championships, a lot of athletes will
41:29tell you the emotion they felt wasn't
41:31elation. It was relief. Their own
41:33expectations and the expectations of
41:36others were so high that winning the
41:38ultimate prize merely got them to
41:41psychological par. Then their focus
41:43immediately shifts to what they don't
41:45have, winning the next competition. A
41:47few years after leaving office, former
41:49President Richard Nixon mentioned that
41:51the richest people in the world are some
41:53of the unhappiest people he's ever met.
41:55Drinking too much, talking too much,
41:57thinking too little, retired, no
41:59purpose, he said. To ordinary people, it
42:02sounds like an amazing life. To those
42:04who can afford to do anything, it often
42:06falls flat. Nixon elaborated. You feel
42:08that, gee, isn't it just great to have
42:10enough money to afford to live in a very
42:12nice house, to be able to play golf, to
42:14have nice parties, to wear good clothes,
42:17to travel if you want to. And the answer
42:19is, if you don't have those things, then
42:21they can mean a great deal to when you
42:23do have them, they mean nothing to you.
42:25It's such a powerful statement. One of
42:26the most natural and common feelings
42:28with money is just chasing what you
42:30don't have. Some people are less
42:32susceptible to this than others, but the
42:34dopamine train is such a common and
42:36powerful trap. And it helps answer the
42:38question of what do you want out of
42:39money? Do you want a new car, a new
42:41house, better clothes? For most people,
42:44no, you don't actually want any of those
42:46things, at least not directly. You want
42:48everything you can't have. Once you get
42:50them, if you do, the goalpost moves, the
42:53dopamine takes over, and you'll
42:54immediately begin to ask, "What's next?"
42:56There are two big things to keep in mind
42:58here. People often chase the wrong
43:00emotion. They go for a buzz of
43:02happiness, which is fun but fleeting.
43:04It's better to go for contentment, which
43:06feels even better and is much more
43:08durable. If you heard the funniest joke
43:10you've ever heard, you might laugh for
43:1260 seconds. If I told you that joke
43:13again, you might giggle a little. If I
43:15told you over and over again, you'd
43:17quickly get tired of it and ask, "Do you
43:19have any new joke?" Happiness is so
43:21similar. It's a wonderful feeling, but
43:23it's always fleeting. To paraphrase Don
43:25Draper, happiness is that feeling you
43:28get right before you need more
43:29happiness. The problem with chasing
43:31happiness is that since it feels great,
43:33but it's short-lived, you can quickly
43:35enter something that looks like an
43:36addiction cycle. When you're content,
43:39you're no longer chasing, which is a
43:40prerequisite to being in the moment. You
43:42only get to live in the moment, enjoying
43:45what you have right now, rather than
43:46dwelling on the past or dreaming about
43:48the future when you have a complete
43:50absence of expectations that things
43:53would have or could have been better
43:54than they are now. Then you get to enjoy
43:56what you have, what you're doing, what
43:58you've created, and who you're with.
44:00Once you view contentment as the
44:02ultimate psychological mountaintop, your
44:05goals change. You recognize that the
44:07dopamine game can never be won. There's
44:09always a next level you're striving for.
44:11And so the only way to win is to stop
44:13playing, to be content. And let me tell
44:15you, there are few greater monetary joys
44:18than realizing that you have everything
44:20you need right now to be as satisfied,
44:23even as happy as you can be. The best
44:25measure of wealth is what you have minus
44:28what you want. The obvious way to think
44:30of wealth is additive. You're wealthier
44:32when you have more money. But when you
44:33realize how important expectations and
44:36contentment are, you realize the
44:38calculation is more nuanced. The most
44:40powerful definition of wealth is not
44:42what you have. What actually matters is
44:44the gap between what you have and what
44:46you want. Desiring less can have the
44:48same impact on your well-being as
44:50gaining more money. But it's not only
44:52more in your control, it's a game you
44:54can actually win, leading to durable
44:56contentment instead of fleeting
44:58happiness. And desiring less does not
45:00mean giving up. It doesn't mean you
45:01don't know how to spend money and have a
45:03good time. I think it's quite the
45:04opposite. To be content with what you
45:07have is the deepest way to enjoy the
45:09house you've purchased, the clothes you
45:11wear, and the vacations you take. Would
45:13you rather be a billionaire who wakes up
45:15every morning anxious about what you
45:17don't have and jealous of those who have
45:19more? Or an ordinary person who wakes up
45:21so content with so much pleasure, able
45:24to appreciate what you have, regardless
45:26of how much that is? My
45:28grandmother-in-law was financially poor,
45:30but psychologically rich. The gap
45:32between what she had and what she wanted
45:35was smaller than some people with a
45:36hundred times as much money as she had.
45:39Once you see someone master that
45:40equation, you'll never think about
45:42wealth the same. Now, let me tell you a
45:44couple stories about how having all the
45:46money in the world won't fix you if
45:48you're already miserable. Chapter 4.
45:50Everything you don't see. Happiness
45:53depends on so much more than income.
45:55There are 13 divorces among the 10
45:58richest men in the world. Would you
46:00rather make $100,000 a year with a
46:03spouse who loves you, children who
46:05admire you, good friends, good health,
46:08and a clear conscience? Or make a
46:11million dollars and have none of those
46:13things. It's so obvious. And now we get
46:16to an important point about money, what
46:18it cannot do for you. On his deathbed,
46:21former US President John Adams last
46:24words were, "Jefferson still lives."
46:27expressing jealousy of his political
46:29rival, Thomas Jefferson. The irony is
46:32that it wasn't even true. Unbeknownst to
46:34Adams, Jefferson had died a few hours
46:37earlier. When you envy someone, remember
46:40that the picture you have of their life
46:42is almost always incomplete. As I write
46:45this, there are 13 divorces among the 10
46:48richest men in the world. Seven of the
46:50top 10 have been divorced at least once.
46:53Correlation isn't causation, and that's
46:56a small sample size. But a figure that
46:58is so much worse than the national
47:00average on a topic so critical to
47:03happiness among a group whose lives are
47:06envied by so many is interesting, isn't
47:08it? So much of everyone's life is
47:11invisible, especially the difficult,
47:13depressing, and miserable parts that
47:15people try to hide. An interesting thing
47:18about money, acquiring it, having it,
47:20spending it, is that when you imagine
47:23having more of it, you focus almost
47:25exclusively on the parts of your life
47:27that might become better. What's easy to
47:30ignore are all the hidden parts that
47:32probably won't. There's a well-known
47:34trend with money where if you ask
47:36people, "How much money would you need
47:38to be happy?" The answer is usually
47:41about twice as much as you currently
47:43make. That's true at almost every income
47:45level. People who make $30,000 a year
47:48say they would need $60,000 to be happy.
47:51People who earn $60,000 say they would
47:54need $120,000.
47:56People who earn a million say they would
47:59need $2 million to feel great. Part of
48:01the reason this occurs is because it's
48:03easy to view having more money as the
48:06tonic for all your ills. When you
48:08realize it's not, the tendency is to
48:10assume that, well, if you just had a
48:12little more, that would do the trick.
48:14This focus on what more money could do
48:16for you while ignoring what it can't
48:19trap people on a psychological
48:21treadmill. J. Paul Getty was once the
48:24richest man in the world, one of the
48:26first people to accumulate more than $1
48:28billion. In a 1963 documentary, Getty
48:32was interviewed at his 700 acre 72 room
48:35Sutton Place Castle. It is one of the
48:38more ornate and over-the-top homes to
48:40ever exist. Getty is asked over and over
48:43what it's like to live like a modern
48:45king. His answers are mostly shrugs. It
48:48becomes clear that for all the money in
48:50the world, this is not a man bubbling
48:53with joy. Finally, Getty is asked who he
48:55envys. He says, "I envy people younger
48:59and stronger and more cheerful than I
49:01am. People who have better characters
49:03than I have. I always wish that I had a
49:05better personality, that I could
49:07entertain people better. I always
49:09worried I might be a little on the dull
49:11side. It's a fascinating answer because
49:14you might expect him to say that he
49:16envys his competitors or people from a
49:19different era who were more successful,
49:21but the people he actually envys could
49:23have been infinitely poorer and less
49:25successful than he was. If you're
49:27already miserable, having more money
49:30might not do much for you. That can be
49:32so hard for people striving for more
49:34money to accept. And yet most of what
49:37makes you happy in life has nothing to
49:39do with money. And realizing that once
49:42you have money can be a painful
49:44admission. Will Smith wrote in his
49:46biography that when he was poor and
49:49depressed, he could dream about a future
49:51when he had more money and that money
49:54making his problems go away. Once he was
49:56rich, that optimism was gone. He had all
49:59the money he could ever need and he was
50:02still depressed. his life was still
50:04filled with problems. Music executive
50:06Rick Rubin once echoed something
50:08similar. It's hard to get really
50:11depressed until your dreams come true.
50:13Once your dreams come true and you
50:15realize you feel the same way you did
50:17before, then you get a feeling of
50:19hopelessness. He later elaborated, I
50:21think we mistakenly think that some kind
50:23of outward success is going to change
50:26something in us and it does not. It may
50:28make life more comfortable, but it
50:30doesn't change who we are. And any hole
50:32in ourselves that we're hoping to fill
50:34does not get filled. And let's say you
50:37spend 20 years of your life working
50:38towards something that's going to solve
50:40everything. And then you finally achieve
50:42what you've been trying to do for 20
50:44years toiling away and nothing changes.
50:48That's when you get hopeless. This
50:50happens so often when people meet some
50:52financial goal or buy a new toy. What
50:55you thought would change your life and
50:57turn you into a walking ball of
50:59happiness very likely does not, which
51:01can be agonizing to experience.
51:04Happiness is complicated, but if you
51:06simplify it into things like a loving
51:08family, health, friendship, 8 hours of
51:11sleep, well-balanced children, and being
51:14part of something bigger than yourself,
51:16you realize how limited money's role can
51:18be. It's not that it has no role, just
51:21smaller than you may have assumed. Of
51:23course, you can be poor and miserable or
51:25rich and happy, but only those who have
51:28gained significant wealth are aware of
51:30how tenuous that relationship can be.
51:33Gaining money probably didn't fix your
51:35marriage. It didn't make you more
51:37attractive. It didn't make your friends
51:39like you more. It didn't make you more
51:41fulfilled, at least as much as you
51:43assumed. So, what used to be comforting
51:45optimism about what money could do for
51:47you is replaced by the stark reality of
51:50what it can't. Sometimes the dream is
51:52what feels good and once you've hit it,
51:55the dream is gone and you actually
51:57become depressed. Malcolm Forbes said,
52:00"By the time we've made it, we've had
52:02it." My wife and I used to live in
52:04Southern California. Then we lived in
52:07Washington DC. Hardly a day went by in
52:10DC that we missed California's weather.
52:12Los Angeles is 70° in the winter and 80°
52:16in the summer. Here's what's hard to
52:18come to terms with. We missed
52:20California's weather because we thought
52:21it would make us happier. But there's no
52:24evidence, either for us or for anyone
52:26else, that Californians are happier than
52:29their East Coast counterparts. The
52:31happiest states in America are the
52:33Dakotas, Nebraska, and Minnesota, home
52:37to some of the most insulting climates
52:39in this hemisphere. Money can be so
52:41similar. The late psychologist Daniel
52:44Kinman once said, "Nothing in life is as
52:47important as you think it is when you're
52:49thinking about it." He pointed out that
52:51parapolgics are often unhappy, but they
52:54are not unhappy all the time because
52:56they spend most of the time experiencing
52:58and thinking about things other than
53:00their disability. In the same way, those
53:03with tons of money might be often happy,
53:06but they are not happy all the time
53:08because they spend most of the time
53:10experiencing and thinking about things
53:12other than their money. Here's Conoran
53:15again. Emphasis mind. On average,
53:17individuals with high incomes are in a
53:19better mood than people with lower
53:21income, but the difference is about a
53:23third as large as most people expect.
53:25When you think of rich and poor people,
53:27your thoughts are inevitably focused on
53:29circumstances in which income is
53:31important. But happiness depends on
53:33other factors more than it depends on
53:35income. It is easy, for example, to
53:37imagine having more money and think that
53:39a bigger house will make you happy. You
53:41imagine the giant living room, the
53:43marble bathroom, the curved staircase.
53:46In that specific context, it seems
53:48amazing. And maybe it is. What's easy to
53:51ignore, the part you don't see or pay
53:53attention to, are things like how hard
53:55it is to clean, six-f figure bills to
53:57replace something mundane like gutters,
54:00neighbors who sue you because they don't
54:02like your landscaping because that's the
54:04kind of thing rich neighbors do, and so
54:06on endlessly. You also think about
54:08enjoying your big backyard in a vacuum,
54:10isolated from the reality that people
54:12with big backyards still have
54:14indigestion, seasonal allergies, and the
54:17flu as much as their less affluent
54:19peers. You ignore that people with big
54:21backyards also get angry at their
54:23co-workers and have jerk bosses and
54:25annoying clients. You casually disregard
54:28that people with in-home theaters argue
54:30with their spouses and compare
54:32themselves to their more successful
54:34peers as much as anyone else. All of
54:36those things subtract from the bliss we
54:38imagine ourselves in when dreaming about
54:41having and spending more money. When
54:42it's easy and fun to think about the
54:44upside of what more money can provide
54:46you, but equally easy to ignore what
54:48won't change or what baggage comes along
54:51with having more stuff, you get
54:52disappointment. None of this is to say
54:54that money can't make you happier. It's
54:57just less of a miracle drug than we
54:58often assume. And when it does make you
55:00happier, it's often for nuanced reasons.
55:03A few key things to keep in mind here.
55:05If you're already an unhappy person,
55:08it's unlikely that more money will ever
55:10fix your problems. Matthew Killingsworth
55:12from the University of Pennsylvania
55:14settled decades of debate in academic
55:16circles about the relationship between
55:18money and happiness. Some studies had
55:20shown there's a clear correlation
55:22between the two. Others didn't. When he
55:24drilled down into the data, people who
55:26were already rated as having low
55:28emotional well-being saw no improvement
55:31in happiness when their incomes rose
55:33above $100,000 a year. For the middle
55:35group of emotional well-being, happiness
55:38tended to improve with extra income. For
55:40people who were already super happy,
55:42making more money was like a happiness
55:44accelerant. Quote, "If you're rich and
55:46miserable, more money won't help."
55:48Killingsworth wrote, "So many factors go
55:51into happiness that having more money
55:53can be a drop in the bucket amid a
55:55tsunami of other things that create an
55:57unhappy life." A related point is that
55:59the core ingredients that truly make
56:01people happy. Friends, family, health,
56:04meaning, a clear mind cannot be
56:06purchased, only earned. When spending
56:09more money does make you happier, it's
56:11usually for indirect reasons. Spending
56:13money on a nice big house might make me
56:16happier, but probably because it makes
56:17it easier to entertain friends and
56:19family, and spending time with those
56:21people is actually what makes me
56:23happier. It's the same with vacations.
56:25Going to Maui might be a joy, but
56:27perhaps the best part is a week of
56:29uninterrupted, work-free, email free,
56:32commuteree time with your family. You
56:34can look at this from the opposite
56:35direction. Will a big nice house make
56:38you happy if you don't have friends and
56:40family to share it with? Will a vacation
56:42make you happy if you don't enjoy
56:44spending time with your family? Will a
56:46fancy car make you happy if you only
56:48drive it while commuting to a job you
56:50despise? If you already have some of the
56:52core ingredients for happiness, spending
56:54money can be like leverage for a good
56:56life. But if you're lacking in some of
56:58those core areas, it becomes a false
57:01crutch. And it's a frustrating one
57:03because we're so hardwired to think that
57:05having more money and spending more
57:07money should always lead to a better
57:09life. Never focus on what money can do
57:11for you without a clear understanding of
57:13the cost of acquiring more of it. Taylor
57:16Swift, remembering her drive early in
57:18her career, once said, "I would think
57:20about exactly how I was going to get
57:22there, not just how it would feel to be
57:25there. That's rare. It's so much easier
57:27to fantasize about the trophy while
57:29ignoring the stress of the race. If I
57:32dream about how much better my life will
57:34be if I could spend more money, there's
57:36a good chance I'm dismissing the
57:38potential costs of acquiring that money.
57:40Stressful jobs, long hours, uncertainty,
57:44time away from doing other things I
57:46enjoy. It's an important example of what
57:48you are often blind to with money.
57:50Another successful entertainer, Jimmy
57:52Carr, says, "Everyone is jealous of what
57:55you've got. No one is jealous of how you
57:57got it. So much of a good life is about
57:59what didn't happen. It's the fights you
58:01didn't have, the illnesses you avoided,
58:04and the unhealthy desires you didn't
58:06feed. It's the unaffordable lifestyle
58:08you didn't choose to live, the mistakes
58:10you didn't make, and the regrets you
58:13don't have. In truth, I can probably see
58:151% of what's important in your life, and
58:18you can see 1% of mine. If that when so
58:21much of a good life is not just hidden,
58:23but things that never happened, we focus
58:25too much on what's visible and easy to
58:27measure. People's homes, cars, clothes,
58:30jewelry, vacations, and toys, and
58:33overestimate their importance. Looking
58:35back, whether you lived a good life will
58:37likely have little to do with how much
58:39money you made or spent. Mark Randolph,
58:42co-founder of Netflix, once wrote this
58:44beautiful note. I resolved a long time
58:46ago to not be one of those entrepreneurs
58:48on their seventh startup and their
58:50seventh wife. In fact, the thing I'm
58:52most proud of in my life is the fact
58:54that I was able to start them while
58:56staying married to the same woman,
58:58having my kids grow up knowing me and
59:01best as I can tell, liking me and being
59:03able to spend time pursuing the other
59:05passions in my life. That's my
59:07definition of success. It's a wonderful
59:09philosophy. What matters more than the
59:11money you make and the money you spend
59:13are the less tangible parts of life that
59:16can't be purchased. Next, an astounding
59:18and tragic story of two men who chose
59:20opposite lifestyles and what they can
59:23teach us about internal versus external
59:25benchmarks. Chapter 5. The most valuable
59:28financial asset is not needing to
59:31impress anyone. The ability to not need
59:33to prove yourself to strangers is
59:36priceless. Not needing to impress other
59:38people, especially strangers, is an
59:41asset on your personal balance sheet
59:43that can be more valuable than anything
59:45else. When you don't feel the need to
59:47impress other people, your desires fall.
59:50When your desires fall, your
59:52satisfaction with what you already have
59:54grows. It's really that simple. There
59:56are always two benchmarks to measure
59:58yourself against to determine how well
1:00:00you're doing in life, internal and
1:00:03external. The first is how happy you are
1:00:05with yourself. The other is what other
1:00:08people think of you. It's astounding to
1:00:10watch how agonizing it can be when
1:00:12someone focuses too much on the external
1:00:14benchmark. And it's so thrilling to
1:00:16witness someone whose only goal in life
1:00:19is to nail their internal benchmark. Let
1:00:22me tell you an extreme story of two guys
1:00:24on opposite ends of that spectrum. Their
1:00:26stories have nothing to do with money,
1:00:28but can teach us so much about how
1:00:30important it is to pick the right
1:00:32benchmark in life. In 1968, the Sunday
1:00:35Times newspaper in London, looking to
1:00:38drum up some publicity and capitalize on
1:00:40the growing sport of sailing, sponsored
1:00:43an around the world boat race. The goal
1:00:45was simple. The first person to sail
1:00:47around the world nonstop solo would win
1:00:51the Golden Globe race. It was called a
1:00:53race, but that was technically an
1:00:55afterthought. No one in human history
1:00:57had ever sailed around the world solo
1:01:00non-stop. So, the first person to merely
1:01:02complete the task would instantly be
1:01:05crowned one of the greatest sailors in
1:01:07history. There were no qualification
1:01:09requirements and few rules. Nine men
1:01:11joined the race, one of whom had never
1:01:14sailed. Just one man finished, almost
1:01:16one year and 27,000 m later. But it was
1:01:20two of the sailors who did not finish
1:01:23who had the most remarkable voyages and
1:01:25stunned the world for opposite reason.
1:01:28The two men, Donald Crowhurst and
1:01:30Bernard Muayessier, are incredible
1:01:32examples of how the quality of your life
1:01:35is shaped by who you want to impress.
1:01:37Their stories are wild and extreme, but
1:01:40what they dealt with was just a
1:01:41magnified version of what ordinary
1:01:44people face all the time. Donald
1:01:46Crowhurst once said, "Life was a game
1:01:48only the clever would win." To him,
1:01:50cleverness was the most valuable trait,
1:01:53and lying was okay if it made people
1:01:55happy and helped you win the game. Both
1:01:57ideas would eventually come back to
1:01:59haunt him. Born in 1932, Crowhurst was
1:02:0336 years old when he first heard of the
1:02:05Golden Globe Race. There were two
1:02:07important things to know about his life
1:02:09up until this point. Despite huge
1:02:11ambition, he had been a professional
1:02:13failure at nearly everything he had
1:02:15tried. He was kicked out of both the
1:02:17Royal Air Force and the British Army
1:02:20before starting a business that never
1:02:22took off and was on the brink of
1:02:23failure. He viewed the Golden Globe as a
1:02:26new shot at redemption, a chance to
1:02:28finally show the world he was worthy of
1:02:30attention. He was not a very good
1:02:32sailor. At best, Crowhurst was a weekend
1:02:35sailor, taking his boat out for short
1:02:37trips while being prone to seasickness.
1:02:39But rarely short of confidence,
1:02:41Crowhurst was convinced his homemade
1:02:43sailing navigation equipment could not
1:02:46only propel him to win the Sunday Times
1:02:48race, but that doing so would generate
1:02:50enough attention to save his business.
1:02:53He faced just a few obstacles. He didn't
1:02:55own a boat. He was broke. And he stood
1:02:58no chance of financing the race himself.
1:03:00Crowhurst struck a deal with an English
1:03:02businessman named Stanley Best who
1:03:05agreed to cover the cost of equipment
1:03:06for the race under two conditions. They
1:03:09would orchestrate a media frenzy
1:03:11portraying Crowhurst as a sailing
1:03:13savant. And if Crowhurst failed to
1:03:15finish, he would owe all the money back.
1:03:17While preparing for the race, the BBC
1:03:20was enamored with Crowhurst, the brave,
1:03:22unknown amateur about to undertake the
1:03:25hardest race in sailing history. You
1:03:27have to understand how insane this race
1:03:29was. The most grizzled sailors in the
1:03:31world thought it nearly impossible to
1:03:33sail around the world solo non-stop.
1:03:36Now, here was Crowhurst, a man the
1:03:39sailing community had never heard of
1:03:41with almost no experience, stepping up.
1:03:43He reveled in the attention. The thing
1:03:45about Donald was that he thought himself
1:03:47God, one of Crowhurst's friends said.
1:03:50But he wasn't. And the day before
1:03:52Crowhurst set sail around the globe, he
1:03:54realized how woefully unprepared he was.
1:03:57His boat, the Tinmth Electron, had been
1:04:00so heavily modified, so weighed down
1:04:02with half-finished gizmos and gimmicks
1:04:05that it was barely seaorthy for a short
1:04:07sail near home, let alone a solo trip
1:04:10around the globe. Crowhurst's wife,
1:04:12Clare, tried talking him out of the
1:04:14race. I suppose you're right, but the
1:04:16whole thing has become too important for
1:04:18me. I've got to go through with it.
1:04:20After a long pause, he continued,
1:04:22darling, I'm very disappointed in the
1:04:24boat. She's not right. I'm not prepared.
1:04:27If I leave with things in this hopeless
1:04:29state, will you go out of your mind with
1:04:31worry? Clare responded with a question.
1:04:33If you give up now, will you be unhappy
1:04:35for the rest of your life? Donald
1:04:37offered no response and began to cry.
1:04:40Prepared or not, Crowhurst set sail
1:04:42around the globe on October 31st, 1968.
1:04:46It was a disappointment from the start.
1:04:48After 2 weeks at sea, Crowhurst had
1:04:51covered less than half the distance he
1:04:53intended. Then disaster. Crowhurst's
1:04:55boat began to leak. "This bloody boat is
1:04:58just falling to pieces due to lack of
1:05:00attention to engineering detail," he
1:05:02wrote in his diary. The boat was not at
1:05:04risk of sinking, but the incoming water
1:05:06fried its electronics and generator. all
1:05:09but ending any chance of finishing the
1:05:11race. Worse, if Crowhurst continued to
1:05:14the rough seas of the South Atlantic, he
1:05:16knew his fragile boat could quickly
1:05:18capsize. "What courses are open? Either
1:05:20I abandon the non-stop attempt, or I go
1:05:23on with it. If I go on, I have an equal
1:05:26chance of making the trip or drowning,"
1:05:28he wrote in his diary. The alternative
1:05:30might be worse. If Crowse turned around
1:05:32and went home, he would face not only
1:05:34bankruptcy after being forced to repay
1:05:37the borrowed funds, but shame and
1:05:39humiliation for failing at yet another
1:05:41endeavor. Then the clever Crowhurst
1:05:44realized there was a third option, which
1:05:46was outright fraud and deceit. Crowhurst
1:05:49began loitering in the Atlantic,
1:05:51drifting aimlessly in circles in calm
1:05:53water. He then began sending fake
1:05:55coordinates back to England, giving the
1:05:58impression that he was still sailing
1:05:59around the world by selling around the
1:06:02world before returning to England with
1:06:04his dignity intact. At this point in the
1:06:06race, Crowhurst began keeping two log
1:06:08books. One with his fake locations,
1:06:11which he plotted by reverse engineering
1:06:13how fast he could plausibly have made it
1:06:15to an imaginary destination, and one
1:06:18with his actual location. Tracking his
1:06:20actual location was vital to ensure he
1:06:23remained where he was unlikely to be
1:06:24spotted by other boats whose crews might
1:06:27reveal his position to the press back
1:06:28home. You need to be an utter genius to
1:06:31pull off a fraud like this. Crowhurst
1:06:33was not. In the first few days of
1:06:35hatching his scheme, he made his first
1:06:37major error. While reporting his fake
1:06:40coordinates to the race organizers back
1:06:42home, Crowhurst's sloppy calculations
1:06:45gave the impression he was suddenly
1:06:46moving at blistering speed, covering an
1:06:49unprecedented amount of distance. The
1:06:51press, having no idea what was actually
1:06:53happening, ate it up. The Sunday Times
1:06:56wrote, "Donald Crowhurst, last man out
1:06:58in the Sunday Times Round the World Lone
1:07:00Man Yacht Race, covered a breathtaking
1:07:03and possibly record-breaking 243 miles
1:07:06in his 41 ft triaran Tinymith Electron
1:07:09last Sunday. The achievement is even
1:07:11more remarkable in the light of the very
1:07:13poor speeds in the first 3 weeks of his
1:07:15voyage. He took longer to reach the Cape
1:07:18Verde than any other competitor. In his
1:07:20last radio message, Crowhurst said he
1:07:23was on watch for the full 24 hours. It
1:07:25took pretty strong nerve. I have never
1:07:28sailed so fast in my life. It was all a
1:07:31lie. It went on like this for months.
1:07:33Crowurst drifting around the Atlantic,
1:07:36depressed and scared, sending fake
1:07:39coordinates back to the race organizer.
1:07:41While everyone at home thought he was
1:07:42pulling off the most heroic feat in
1:07:45sailing history. As he plotted his
1:07:47eventual return home, Crowhurst realized
1:07:49he did not want to win the race. Doing
1:07:51so would spark so much attention that
1:07:54the sailing community might dig through
1:07:55his log books and discover the deceit.
1:07:58Coming in second place seemed ideal. An
1:08:00incredible performance that would make
1:08:02him a hero, but not so famous that
1:08:05experts would examine his voyage too
1:08:07deeply. Crowhurst knew another sailor.
1:08:09Nigel Tetley was on track to win the
1:08:12fastest time around the world. Crower
1:08:14strategically inserted himself into
1:08:16second place, but made another error,
1:08:19coming too close to Tetley. Tetley
1:08:21became nervous about a competitor hot on
1:08:23his tail and began pushing his sailboat
1:08:26harder and harder past the limits that
1:08:28it could handle. While desperately
1:08:30trying to gain distance on Crowhurst,
1:08:32Tetley's boat fell to pieces and sank in
1:08:35the Atlantic. He survived on his life
1:08:37raft. Crowhurst was now on track to win
1:08:40the Golden Globe Race and be crowned the
1:08:42greatest sailor of all time. Supporters
1:08:44at home were stunned. On June 18th, the
1:08:47BBC sent Crowhurst a telegram that read,
1:08:50"Congratulations on progress, have
1:08:52network television program for Day of
1:08:54Return." In the town of Tainmouth, a
1:08:57welcome home Donald Crowhurst committee
1:08:59was formed to celebrate its new hero.
1:09:02The plan was for a BBC helicopter to
1:09:04follow him back to port while a parade
1:09:07complete with a firing cannon met his
1:09:09triumphant return. Crowhurst diary makes
1:09:12clear how much this impending fame. All
1:09:14of it illgotten. All of it risky if the
1:09:17truth was uncovered worried him. Life
1:09:19was a game to Crowhurst. As he pondered
1:09:22his fate, he wrote in his diary cannot
1:09:24see any purpose in game. I am what I am
1:09:28and I see the nature of my offense. Then
1:09:31came more ominous entries. One read, "It
1:09:34is finished. It is finished. It is the
1:09:36mercy." And the final entry, "It is the
1:09:38end of my game. The truth has been
1:09:41revealed, and it will be done as my
1:09:43family require me to do it. I have no
1:09:45need to prolong the game. It has been a
1:09:48good game. Must be ended. I will play
1:09:50this game when I choose. I will resign
1:09:53the game." The Tamemoth Electron was
1:09:55found 11 days later, a drift in the
1:09:58Atlantic. There was no sign of major
1:10:00damage, no sign of any accident, and no
1:10:03sign of Donald Crowhurst. He was never
1:10:06seen again. He had, in all likelihood,
1:10:08thrown himself into the sea and taken
1:10:11his own life. In a sweet twist of irony,
1:10:13Robin Knox Johnston, the only man to
1:10:16finish the Golden Globe Race, donated
1:10:18the £5,000 in prize money to Clare
1:10:21Crowhurst. It was enough to spare her
1:10:23the bankruptcy that Donald Crowhurst
1:10:25dreaded would haunt his family if he
1:10:27didn't finish the race. Just before
1:10:29Crowhurst took his life, another sailor
1:10:31in the Golden Globe race made an equally
1:10:34astonishing decision at sea. Bernard
1:10:36Muayesier was an expert sailor and 5
1:10:39months into the race, he was on track to
1:10:42legitimately win. Muay, a Frenchman who
1:10:45was 48 years old during the race, loved
1:10:47sailing and spent most of his life at
1:10:49sea. But he seemed to despise the
1:10:52commercialization of his sport. The idea
1:10:54of performing for the media, the
1:10:56sponsors, the press seemed to damage his
1:10:58soul. He just liked sailing for
1:11:00sailing's sake. Mortasier didn't even
1:11:02bring a radio on his trip, preferring
1:11:05solitude and letting other passing ships
1:11:07report his location to the race
1:11:09organizers back in England. The
1:11:11personality required to spend 9 months
1:11:13alone at sea selects people who were
1:11:15comfortable detaching from society. Muay
1:11:18was an extreme version of that and the
1:11:21idea of sailing for someone else's
1:11:23pleasure was so detestable that midway
1:11:25through his voyage he'd had enough. He
1:11:28wrote in his diary, "I really felt sick
1:11:30at the thought of getting back to
1:11:32Europe, back to the snake pit. I am
1:11:34really fed up with false gods always
1:11:36lying in weight, spiderlike, eating our
1:11:39liver, sucking our marrow. I charged the
1:11:42modern world. That's the monster
1:11:44trampling the soul of men. But being on
1:11:47his boat Joshua was a different story
1:11:50that actually fed his soul. Muay Tessier
1:11:52later recalled the days go by never
1:11:55monotonous. Even when they appear
1:11:57exactly alike they are never quite the
1:11:59same. That is what gives life at sea its
1:12:02special dimension made up of
1:12:04contemplation and very simple contrasts.
1:12:07Sea, winds, calms, sun, clouds,
1:12:11porpuses, peace and the joy of being
1:12:14alive in harmony. As he sailed around
1:12:16Cape Horn on his way back to England,
1:12:19Muayessier began contemplating the
1:12:21unthinkable. Quitting the race, he was
1:12:23on track to win and sailing somewhere
1:12:25else. Thinking of his family and
1:12:27friends, he wrote, "I do not know how to
1:12:29explain to them my need to be at peace,
1:12:32to continue toward the Pacific. They
1:12:34will not understand. I know I'm right. I
1:12:37feel it deeply. I know exactly where I'm
1:12:40going, even if I do not know." Then he
1:12:42made his decision. He flagged down a
1:12:45commercial ship to hand off a message.
1:12:47It was a letter addressed to the editor
1:12:49of the Sunday Times that read, "Dear
1:12:51Robert, today is March 18th. I am
1:12:54continuing non-stop toward the Pacific
1:12:56Islands because I am happy at sea and
1:12:58perhaps to save my soul." Muay shouted
1:13:02for the captain to take the message to
1:13:03the French consul. He then quit the
1:13:05race, turned his boat around, and set
1:13:08sail for Tahiti. Mortesier wrote in his
1:13:10diary, "Now it is a story between Joshua
1:13:13and me, between me and the sky. A story
1:13:16just for us, a great story that does not
1:13:19concern the others anymore. To have the
1:13:22time, to have the choice, not knowing
1:13:24what you are heading for and just going
1:13:26there anyway, without a care, without
1:13:29asking any more questions." To some at
1:13:32home, Muay Tessier had gone mad. In his
1:13:35mind, he had found his own version of
1:13:37sanity. He anchored in Tahiti in June,
1:13:40built a house on the beach, grew his own
1:13:42food, and wrote a book about sailing.
1:13:45"He can't understand how happy I am," he
1:13:47wrote. In a twist of irony, Tahiti was
1:13:50so far out of the way and required so
1:13:52much backtracking that despite dropping
1:13:54out of the race, Muay did circle the
1:13:57globe and set a world record for the
1:14:00longest ever non-stop solo sail, more
1:14:02than 37,000 miles. There is no mention
1:14:06of that fact in his book. He didn't seem
1:14:08to care whether anyone else knew and
1:14:10certainly didn't want the attention. The
1:14:12point of this story is not to ridicule
1:14:14Crowhurst or heroise Muayessier. 9
1:14:17months alone at sea is enough to drive
1:14:19anyone mad. I can sympathize with
1:14:22Crower's feelings of desperation and
1:14:24Mortessier's decision though perhaps
1:14:26right for him would be disastrous for
1:14:28most people who enjoy if not crave
1:14:31social acceptance. But extreme examples
1:14:33often highlight emotions many people
1:14:36experience every day. And I think that's
1:14:38the case here. It's very simple.
1:14:40Crowhurst was addicted to what other
1:14:42people thought of his accomplishments.
1:14:44While Muayessier could not have cared
1:14:46less. One lived for external benchmarks.
1:14:49The other only cared about internal
1:14:51measures of happiness. And knowing the
1:14:53difference between the two is so so
1:14:56powerful in life. Warren Buffett once
1:14:58said, "The big question about how people
1:15:00behave is whether they've got an inner
1:15:02scorecard or an outer scorecard. It
1:15:05helps if you can be satisfied with an
1:15:07inner scorecard." He used this example.
1:15:09Would you rather be known as the best
1:15:11investor in the world, but in reality be
1:15:14the worst or be thought of as the
1:15:16world's worst investor when you are
1:15:18actually the best? That's another
1:15:20extreme example, but it gets you
1:15:22thinking about what actually matters to
1:15:24you. Every decision we make when
1:15:26spending money falls into one of two
1:15:28buckets. Are you spending money on
1:15:30something because it makes people think
1:15:32differently of you, like you more, be
1:15:34more impressed with you, maybe even
1:15:36jealous of you, or because it actually
1:15:38feeds your soul and makes you happy?
1:15:41Using Buffett's framework, would you
1:15:43rather be impressed with your
1:15:44possessions, but be miserable inside, or
1:15:47have no one care what you own, but wake
1:15:49up happy every morning? I have no idea
1:15:52how to find the perfect balance between
1:15:54internal and external benchmarks, but I
1:15:56know there's a strong social pull toward
1:15:58external measures, chasing a path
1:16:00someone else set, whether you enjoy it
1:16:02or not. Social media makes it 10 times
1:16:05more powerful. But I also know there's a
1:16:08strong natural desire for internal
1:16:10measures, being independent, following
1:16:12your quirky habits, and doing what you
1:16:14want, when you want, with whom you want.
1:16:17That's money's highest purpose because
1:16:19that's what most people actually want.
1:16:22Next, an important twist on this idea
1:16:25with the story of a blind man who can
1:16:27teach us so much about happiness.
1:16:30Chapter 6. What makes you happy? A good
1:16:33life is everything you need and some of
1:16:35what you want. If you have everything
1:16:36you want, you appreciate none of what
1:16:38you have. Michael May suffered a
1:16:40horrific accident when he was a baby
1:16:42that left him completely blind. A
1:16:44miraculous surgery restored his vision
1:16:46at age 46 when from his perspective he
1:16:50could see the world for the first time
1:16:51in his life. As May left the doctor's
1:16:53office after his successful surgery, he
1:16:56walked through the lobby and one thing
1:16:58stopped him in his tracks. The carpet.
1:17:00The standard drab office carpet. Look at
1:17:03those shapes. Look at those colors. He
1:17:05excitedly told his wife. It was the most
1:17:07beautiful thing his mind could ever
1:17:09imagine. As he looked around the lobby,
1:17:11he saw other patients waiting for their
1:17:13appointments. He couldn't fathom why
1:17:15none of them were freaking out about the
1:17:16carpet. Didn't they see what he saw?
1:17:18Michael's biographer, Robert Kersonen,
1:17:21writes, "He could not believe they were
1:17:23just sitting there ignoring this carpet.
1:17:25How could a person just sit there when
1:17:27such a carpet was happening?" At one
1:17:29point, May stops and mumbles, "That's
1:17:31blue. Oh my gosh, that's blue." He had
1:17:34dreamed what colors might look like, but
1:17:36his mind could never quite understand it
1:17:38until now. As he moves through the
1:17:40office, he does the same thing with wall
1:17:42paintings, exit signs, and the most
1:17:44stunning of all, seeing numbers on a
1:17:47piece of paper for the first time ever.
1:17:49It was all so beautiful, so overwhelming
1:17:52to him because he had never seen
1:17:54anything before. May was getting
1:17:56probably 10,000 times more pleasure and
1:17:58awe looking at an office carpet than you
1:18:01and I would from viewing the most
1:18:03perfect, radiant sunset. Isn't there so
1:18:05much to learn from that? The most
1:18:07mundane things can feel incredible when
1:18:09they're a contrast to what you're used
1:18:11to. A weird thing is that everyone
1:18:13strives for a good life because they
1:18:15think it will make them happy. But what
1:18:17actually brings happiness is the
1:18:19contrast between what you have now and
1:18:21whatever you were just experiencing. The
1:18:24best drink you will ever taste is a
1:18:25glass of tap water when you're thirsty.
1:18:27The best meal you will ever eat is cheap
1:18:30food when you're starving. The best
1:18:31sleep you will ever experience is when
1:18:33your newborn allows you to sneak in a
1:18:35quick nap. There is no such thing as an
1:18:37objectively good experience. Every
1:18:40amount of good is just the gap between
1:18:43expectations and reality. It's the
1:18:45distance between what you have now and
1:18:47what you either had or expected before.
1:18:50The contrast, not the amount, is what
1:18:52makes you happy. Few things are as
1:18:54important to keep in mind while spending
1:18:56money. A good life is everything you
1:18:58need and some of what you want. If you
1:19:00have everything you want, you appreciate
1:19:03none of what you have. William Dawson
1:19:05once wrote, "The thing that is least
1:19:07perceived about wealth is that all
1:19:09pleasure in money ends at the point
1:19:11where economy becomes unnecessary. The
1:19:14man who can buy anything he covets
1:19:16without any consultation with his banker
1:19:19values nothing that he buys. The
1:19:21anticipation of something you're saving
1:19:23up for, the surprise of getting
1:19:25something you didn't expect, the change
1:19:27in circumstances from one period to the
1:19:29next is what makes certain purchases
1:19:32feel valuable. Consider how you felt
1:19:34when you got your first paycheck from
1:19:35your first job. If you celebrated with
1:19:38as little as a cheap milkshake, you
1:19:40probably had a joyous feeling of, "I did
1:19:42this. I bought this with my own money."
1:19:45Going from not being able to buy
1:19:47anything to being able to buy something
1:19:49is an amazing feeling. The gap between
1:19:52struggle and reward is a big part of
1:19:54what makes people happy. Contrast that
1:19:57with later in your career when hopefully
1:19:59savings have been built and paychecks
1:20:01have grown. It's not that spending won't
1:20:03make you happy, but it won't be as
1:20:05thrilling and adrenaline inducing as it
1:20:08was when there was more struggle and
1:20:10contrast behind each dollar. The richest
1:20:12you'll probably ever feel is when you
1:20:14get your first paycheck and your bank
1:20:16account goes from $5 to perhaps 500. The
1:20:20contrast that generates might be greater
1:20:23than going from $10 million to $20
1:20:25million. Going from nothing to something
1:20:28can be so much more powerful than going
1:20:30from a lot to even more. Contrast.
1:20:33Contrast. Contrast. Once you see how
1:20:35powerful it is, you appreciate how
1:20:38important it is. I know a guy with a
1:20:39private chef. He's served five-star
1:20:42meals three times a day, an arrangement
1:20:44he's enjoyed for years. It's amazing.
1:20:46I'd lie if I said I wasn't jealous. But
1:20:48I also wonder if the joy diminishes over
1:20:51time. He doesn't have to struggle to get
1:20:53these meals. There's no anticipation. No
1:20:56looking forward to a rare restaurant
1:20:58reservation. No contrasting gap between
1:21:01a normal meal and his daily delicacy.
1:21:03Does he get more pleasure out of his
1:21:05third five-star meal of the day than a
1:21:07child gets when a parent offers a
1:21:09surprise trip to McDonald's and the kid
1:21:11savors the first bite? I doubt it. So
1:21:14much of being happy with your money is
1:21:16battling the hedonic treadmill. The
1:21:18ability to become accustomed to
1:21:20something you once considered a luxury.
1:21:22One way to fight back is respecting the
1:21:24idea that occasional treats can generate
1:21:27more joy than perpetual luxury. Arnold
1:21:29Schwarzenegger once gave diet advice.
1:21:32You should mostly eat food you know is
1:21:34healthy. You should also occasionally
1:21:36let yourself eat delicious food you know
1:21:39isn't healthy. Otherwise, what's the
1:21:41point? So much of the reason you do the
1:21:43right thing is because it makes
1:21:44occasionally doing the wrong thing
1:21:46responsibly feel so much better. There's
1:21:49a financial version of this that's tied
1:21:51to the previous chapter and the idea of
1:21:53contentment. When you're content with
1:21:55what you have now, an occasional treat
1:21:57or surprise can feel incredible. It's a
1:22:00surprise. It's a joy. You appreciate and
1:22:03savor it more. And the more content you
1:22:05are now, the more frequently you'll
1:22:07stumble across little things in life
1:22:09that feel like a treat, a surprise
1:22:12dinner, a hotel room upgrade, and even a
1:22:14rare splurge, even if it's small. When
1:22:17you expect nothing, everything is a
1:22:19surprise. When everything is a surprise,
1:22:22you walk around like Michael May,
1:22:24ecstatic over the littlest things you'd
1:22:26otherwise take for granted. Everyone's
1:22:28different, but my own desire to live a
1:22:30relatively simple life is not because I
1:22:33don't enjoy nice things. It's quite the
1:22:34opposite. When you live a simple and
1:22:36modest life, your occasional experience
1:22:39with nice things can generate more joy
1:22:41than if you had those things all the
1:22:43time. I'm not recommending you deprive
1:22:45yourself of something you want, can't
1:22:46afford, and that makes you happy. I'm
1:22:48merely pointing out how much influence
1:22:50your expectations have on your
1:22:51well-being. People struggle through
1:22:53grueling hours of work they often don't
1:22:55enjoy for a chance at buying stuff they
1:22:57assume will make them happier. It feels
1:22:59like such an obvious thing to do. It's
1:23:01much harder to recognize that there's
1:23:03often more psychological upside to
1:23:05managing your expectations down rather
1:23:07than attempting to push your
1:23:09circumstances up. The reason is not just
1:23:11because you learn to be happy with less,
1:23:13but because the occasional treat becomes
1:23:15that much more delightful. Christmas
1:23:17morning, the 4th of July, birthdays, and
1:23:19the last day of school feel great
1:23:21because they have been just once a year.
1:23:23The same joy can be had when the luxury
1:23:25items in your life become occasional
1:23:28treats rather than constant me. Ernest
1:23:30Shackleton's ship, the Endurance, became
1:23:33stuck in Antarctic ice. Before long, it
1:23:35was crushed, ruined. Shackleton and his
1:23:3727man crew then spent 19 months from
1:23:41January 1915 to August 1916 rowing 800
1:23:45miles to safety in tiny lifeboats with
1:23:47nighttime temperatures hitting 10° below
1:23:50zero. They were constantly freezing,
1:23:52wet, hungry, and sleepdeprived. They
1:23:54survived, and all of them did survive on
1:23:57an occasionally captured seal and
1:23:59foraged seaweed. It's one of the most
1:24:01astounding survival stories you'll ever
1:24:03hear. But for me, the most emotional
1:24:05part of the story comes at the end when
1:24:07Shackleton's crew finally made it to a
1:24:09whailing station on South Georgia
1:24:11Island, 1600 m east of Argentina, where
1:24:14they received aid. Author Alfred Lancing
1:24:16writes, "Every comfort the whailing
1:24:18station could provide was placed at the
1:24:21disposal of Shackleton and crew. They
1:24:23first enjoyed the glorious luxury of a
1:24:25long bath, followed by a shave. Then new
1:24:28clothes were given to them from the
1:24:29station's storehouse. They were then
1:24:31served a hot meal and slept for 12
1:24:33hours. Can you even imagine what that
1:24:35must have felt like? Can you imagine how
1:24:37good it must have felt to have a bath, a
1:24:39hot meal, and a warm bed after being
1:24:42constantly frozen and starving for 19
1:24:44months? Even if the water was lukewarm
1:24:46and the food was half stale, that must
1:24:48have been one of the most pleasant and
1:24:50fulfilling evenings anyone has ever
1:24:52experienced. It's a strange feeling to
1:24:54read these stories. I would never want
1:24:55to experience the hardship they or
1:24:58Michael May endured. But I am a little
1:25:00jealous of the overwhelming joy they
1:25:02must have experienced when their
1:25:04hardship was over. It's the same with
1:25:05money. I don't want to live a life of
1:25:07destitution, deprived of all luxury. But
1:25:10I have an even stronger desire to
1:25:11experience the joy that contrast
1:25:14delivers when I experience an occasional
1:25:16luxury, a nice surprise, an unexpected
1:25:19treat. A few things I keep in mind here.
1:25:21A simple life can be the most potent way
1:25:23to enjoy luxury items. That's so
1:25:26counterintuitive until you realize how
1:25:28powerful contrast can be. Figure out
1:25:31your own details. Everyone's different.
1:25:32But when I find something I love, a
1:25:34restaurant, a trip, a drink, I tend to
1:25:37ask how I can turn it into an occasional
1:25:39treat versus a constant new addition.
1:25:41When you are content with a simple life,
1:25:43the occasional treat truly feels like
1:25:46magic. The power of contrast can make
1:25:48ordinary things feel incredible and
1:25:50extraordinary things feel bland. Rich
1:25:52people who fly in their own private jets
1:25:54will tell you it's the most amazing,
1:25:56satisfying thing extreme wealth can buy,
1:25:59and it never gets old. Why don't we
1:26:01ordinary people say the same thing about
1:26:03driving in our own cars, private cars?
1:26:05My theory is that most people who fly in
1:26:07private jets used to fly commercial
1:26:09before they were rich, so they remember
1:26:11the slog of flying like an ordinary
1:26:13person. Long lines, going through
1:26:16security, the middle seat, the snoring
1:26:18passengers. Compared to that, flying
1:26:20private is a dream. But most people who
1:26:22drive private cars don't have anything
1:26:25similar to compare the experience with.
1:26:26They've been in private cars their whole
1:26:28life. There is no contrast between
1:26:30current and previous experiences. But go
1:26:32back to the early 1900s when cars were
1:26:35new and people could contrast the
1:26:37experience to the horse and buggy. What
1:26:39did people say about cars back then?
1:26:40They seemed so magical and luxurious
1:26:43that many feared they would create a
1:26:44halves versus knots war that could tear
1:26:47the country apart. In 1906, Woodro
1:26:49Wilson, who was then president of
1:26:51Princeton University, said, "Nothing has
1:26:53spread socialistic feeling in this
1:26:55country more than the automobile." And
1:26:58that it offered a picture of the
1:26:59arrogance of wealth, exactly as people
1:27:01talk about private jets today. When you
1:27:03have no contrast against current
1:27:05experiences, amazing things can feel
1:27:08completely ordinary. When you realize
1:27:10how powerful expectations are, you put
1:27:12as much effort into keeping them low as
1:27:14you do into improving your
1:27:16circumstances. Happiness, contentment,
1:27:18joy, all of those things come from
1:27:21experiencing a gap between expectations
1:27:23and reality. Shackleton's men learned
1:27:25this after their ordeal. They found so
1:27:28much joy in little things they'd never
1:27:30before considered. One crew member wrote
1:27:32in his diary as they reached land, "One
1:27:34of the finest days we have ever had. A
1:27:36pleasure to be alive." Lancing wrote,
1:27:38"In this lonely world of ice and
1:27:40emptiness, they had achieved at least a
1:27:43limited kind of contentment. They had
1:27:44been tested and found not wanting.
1:27:46That's about as good as it gets. Chapter
1:27:49seven. The rich and the wealthy. Being
1:27:51controlled by money is a hidden form of
1:27:53debt. And like all debt, it will
1:27:55eventually be repaid, plus interest. Let
1:27:58me make a distinction between rich and
1:28:00wealthy. The definitions are my own, but
1:28:02I've always found them helpful. If you
1:28:03are rich, you have money in the bank
1:28:05that allows you to buy the stuff you
1:28:07want. If you are wealthy, you have a
1:28:09level of control over what that money
1:28:11does to your personality, your freedom,
1:28:14your desires, ambition, moral,
1:28:16friendship, and mental health. When
1:28:18figuring out how to spend money in a way
1:28:20that will make you happy, I've found
1:28:22that it's not so much about how much
1:28:24money you have or how much you spend.
1:28:26The trick is whether you are or aspire
1:28:29to be this definition of rich or
1:28:31wealthy. Money is a powerful tool
1:28:34capable of shaping people's lives in
1:28:36extraordinary ways. That statement can
1:28:38either be an inspiration or a curse.
1:28:40Because here's the truth. If you don't
1:28:42figure out how to use money correctly,
1:28:44it will use you. It will control you. It
1:28:47will make you its prisoner, showing no
1:28:49mercy and offering no sympathy. Some
1:28:51people are so controlled by money that
1:28:53they think they're chasing money to live
1:28:55a better life. But in fact, the money
1:28:57plays them like a marionette doll,
1:28:59pulling the strings and demanding that
1:29:01they chase things they may not like and
1:29:03aspire to things they don't even
1:29:05understand. If I ask, is it a good thing
1:29:08to be obsessed with drugs or alcohol or
1:29:10fame or power? You would say, of course
1:29:13not. Obsession with almost anything can
1:29:15turn into a liability because it begins
1:29:18to control you. What you intended to be
1:29:20a helpful tool becomes a controlling
1:29:23dictator. A dangerous obsession with
1:29:25money, particularly spending money, can
1:29:28creep into your life unnoticed because
1:29:30the allure of what money can do for you
1:29:32is so enchanting. The idea that you will
1:29:35be happier if you just had more money to
1:29:37spend is so powerful and so universal
1:29:40that people have a hard time
1:29:42distinguishing noble ambition from
1:29:44dangerous obsession. Being controlled by
1:29:47money can apply to everyone at every
1:29:49income level. But you see its power
1:29:51under a magnifying glass among the very
1:29:54rich who are blessed with lots of money
1:29:56but often cursed by the control it has
1:29:59on their lives. It can be a shocking
1:30:01thing to witness throwing you off guard
1:30:03when you realize that someone who has so
1:30:05much money has lost so much control over
1:30:08their life. Ernest Hemingway said fellow
1:30:10author F. Scott Fitzgerald had a
1:30:12romantic awe of the rich. He thought
1:30:15they were a special glamorous race. And
1:30:17when he found they weren't, it wrecked
1:30:19him as much as any other thing that
1:30:21wrecked him. Let me share a story of one
1:30:23of the richest families in human history
1:30:26who were so obsessed with spending money
1:30:28that it led to a life I find more
1:30:30pitiful than enviable. Regginald Clayool
1:30:33Vanderbilt was born into a family
1:30:35fractured by bitter rivalries, fragile
1:30:38egos, and insurmountable expectation.
1:30:41Everything went downhill from there.
1:30:43When Reggie's greatgrandfather,
1:30:45Cornelius Commodore Vanderbilt, died in
1:30:481877, the New York Daily Tribune
1:30:51published an editorial predicting the
1:30:53legacy of the world's richest man. The
1:30:55Vanderbilt case is an impressive lesson
1:30:58in the folly of attempting to found a
1:31:00family upon no better basis than the
1:31:03possession of money. The ruling idea of
1:31:05the old Commodore's latter years was to
1:31:08amass a huge fortune which should stand
1:31:10for generations as a monument to the
1:31:13name of Vanderbilt and make the head of
1:31:15the house a permanent power in American
1:31:17society. There is no country in the
1:31:19world where fortunes are made so quickly
1:31:22and none in which inherited money has
1:31:24done so little for its possessors. The
1:31:26Vanderbilt money is certainly bringing
1:31:28no happiness and no greatness to its
1:31:30present claimant. And we have little
1:31:32doubt that in the course of a few years
1:31:34it will go the way of most American
1:31:36fortune. A multitude of heirs will have
1:31:39the spending of it and it will be
1:31:41absorbed in the vast circulating system
1:31:43of the country. It was a brutal outlook
1:31:45and underestimated what was to come.
1:31:48Adjusted for inflation, Cornelius
1:31:50Vanderbilt left his heirs something like
1:31:52$300 billion. He allegedly had more
1:31:55money than the US Treasury. Within 60
1:31:58years, almost nothing was left. The
1:32:00wealth went to three generations whose
1:32:03guiding life purpose was to see who
1:32:05could spend it the fastest and most
1:32:07recklessly. Early heirs felt some duty
1:32:10to run the family business. Over time,
1:32:12the family business became insecurity
1:32:14and resentment. In 1875, an op-ed said
1:32:18socialites devote themselves to pleasure
1:32:20regardless of expense. A Vanderbilt
1:32:22quipped that actually they devote
1:32:25themselves to expense regardless of
1:32:27pleasure. That frank admission was
1:32:29really the heart of it. It was a game
1:32:31that couldn't be won, so everyone lost.
1:32:33Being controlled by money is a hidden
1:32:36form of debt. And like all debt, it will
1:32:38eventually be repaid at significant
1:32:40cost. Reggie was one of the last
1:32:42Vanderbilt heirs to inherit significant
1:32:44wealth. On his 21st birthday, he
1:32:47inherited $12.5 million, or about $350
1:32:51million in today's dollars. Family
1:32:53biographer Arthur Vanderbilt writes,
1:32:55"Self-indulgent, lazy, lacadasical,
1:32:58Reggie had absolutely no sense of
1:33:00responsibility or purpose other than to
1:33:03keep himself from being bored. He never
1:33:05did a lick of work. Somewhat at a loss
1:33:07when asked his occupation, he usually
1:33:10responded, "Gentlemen." The only way
1:33:12Reggie could distinguish himself was to
1:33:14live the life of a rich playboy. And
1:33:16this he did with dedication and
1:33:19consumate skill. Reggie's two great
1:33:21loves were liquor and gambling. The
1:33:23first left him dead at age 45 with
1:33:26cerosis so severe the blood flow from
1:33:29his liver was choked off and pushed up
1:33:31to his esophagus where veins abruptly
1:33:34ruptured and left him choking in a pool
1:33:36of blood as his family watched in
1:33:38horror. The latter left him broke. After
1:33:40debts were repaid, Reggie's will was
1:33:42nearly irrelevant since he had nowhere
1:33:45near the amount of money promised to his
1:33:47heirs. The Vanderbilts had the biggest
1:33:49homes. the most glorious furnishings,
1:33:51the most extravagant parties, and the
1:33:54most exquisite travel. But so much of it
1:33:56was purchased as a monument to their
1:33:58wealth, virtually worshiping it like a
1:34:00deity, rather than using it as a tool
1:34:02that could improve their lives. The
1:34:04result was something between absurdity
1:34:06and tragedy. While Reggie's life was
1:34:08spinning out of control, another
1:34:10Vanderbilt heir, George Washington
1:34:13Vanderbilt, spent six years building the
1:34:16135,000 square ft Builtmore house with
1:34:2040 master bedrooms and a full-time staff
1:34:22of nearly 400. He allegedly spent little
1:34:25time there because it felt more like a
1:34:27commercial building than a cozy home. It
1:34:30was utterly addressed to any possible
1:34:32arrangement of life, as one friend put
1:34:34it. The house nevertheless cost so much
1:34:37to maintain it nearly ruined Vanderbilt.
1:34:4090% of the land was sold off to pay tax
1:34:42debt and the house was turned into a
1:34:44tourist attraction. Then there were
1:34:46family rivalries over who could build
1:34:48the biggest yacht, buy the most
1:34:49expensive art, or marry the bluest
1:34:52blood. The rivalry, not the material
1:34:54pleasure, was the point, which ensured
1:34:56happiness was always out of reach. There
1:34:58were arranged marriages, endless bitter
1:35:01disputes over inheritance, and almost
1:35:03never a chance for heirs to find their
1:35:05own way or be known as anything other
1:35:08than a trust funer. Just before he died
1:35:10in 1920, William Vanderbilt said, "My
1:35:13life was never destined to be quite
1:35:15happy. Inherited wealth is a real
1:35:17handicap to happiness. It is as a death
1:35:19to ambition as cocaine is to morality."
1:35:22At almost every turn, money tore the
1:35:24family apart, leading to a level of
1:35:27dysfunction and insecurity you would not
1:35:29wish upon your enemies. Dig into the
1:35:31lives of the Vanderbilt heirs, history's
1:35:33luckiest members of the Lucky Sperm
1:35:35Club, and not many of you would want to
1:35:37swap lives. You look at this enormous
1:35:40wealth that tore the family apart, and
1:35:42you begin to ask, "What was the point?"
1:35:44The point, as the New York Daily Tribune
1:35:46realized early on, was not to live a
1:35:49great life. It was not to use their
1:35:51money as a tool to become happier, more
1:35:53content, more enriched, or more
1:35:55satisfied. The point was just to be rich
1:35:58and to spend, to be valued upon no
1:36:01better basis than the possession of
1:36:03money. Rather than using money to build
1:36:05a life, their life was built around
1:36:07money. Rather than an asset, their
1:36:10inheritance functioned as an
1:36:12insurmountable lifestyle debt passed to
1:36:14the next generation until there was
1:36:16mercifully nothing left. It's hard to
1:36:19have sympathy for billionaire heirs, but
1:36:21the important part here is diagnosing
1:36:23the problem because it's one that
1:36:25afflicts many ordinary people. The
1:36:27Vanderbilts are one of the clearest
1:36:29examples of money controlling a person
1:36:32rather than being used as a tool to
1:36:34improve their life. They lived to serve
1:36:36their money rather than the other way
1:36:38around. It's not an isolated example.
1:36:41Entrepreneur David Seagull once built a
1:36:4490,000 square ft house in Florida. asked
1:36:47why he was building such a big house. He
1:36:49thought about it for a moment and
1:36:51replied, "Because I can." To each their
1:36:53own. But he said nothing about the
1:36:55memories it would enhance or the
1:36:57pleasure it would bring. Just because I
1:37:00can. That to me smells like someone
1:37:02whose money has complete control over
1:37:04their personality. Back to the tool. If
1:37:07someone asked why you're using a
1:37:08screwdriver, you would not say because I
1:37:11can. You would say because it helps me
1:37:13hang pictures on the wall and put
1:37:15furniture together. The master versus
1:37:17tool framework is so powerful once you
1:37:20look for it. Harvey Firestone, the late
1:37:22tire tycoon, seemed to fall for this
1:37:24same trap. To his credit, he was aware
1:37:27of the silly game his money made him
1:37:29play. He wrote in his 1926 memoir, "Why
1:37:32is it that a man just as soon as he gets
1:37:34enough money builds a house much bigger
1:37:37than he needs? I have a house in Akran
1:37:39many times larger than I have the least
1:37:42use for. I have another house at Miami
1:37:44Beach which also is much larger than I
1:37:46need. I suppose that before I die, I
1:37:49shall buy or build other houses which
1:37:51also will be larger than I need. I don't
1:37:53know why I do it. The houses are only a
1:37:56burden, but I have done it. And all my
1:37:58friends who have acquired wealth have
1:38:00big houses. Even so unstentious a man as
1:38:03Henry Ford has a much bigger house at
1:38:05Dearbornne than he really cares about. I
1:38:07wonder why it is. Perhaps it is some
1:38:09foolish survival of the ancient feudal
1:38:12idea when a big house meant a strong
1:38:14house in which one might keep a small
1:38:16army for protection. In a few cases, a
1:38:18big house is built just as an
1:38:20advertisement that one is rich.
1:38:22Sometimes a big house is built so that
1:38:24great entertainments may be given. But
1:38:26in most cases, and especially with men
1:38:28who have earned their own money, the
1:38:30house is just built. And when it is
1:38:32done, no one quite knows why it was ever
1:38:34started. The houses are only a burden. I
1:38:37don't know why I do it. I wonder why it
1:38:39is. I admire his honesty, but the
1:38:41admission is astounding. Reggie
1:38:44Vanderbilt's grandson, broadcast
1:38:46journalist Anderson Cooper, was one of
1:38:48the first Vanderbilt heirs who was never
1:38:50promised dynastic wealth. It may have
1:38:52been a blessing. He's not only the most
1:38:54successful Vanderbilt heir in over a
1:38:56hundred years, but appears to be the
1:38:58happiest. Cooper once said of
1:39:00inheritance, "I think it's an initiative
1:39:02sucker. I think it's a curse. From the
1:39:04time I was growing up, if I felt like
1:39:06there was some pot of gold waiting for
1:39:08me, I don't know if I would have been so
1:39:10motivated, free from the inherited
1:39:12obsession with money, he was allowed to
1:39:14find his passion and appreciate the
1:39:16value of a dollar. It's like he was the
1:39:18first in his family to cut the strings
1:39:20of the marionette doll, refusing to let
1:39:23money control who he was or the life he
1:39:26lived. Back to the difference between
1:39:27rich and wealthy. What I find
1:39:29fascinating are stories like the
1:39:31Vanderbilts. They were the richest
1:39:32people on earth, but by my definition,
1:39:35some of the least wealthy. Money to them
1:39:37was less of an asset and more of a
1:39:39social and mental liability, indebting
1:39:42them to a status chasing life that left
1:39:44most of them seemingly miserable. No
1:39:47matter how much money you make, anyone
1:39:49can get caught in that trap. And my
1:39:51gosh, I hope you avoid it. If you want
1:39:53an example of someone I'd call wealthy,
1:39:55have a look at Chuck Feny. Fine, who
1:39:57co-founded Duty-Free Stores, died in
1:40:002023. The well-known part of Feni's
1:40:03story is that he was the most frugal
1:40:05billionaire to ever live. He gave away
1:40:0799.99%
1:40:09of his $8 billion fortune years before
1:40:12he died. He and his wife kept $2
1:40:14million, lived in a small apartment,
1:40:16flew coach, and lived a quiet life. The
1:40:19less well-known part of Fine's story is
1:40:21that he once gave the high life an
1:40:23honest try. The Washington Post wrote of
1:40:25his life in the 1980s when he was newly
1:40:28rich. He had luxury apartments in New
1:40:30York, London, and Paris, and posh
1:40:32getaways in Aspen and the French
1:40:34Riviera. He hobnobbed with the other
1:40:36mega rich on yachts and private jets. If
1:40:39he wanted it, he could afford it. He
1:40:41quickly realized it wasn't for him.
1:40:43Society told him he should want those
1:40:45things. But it wasn't what actually made
1:40:47him happy. Giving money away was I'm
1:40:50happy when what I'm doing is helping
1:40:52people and unhappy when what I'm doing
1:40:54isn't helping people. Fine said, I love
1:40:57that. Or more specifically, I love that
1:40:59he loved that. He didn't follow a
1:41:01typical path of what other people told
1:41:03him to like or how to live. He didn't
1:41:06worship his money and let it dictate how
1:41:08he should live or control who he was or
1:41:11capture him to a status chasing life. He
1:41:14found what made him happy and used his
1:41:16enormous wealth as a tool to become even
1:41:19happier. He may have looked frugal, but
1:41:21he was actually the freest, most
1:41:23independent person you'll ever hear of.
1:41:26He was wealthy. Feny is someone I
1:41:28consider a role model, not because of
1:41:30how much he made or the lifestyle he
1:41:32lived, but because he was so clearly in
1:41:35control of the money he had, never
1:41:37letting it become the master of his
1:41:39life. If the Vanderbilts were a family
1:41:41built upon no better basis than the
1:41:43possession of money, Feny was the
1:41:46opposite. He was a man built upon morals
1:41:48and individuality who just happened to
1:41:51have a ton of money. Rather than a
1:41:53monument to be glorified, the money he
1:41:55had was a tool that was used no
1:41:57differently than how a mechanic uses a
1:41:59rent. Everyone at every income level can
1:42:02learn from that. My friend David Pell
1:42:04once wrote, "The people I admire most
1:42:07have a way of escaping the bubble of
1:42:09culture. Sometimes via religion,
1:42:11sometimes via old books, sometimes via
1:42:14time in nature. Without such an escape,
1:42:16propaganda wins. You stop thinking for
1:42:18yourself." Modern delusions grow into an
1:42:21all-consuming mind virus. That's such a
1:42:23big part of the rich versus wealthy
1:42:25idea. To be happy, you have to be
1:42:27yourself. If you blindly accept money's
1:42:30ability to persuade your personality and
1:42:32dictate how you spend your day, it will
1:42:35quickly take control. When putting this
1:42:37theory to use in my own non-rustf
1:42:39funder, non-billionaire tycoon life, I
1:42:42keep three things in mind. There's this
1:42:44idea in relationships that you can't be
1:42:46happy with a partner if you can't be
1:42:48happy without them. It's the same for
1:42:50spending money. Recall the fascinating
1:42:51finding from behavioral finance that
1:42:54having more money is more likely to make
1:42:56you happy if you were already happy
1:42:59before you had more money. And the flip
1:43:01side, beyond a basic level of
1:43:02necessities, it's hard for more money to
1:43:04make you happy if you're not already
1:43:07happy with who you are, your morals,
1:43:09your values, your personality, your
1:43:11friendships, who you seek attention and
1:43:13admiration from. You must control these
1:43:16things regardless of how much money you
1:43:18have in order to have a decent life. The
1:43:20danger is assuming that more money will
1:43:22improve them. That's when the money you
1:43:24have or even just your ambitions for
1:43:26more take control over your life. If
1:43:28you're already satisfied with who you
1:43:30are, you naturally view money as a tool
1:43:33to be used to make things even better.
1:43:35That's when you become wealthy. Separate
1:43:37what you like from what you want. They
1:43:39can be very different thing. Many people
1:43:41like cigarettes because they feel good,
1:43:43but few actually want them. I like
1:43:45aimlessly scrolling through social
1:43:47media, but I don't necessarily want to
1:43:49do it. These things are just addictive
1:43:51and they control the person rather than
1:43:53becoming tools to help to enhance the
1:43:55person's life. What I want to buy are
1:43:57things that I both like and don't drive
1:43:59me crazy when I can't have them all the
1:44:01time. An occasional fancy meal, an
1:44:03annual big family vacation, nice clothes
1:44:06every once in a while. If for whatever
1:44:08reason I had to drop these things from
1:44:10my spending, it might sting a little,
1:44:12but my family and I would be fine. I
1:44:14enjoy these things, but I don't obsess
1:44:15over them. They don't control me. I
1:44:17think then, and only then, do you know
1:44:19that money is being used as a tool to
1:44:21help you rather than a master to obey.
1:44:24There's a stoic saying, you are unlikely
1:44:26to have a good and meaningful life
1:44:28unless you can overcome your
1:44:30insatiability. That fits well here.
1:44:32Don't be proud of your consumption. Be
1:44:34proud of what you've built. Family
1:44:36you've built, the friends you've found,
1:44:38the memories you have, the wisdom you've
1:44:40accumulated. There are times when the
1:44:42stuff you buy can help produce memories
1:44:44and foster quality time with friends and
1:44:46family. But the people, not the stuff,
1:44:49are what are actually meaningful. Warren
1:44:51Buffett once noted that he has very rich
1:44:53friends who have everything. The big
1:44:55homes, the private planes, even hospital
1:44:58wings named after them. But the truth is
1:45:00that nobody in the world loves them. He
1:45:02said, "If you get to my age in life and
1:45:04nobody thinks well of you, I don't care
1:45:06how big your bank account is, your life
1:45:08is a disaster. You become rich, but
1:45:10wealth remains elusive. Chapter 8.
1:45:12Utility versus status. The value of
1:45:15anything is its ability to help you live
1:45:18the life you want, nothing more. I once
1:45:20heard someone say that a high-end Toyota
1:45:23is a nicer car than an entry-level BMW.
1:45:26Because the Toyota is filled with things
1:45:29that make driving more pleasant. Plush
1:45:31seats, a great sound system, a moon
1:45:33roof. While the low-end BMW is mostly
1:45:36just bragging. I love that framing. The
1:45:38nice Toyota decked out with all the
1:45:41options has utility. It makes your life
1:45:43better. You're owning it for yourself.
1:45:45The low-end BMW has status. It might
1:45:49change other people's opinion of you.
1:45:50You're owning it for them and their
1:45:52attention. It's such an important
1:45:54distinction to make when spending money.
1:45:57Maybe the single most important one
1:45:59because it gets right to the point of
1:46:00whether you're using money as a tool to
1:46:02live a better life or as a yard stick to
1:46:05measure yourself against others. An
1:46:07imperfect model I use in my own life is
1:46:09thinking like this. If my family and I
1:46:12were stranded on an island with no one
1:46:14else around to notice us, and we could
1:46:16have any material goods we desired, what
1:46:18would we own? In this situation, you
1:46:21would instantly value utility over
1:46:23status. You'd value comfort over
1:46:25appearance, the right fabric more than
1:46:28the right logo, function more than
1:46:30brand, durability more than prestige,
1:46:33practicality more than size, a great
1:46:35view over a prestigious zip code, and
1:46:38social interaction more than social
1:46:40hierarchy. You'd want a high-end Toyota,
1:46:43not an entry-level BMW. You'd want
1:46:46utility over status. I'm not against
1:46:49buying things just for status. Fitting
1:46:51into your chosen social group is an
1:46:53important part of a happy life, and the
1:46:55social benefits of high status can be
1:46:58enormous for those who pull it off. What
1:47:00I find fascinating are cases when people
1:47:02confuse the two. And it's so common.
1:47:05People sometimes think they're buying
1:47:07something nice because it will make
1:47:08their life more pleasant, comfortable,
1:47:11interesting, or fulfilling. But
1:47:13unknowingly, what they're paying for is
1:47:15a chance that other people will look at
1:47:17them, ideally in a positive light. With
1:47:20everything you purchase, it's vital to
1:47:22identify which is which, why you
1:47:24actually want to buy this thing, and
1:47:26realize that each offers a very
1:47:28different outcome and benefit.
1:47:30Billionaire Bill said one of his
1:47:33brothers collects money, another
1:47:35collects women. He prefers wine. Cox
1:47:37seller once contained a world-class
1:47:40collection of over 43,000 bottles. He
1:47:43loved it. You can taste the love of the
1:47:45Ventner, he says, calling drinking rare
1:47:48wine drinking history that amounts to a
1:47:50religious experience. Some of Cox's
1:47:52bottles were the finest and rarest ever
1:47:55sold. He once paid $400,000 for four
1:47:58bottles of wine allegedly owned by
1:48:00former President Thomas Jefferson. The
1:48:03bottles have Jefferson's hand signature
1:48:05scrolled right on them. When heard
1:48:07they were for sale, he said, "I got to
1:48:09have that." And that was that. It was an
1:48:11amazing treasure he enjoyed showing off
1:48:14until historians from Jefferson's estate
1:48:17told the bottles were entirely
1:48:19fake. Thus began a research project to
1:48:22authenticate Cox's wine collection. He
1:48:25hired private investigators who
1:48:27discovered, which perhaps will not
1:48:29surprise you, that several hundred of
1:48:31his most expensive and coveted wines
1:48:33were cheap fake. Counterfeit wine is a
1:48:36massive business. Same with counterfeit
1:48:38handbags, sunglasses, shoes, and
1:48:40jewelry. The National Crime Prevention
1:48:43Council says $2 trillion of counterfeit
1:48:46goods are sold worldwide each year, the
1:48:48largest illicit trade in the world. A
1:48:51big part of the reason counterfeits have
1:48:53proliferated in recent years is because
1:48:55scammers have become so good at making
1:48:57authentic knockoffs that even experts
1:49:00struggle to identify. It's such a
1:49:02curious thing when you think about it.
1:49:04Some goods are expensive because they
1:49:06are deemed to be of superior quality.
1:49:08But even astute buyers and the premium
1:49:10brands themselves often struggle to spot
1:49:13counterfeits because the quality of the
1:49:15fake product is often pretty comparable
1:49:18to the real thing. One of the scammers
1:49:20who took Bill was an Indonesian
1:49:22wine enthusiast named Rudy Kernawan. He
1:49:25was arrested in 2012 for running a
1:49:28massive fake wine operation. Kernia got
1:49:31away with selling fake wines to some of
1:49:33the most astute wine drinkers in the
1:49:35world for years because his fake wine
1:49:37didn't just look good, it tasted so
1:49:40good, so authentic. He was a master at
1:49:43blending together cheap wine, slapping
1:49:45on a fake label that made collectors
1:49:47salivate, and selling for absurd prices.
1:49:50The same thing happens with fake
1:49:52handbags. In 2016, a woman was sentenced
1:49:55to prison for buying $400,000 worth of
1:49:58handbags from department stores,
1:50:00returning identical counterfeit handbags
1:50:03to those stores, and reselling the real
1:50:05ones online. She got away with it for
1:50:08years because the fake purses she
1:50:10returned to the stores were so
1:50:12convincingly authentic. If the taste of
1:50:14a fake wine or the quality of a fake
1:50:17handbag is indistinguishable from the
1:50:19real thing, you should not be bothered
1:50:21if your goal is utility. But so often it
1:50:24is not. What you wanted was status. You
1:50:27wanted to show others and know for
1:50:29yourself that you own something few
1:50:31others can have. It makes you feel
1:50:33better about who you are and what you've
1:50:35accomplished, which again, no problem
1:50:37with that. Of course, I do it sometimes
1:50:39myself. But buying a thing for its
1:50:41utility versus its status offers a
1:50:44totally different experience and
1:50:46outcome. Author David Brooks once wrote
1:50:48about a trip to Africa. He and his
1:50:50family stayed in seven different
1:50:52locations. Some modern and luxurious,
1:50:54others camp style with no running water.
1:50:57After the trip, Brooks and his family
1:50:59realized they enjoyed the lower-end
1:51:01homely camps more than the nice hotels.
1:51:04At the cheap camps, they got to
1:51:06socialize with locals and meet other
1:51:08guests. Their kids played soccer with
1:51:10the staff. At the expense of hotels,
1:51:12they were isolated in cocoons of sterile
1:51:15safety. That was the entire allure of
1:51:17the nice hotels. Stay here and you will
1:51:19hardly notice any difference between
1:51:21Midtown Manhattan and the Serengeti. But
1:51:24it wasn't at all what their family
1:51:25actually wanted. The pursuit of luxury
1:51:28and perhaps status detracted from the
1:51:31utility of the trip. Utility being
1:51:33hijacked by the pursuit of status is so
1:51:36common in everyday life. Think about the
1:51:37burden of maintaining a house that's
1:51:39bigger than you need or the stress you
1:51:41feel from buying a nice car you can
1:51:43barely afford. Status devouring utility
1:51:45is one of the most common frustrations
1:51:47of modern spending. People are often bad
1:51:50at knowing how to spend their money.
1:51:51Brooks wrote, "When we get some extra
1:51:53income, we spend it on privacy, space,
1:51:56and refinement, but suddenly we look
1:51:58around and we're on the wrong side of
1:52:00the line separating what makes you happy
1:52:02from what makes people look at you.
1:52:04Thinking status is worthless isn't the
1:52:06point. That can actually be disastrous.
1:52:08If you don't care what anyone thinks of
1:52:10you, there's a decent chance that no one
1:52:12thinks about you. You'll find yourself
1:52:13cut off from the social world that can
1:52:15be the most important element of
1:52:17happiness in your life. But you might
1:52:18find valuing utility more than status
1:52:21important for two big reasons. Buying
1:52:24things for their utility gives you the
1:52:26ability to express your own identity,
1:52:28while chasing status often makes you
1:52:30conform to others identity. Almost by
1:52:32definition, the pursuit of status is the
1:52:34pursuit of showing other people what
1:52:36they want to see. That can be dangerous
1:52:38in a world where people are so
1:52:40different. Different in tastes,
1:52:41different in goals, different in skills.
1:52:43You can find yourself spending so much
1:52:45time and money putting on a performance
1:52:47for people you don't even like because
1:52:50they're so different than you are.
1:52:51Especially when you're honest about who
1:52:53you are and what you want out of life.
1:52:55Conforming to others views is a
1:52:56sacrifice that has a real but hidden
1:52:59cost in life. Utility, by contrast, is
1:53:02deeply selfish in a beautiful way. Your
1:53:04top goal becomes bettering your own life
1:53:07and those you care about. The opinions
1:53:09and attention of others be damned. As a
1:53:11writer, I've always believed in what I
1:53:12call selfish writing. I write for an
1:53:15audience of one. Me, I write stories I
1:53:17find interesting about topics I find
1:53:20useful without wondering if readers feel
1:53:22the same. Not only is it more enjoyable,
1:53:24but I think it produces better work. The
1:53:27common writing phrase know your audience
1:53:29can quickly turn into shamelessly pander
1:53:32to your audience in a way that ruins a
1:53:34lot of writing. The same idea can apply
1:53:36to so much in life, including how you
1:53:38spend money. When you value utility over
1:53:41status, what actually happens is that
1:53:43you value individuality over conformity.
1:53:46The result, just like in writing, can
1:53:48not only be more fulfilling, but
1:53:49produces a better result. By letting
1:53:52yourself be yourself without pandering
1:53:54to what others might want you to be. You
1:53:56get to focus on what you're good at and
1:53:58what actually makes you happy. Give it a
1:54:00shot and you'll probably find that
1:54:01you're extremely talented at being
1:54:03yourself, but a poor actor of what you
1:54:06assume other people want you to be. The
1:54:08pleasure you get from utility can be
1:54:10more durable than pleasure gained from
1:54:11status. The key to success in so many
1:54:14areas of life is endurance and
1:54:16longevity. I'm not interested in
1:54:17anything that's unsustainable. Spending
1:54:19money on status can be rewarding, but
1:54:22it's often short-lived. Even when you're
1:54:24successful at gaining others attention,
1:54:26you often just immediately shift your
1:54:28gaze to the next notch higher on the
1:54:30social hierarchy in a way that leaves
1:54:32you no more fulfilled than you were
1:54:34before. Status is fickle, and the trends
1:54:36society measures you by change every few
1:54:38years, forcing you to adapt, whatever
1:54:41the cost. It's not a cheap game. The
1:54:43brain is also very good at answering
1:54:45whatever questions you throw at it. And
1:54:47constantly flooding your mind with
1:54:49thoughts about whether you are
1:54:50impressing other people is a fast track
1:54:52to feeling inadequate and insecure.
1:54:55Utility spending tends to be more
1:54:57durable. I have no idea what kinds of
1:54:59things will impress other people 10
1:55:00years from now. But I know with near
1:55:02certainty that I will value comfort,
1:55:04dependability, convenience, and most
1:55:07importantly, spending quality time with
1:55:09people I love and admire. I wrote in my
1:55:12book, Same as Ever, that things that
1:55:14never change are important because you
1:55:16can put so much confidence into knowing
1:55:19how they'll shape the future, allowing
1:55:21you to invest heavily in them. I know
1:55:23that when I'm 90 years old, I will value
1:55:25a home with a nice view and memories
1:55:27with my kids, so I can invest in the
1:55:30utility those things provide. But
1:55:31certain clothes, jewelry, a big home, a
1:55:34fast car, what looks awesome today can
1:55:37look ridiculous, even embarrassing a
1:55:40mere year from now as you and society
1:55:42change. It's such a simple idea that can
1:55:45profoundly shift how you think about
1:55:46spending money. Next, a haunting story
1:55:49about an actor's last words. Chapter
1:55:52nine, risk and regret. Good advice is
1:55:55never as simple as saying live for today
1:55:58or save for the future. The only good
1:56:00advice is minimize future regret. Actor
1:56:04David Cassid's last words were, "So much
1:56:07wasted time." What a terrible thing to
1:56:10realize when it's too late. And I wonder
1:56:12if it'll become more common, as many of
1:56:14us spend our days aimlessly scrolling
1:56:17our social media. Daniel Conorman once
1:56:20said, "An important part of becoming
1:56:22good with money was having a
1:56:24well-calibrated sense of your future
1:56:26regret." You need to accurately
1:56:28understand how you'll feel about your
1:56:30current decisions at various points in
1:56:33the future. I love that observation.
1:56:36It's so powerful. Maybe regret is the
1:56:38best definition of risk. When dealing
1:56:41with money, risk isn't how much you
1:56:43might lose. It's not even necessarily
1:56:46how you'll feel when you lose it. Over
1:56:48time, a lot of painful experiences turn
1:56:50into cherished lesson. Real risk is the
1:56:53regret or lack thereof that might come
1:56:56years or decades later. That concept
1:56:59plays such a big role when thinking
1:57:01about how to spend money. One of the
1:57:04biggest conflicts when managing money is
1:57:06finding the delicate balance between the
1:57:09two most powerful forces in the world.
1:57:11Compound interest, which turns patience
1:57:14today into fortunes tomorrow. And the
1:57:17fact that you are one day closer to
1:57:19death than you were yesterday. So make
1:57:21the most of your short time here and
1:57:23enjoy every day you're lucky enough to
1:57:26be alive. There is a Scottish proverb,
1:57:28be happy while you are living, for you
1:57:30are a long time dead. The struggle is
1:57:33knowing how much you should invest for
1:57:35the future versus spend today. It's not
1:57:38an easy problem to solve, and it's a
1:57:40deeply personal one, not the kind of
1:57:42thing you can fit in a one-sizefits-all
1:57:45formula. Let me tell you a story about
1:57:47animals lifespans to drive home what I
1:57:49mean. Spare a thought for the poor guppy
1:57:52fish who lives a miserable existence but
1:57:54teaches us something important about
1:57:57anticipating the future. Small, brightly
1:58:00colored, and terrible at defense, the
1:58:02guppy faces an unusually high rate of
1:58:05predator attacks. Birds eat guppies.
1:58:08Small fish eat guppies. Big fish eat
1:58:10guppies. Crabs eat guppies. It's
1:58:12everyone's favorite lunch. How does a
1:58:14species under so much threat avoid
1:58:17extinction? In short, guppies get busy
1:58:20as soon as they're born. They can
1:58:21reproduce at 7 weeks old and deliver new
1:58:24offspring every 30 days. By the time a
1:58:276-month-old guppy is eaten by a bird, it
1:58:30might be a great great grandmother. The
1:58:33family lives on. But this evolutionary
1:58:35trick has a nasty flip side. Knowing how
1:58:38much danger they're in, guppies expend
1:58:41nearly all their energy on reproducing
1:58:43from the moment they're born. They grow
1:58:46as fast as possible, then devote a huge
1:58:49portion of their resources to nourishing
1:58:51their young. That leaves little energy
1:58:53left to care for themselves. Their
1:58:55bodies are thrown together slipshot like
1:58:57cheap plastic toys, and few resources
1:59:00are available for cell repair and
1:59:02maintenance. By the age of a year or
1:59:05two, the guppy is a crusty senior
1:59:07citizen, crippled by disease and
1:59:10decline, soon to go belly up. That's how
1:59:12it should be. There's no use investing
1:59:14in the future when you're likely to be
1:59:16eaten anyway. It's the ultimate yolo.
1:59:19You only live once. Life philosophy.
1:59:22Now, compare the guppy with the
1:59:23Greenland shark, whose life is nearly
1:59:26the opposite. The Greenland shark has no
1:59:28natural predator. It rules its habitat
1:59:31like a dictator. With few threats, it
1:59:34takes its sweet time becoming an adult.
1:59:36It's one of the slowest growing
1:59:38creatures we've discovered, reaching
1:59:39sexual maturity at, and this isn't a
1:59:42typo,
1:59:44150 years old. In the meantime, it
1:59:46spends more than a century devoting its
1:59:49energy to building itself a perfect
1:59:51body. Slow and methodical, with all of
1:59:54its resources going to cell repair and
1:59:56maintenance, it becomes virtually immune
1:59:59to cancer and infectious disease. It's
2:00:01the ultimate long-term investor, saving
2:00:04for its future, devoting today's
2:00:06resources to ensuring it can have a good
2:00:08life literally centuries from now. As
2:00:11best we can tell, a Greenland shark can
2:00:14live for 500 years, maybe more. The
2:00:17point is that nature is extremely good
2:00:20at assessing future risk and allocating
2:00:23resources accordingly. For guppies,
2:00:25nature takes a realistic look at future
2:00:27threats and says there are so many risks
2:00:30lurking. Don't even bother trying to
2:00:32plan for the future. For Greenland
2:00:34sharks, it says your future is clear and
2:00:37foreseeable. Plan away with confident.
2:00:40Most animals are masters at this
2:00:42balance, allocating resources between
2:00:45invest for the future and live for today
2:00:48as efficiently as possible. But people
2:00:50trying to forecast the trajectory of
2:00:52their life or how much they should spend
2:00:54today versus save for tomorrow or how
2:00:57long they might actually live or what
2:00:59they'll regret, they tend to be terrible
2:01:01at it. What biology has mastered, modern
2:01:04human emotions have failed at. To
2:01:06paraphrase Nasim Talib, the world is
2:01:09split evenly between those who don't
2:01:11know how to start spending money and
2:01:13those who don't know when to stop. You
2:01:15see this in popular financial
2:01:17philosophies. On one end of the
2:01:19spectrum, you have the fire movement,
2:01:21which promotes extreme savings and an
2:01:24almost pathological devotion to
2:01:26frugality. It sounds prudent, but it can
2:01:28be incredibly dangerous. In his book,
2:01:31Die with Zero, Bill Perkins writes,
2:01:34"Imagine if by the time you died, you
2:01:36had done everything you were told to do.
2:01:39You worked hard, saved your money, and
2:01:41looked forward to financial freedom when
2:01:43you retired. The only thing you wasted
2:01:46along the way was your life. On the
2:01:48other end of the spectrum is the YOLO
2:01:50crowd, which pumps day trading bankrupt
2:01:53penny stocks and crypto meme coins to
2:01:56become rich as soon as possible with a
2:01:58sneering disdain for those investing for
2:02:00long-term stock market appreciation. A
2:02:0322-year-old who used his day trading
2:02:06profits to buy a yellow Lamborghini is
2:02:08their unofficial hero. You know exactly
2:02:11how that story eventually ends. The
2:02:13financial philosophies that are most
2:02:15appealing often risk the most amount of
2:02:18future regret. Author Nick Majulio says,
2:02:21"Taking too little risk is like smoking
2:02:23cigarettes. Taking too much risk is like
2:02:26doing heroing. Both will harm you. The
2:02:29only difference is how quickly. And the
2:02:31richer society becomes, the harder this
2:02:34problem gets. For most of history, the
2:02:36majority of Americans were the economic
2:02:38equivalent of guppies. living in such a
2:02:41precarious financial state that the mere
2:02:43thought of saving for retirement or
2:02:46literally the entire concept of
2:02:47retirement was out of the question. When
2:02:50we became wealthier, we're now lucky
2:02:52enough to have to answer questions about
2:02:54how to save for a future while enjoying
2:02:56today that would have seemed
2:02:58preposterous to previous generations. A
2:03:01100 years ago, a 22year-old could expect
2:03:04to live to age 62. Today, a 22-year-old
2:03:07is asked to start saving for a
2:03:09retirement that might begin at age 62
2:03:12and last another 30 years. Onethird of
2:03:14young women in America can now expect to
2:03:17live to age 90. One kid from every
2:03:20kindergarten class today can expect to
2:03:22live past age 100, an entire generation
2:03:26after they might expect to stop working.
2:03:28At the same time, that 22-year-old
2:03:31worker likely earns substantially more
2:03:33than their grandparents did at the same
2:03:35age and has access to more opportunities
2:03:37to spend money that didn't exist a
2:03:40generation ago. They have more
2:03:42opportunities to spend on travel,
2:03:44concerts, dining, and same day delivered
2:03:47stuff that their ancestors couldn't
2:03:49conceive of. We're so fortunate to live
2:03:51in a world with so much opportunity to
2:03:53use money right now to experience a good
2:03:56life. Those two things, saving for
2:03:58tomorrow while still living for today,
2:04:01cause so many people so much angst. The
2:04:04irony is that the richer society
2:04:06becomes, and the longer we live, the
2:04:08more opportunities we have to screw up
2:04:11our finances in a way that could leave
2:04:13us with regret. I'm not immune. I've
2:04:15been a big saver and long-term investor
2:04:17for my entire adult life. I love the
2:04:20idea of compounding and delayed
2:04:22gratification. But I don't want to
2:04:23suffer the same fate as David Cassidy,
2:04:26looking back at the end of my life and
2:04:28realizing that I squandered my short
2:04:30time on this earth, denying myself an
2:04:32enjoyable life out of slavish devotion
2:04:35to building wealth. I've also noticed an
2:04:37important shift in my thinking, one that
2:04:40might apply to many of you. It's grim to
2:04:42think about, but no information in the
2:04:45world would be more powerful than
2:04:47knowing exactly how much time you have
2:04:49left to live. It's so powerful that a
2:04:52lot of people say they wouldn't want to
2:04:53know if they could. It would be too
2:04:55scary and would take the mystery out of
2:04:57life. But almost nothing in your life
2:05:00would be the same if you knew. I met
2:05:02someone a few years ago when we parted
2:05:04ways. He said, "Life is long. I hope we
2:05:07stay in touch." Life is long. No one
2:05:09says that. They always say life is
2:05:11short, but obviously it could be either.
2:05:14We have no idea. The life is short
2:05:17philosophy says don't wait. Go have fun.
2:05:20Live a great life. Eat, drink, and be
2:05:23merry for tomorrow we die. If your life
2:05:25were shorter than you expected, nearly
2:05:27everyone would follow that advice. You'd
2:05:29also be likely to forgive, forget, and
2:05:32not be bothered by petty annoyances,
2:05:34realizing that with your limited time to
2:05:36enjoy good stuff, there's no use being
2:05:38bitter. You'd appreciate every sunset,
2:05:41smell the flowers, and call an old
2:05:43friend. You wouldn't miss a single one
2:05:45of your kids' little league games. Part
2:05:47of the reason former president Lynden
2:05:48Johnson had so much energy and ambition
2:05:51is because he always feared he'd die
2:05:53young. What about the life is long
2:05:55philosophy? If you knew you'd live to be
2:05:57102 years old, you probably wouldn't
2:06:00feel as rushed today. You'd be less
2:06:02anxious about your career. You wouldn't
2:06:04feel guilty sleeping in, taking a
2:06:06sabbatical, or using all of your
2:06:08vacation pay. You'd plant trees to watch
2:06:10them grow and take more pictures to
2:06:12remember. You'd be more willing to learn
2:06:14a new skill. You'd take better care of
2:06:16your joints, and long-term investing
2:06:18would be more exciting. But the truth
2:06:20is, no one has any idea how long they'll
2:06:23be around. I find it useful, though, to
2:06:25think about what it would be like to
2:06:27realize you're near the end at different
2:06:29points in your life. The idea of being
2:06:31on my deathbed looking back with regret
2:06:33at a life of missed opportunity. The
2:06:36vacations I could have taken, the cars I
2:06:38could have purchased changed as soon as
2:06:40I became a father. I have young kids.
2:06:42When I do the grim mental exercise of
2:06:44imagining being at the end of life
2:06:47tomorrow, I think I'd be relieved and
2:06:49proud to realize that the material
2:06:51sacrifices I made to save more money
2:06:54will provide my wife and kids with a
2:06:56meaningful nest egg. The alternative,
2:06:59being about to die and realizing that
2:07:01your young family is about to face a
2:07:03financial burden because you spent so
2:07:05much would leave me racked with guilt,
2:07:08so much regret. That to me would cause
2:07:10me to look back at all the trips and
2:07:12dinners and spending and think so much
2:07:15wasted time. Time I could have used to
2:07:17provide a better future for my family.
2:07:19But will I still believe that in 30
2:07:21years when hopefully my kids are settled
2:07:24and independent? Probably not. At that
2:07:26point, I'd mostly regret the trips I
2:07:28didn't take, the experiences I didn't go
2:07:30for, the memories I didn't make. I don't
2:07:33think those are contradictory feelings.
2:07:35And I'm okay if you disagree. All
2:07:37behavior makes sense with enough
2:07:39information, but I think they highlight
2:07:41an important truth that applies to
2:07:43everyone. Good advice is never as simple
2:07:45as saying live for today or save for the
2:07:48future. The only good advice is minimize
2:07:51future regret. That's it. I think that's
2:07:54the best we can do when trying to find
2:07:56the balance between living for today and
2:07:58saving for tomorrow. Attempt to minimize
2:08:01your regrets with an understanding that
2:08:03different people will regret different
2:08:05things and you yourself will regret
2:08:07different things as you age. Amazon
2:08:09founder Jeff Bezos once described his
2:08:12decision to start an online bookstore in
2:08:14the 1990s. The framework I found which
2:08:17made the decision incredibly easy was
2:08:19what I called the regret minimization
2:08:21framework. I wanted to project myself
2:08:23forward to age 80 and look back on my
2:08:26life and I want to have minimized the
2:08:28number of regrets I have. And I knew
2:08:30that when I was 80, I was not going to
2:08:33regret having tried this. I was not
2:08:35going to regret trying to participate in
2:08:37this thing called the internet that I
2:08:39thought was going to be a really big
2:08:40deal. But I knew the one thing I might
2:08:42regret is not ever having tried it. And
2:08:45I knew that would haunt me every day. So
2:08:47when I thought about it that way, it was
2:08:49an incredibly easy decision. Two things
2:08:51stick out to me here. One is how sound
2:08:54this advice is. The other is that the
2:08:56specific example wouldn't apply to me
2:08:58and my personality. I likely would
2:09:00regret devoting that much time and
2:09:02energy to something that failed.
2:09:04Everyone's different, which is why the
2:09:05blanket advice of live for today or
2:09:08invest for tomorrow can miss so much
2:09:11real world nuance. The only good advice
2:09:14is to minimize your future regret.
2:09:16That's it. I think that's the best we
2:09:18can do when trying to find the balance
2:09:20between living for today and saving for
2:09:22tomorrow. Attempt to minimize your
2:09:24regrets with an understanding that
2:09:27different people will regret different
2:09:28things and you yourself will regret
2:09:31different things as you age. Amazon
2:09:33founder Jeff Bezos once described his
2:09:35decision to start an online bookstore in
2:09:37the 1990s. The framework I found which
2:09:40made the decision incredibly easy was
2:09:42what I called the regret minimization
2:09:44framework. I wanted to project myself
2:09:47forward to age 80 and look back on my
2:09:49life and I want to have minimized the
2:09:52number of regrets I have. And I knew
2:09:53that when I was 80, I was not going to
2:09:56regret having tried this. I was not
2:09:58going to regret trying to participate in
2:10:00this thing called the internet that I
2:10:02thought was going to be a really big
2:10:03deal. But I knew the one thing I might
2:10:05regret is not ever having tried it. And
2:10:08I knew that would haunt me every day. So
2:10:10when I thought about it that way, it was
2:10:12an incredibly easy decision. Two things
2:10:15stick out to me here. One is how sound
2:10:17this advice is. The other is that the
2:10:19specific example wouldn't apply to me
2:10:21and my personality. I likely would
2:10:23regret devoting that much time and
2:10:25energy to something that failed.
2:10:27Everyone's different, which is why the
2:10:28blanket advice of live for today or
2:10:31invest for tomorrow can miss so much
2:10:33real world nuance. The only good advice
2:10:36is to minimize your future regret. Since
2:10:39everyone's different, I can't tell you
2:10:41how to do that. But here are two ideas I
2:10:43think about with my own financial
2:10:45decision. Number one, good memories are
2:10:47the closest thing to living for today
2:10:50while compounding for tomorrow. The
2:10:52anonymous Twitter account FedSpeak once
2:10:54wrote, "The purpose of life is to
2:10:56experience things for which you will
2:10:58later experience nostalgia. I can't be
2:11:00alone in realizing that as I get older,
2:11:03memories of things that took place 10,
2:11:0520, 30 years ago are some of my most
2:11:08cherished assets. They aren't financial
2:11:10assets, but boy, they are very real
2:11:12assets nonetheless. The amazing thing
2:11:15about memories is how they can compound
2:11:17over time, just like a stock. When I was
2:11:1910 years old, memories of what I did at
2:11:22age nine were boring. Today, those same
2:11:24memories are astounding and hilarious to
2:11:27recall as I can put them into the
2:11:29greater context of my life. In 50 years,
2:11:32they will be my most cherished
2:11:33possession. I once heard an elderly
2:11:35woman say that the benefit to growing
2:11:37old was the ability to time travel in
2:11:40your head, to remember what life was
2:11:42like in, say, the 1950s and compare it
2:11:44to today, or to ponder in amazement at
2:11:47how much technology has improved since
2:11:49you were a kid. Children are rich in
2:11:51health but poor in life memories. As you
2:11:54age, that flips. Typical advice that is
2:11:57nearly cliche at this point is to spend
2:11:59money on experiences, not things. It's
2:12:02not bad advice, but the way it's framed
2:12:04leads people to think the only way to do
2:12:06that is to spend money on a nice
2:12:08vacation or to travel to some distant
2:12:11land. That's not always the case. I can
2:12:13think of many expensive experiences that
2:12:16would be entirely unmemorable. While
2:12:18memories formed with friends during high
2:12:20school might be some of your fondest and
2:12:23likely cost nothing, I try to keep in
2:12:25mind that the things I am most likely to
2:12:27regret in the future will be the time I
2:12:30didn't spend with my kids, the
2:12:32relationships with friends I didn't put
2:12:34enough effort into, and certain things
2:12:36I'm stressed and anxious about today
2:12:39that I'll eventually realize deserved
2:12:41more self forgiveness. It might not cost
2:12:43any money to nurture those things, but
2:12:46there are cases where money can help,
2:12:48just not in the way you think. Spending
2:12:50money on a vacation with my kids could
2:12:52form valuable memories. Having a career
2:12:55that pays less but lets me spend more
2:12:57quality time with my kids every day
2:13:00might lead to much happier memories. It
2:13:02can be hard to contextualize, but say
2:13:04you can choose between one job that pays
2:13:06$60,000 per year and requires 45 hours
2:13:10of work per week, or another that pays
2:13:12$50,000 per year and requires 35 hours
2:13:15per week. The latter costs you $10,000
2:13:19per year in lost income, which over 30
2:13:22years invested at 8% is something like
2:13:25$1 million. But it gives you back 500
2:13:28hours per year, which over your career
2:13:31is 15,000 hours of potential memories
2:13:34doing something you enjoy. And those
2:13:36memories compound over time, just like
2:13:39asset. People love to gawk at the power
2:13:41of compounding when investing their
2:13:43money. It's much harder to think about
2:13:46the value of compounding memories you
2:13:48get by trading money for time, but the
2:13:50results can be just as incredible. It
2:13:53could easily be the best money you ever
2:13:55spend and the ultimate antidote to
2:13:58regret. Two, saving for the future
2:14:00creates independence today. If I save
2:14:03$100 for the future, what does that cost
2:14:06me today? I don't think the answer is
2:14:08$100 or anything close to it. Sure, I
2:14:11could have used that money today to buy
2:14:13a $100 shirt or a $100 dinner with
2:14:16friends, but by saving it for the
2:14:18future, I gain something today. $100 in
2:14:22independence. $100 in options and
2:14:26freedom to do anything I want in the
2:14:28future that costs $100. $100 of time
2:14:32that I might need at some point. $100 of
2:14:35reduced stress about my ability to care
2:14:38for my family or retire when I need to.
2:14:41That can be as tangible a benefit to me
2:14:44today as buying the $100 shirt. Once you
2:14:47view savings as providing the benefit of
2:14:49independence, you stop viewing saving
2:14:52for tomorrow as sacrificing today. I
2:14:55will tell you personally, the degree of
2:14:57financial independence I have that's
2:14:59come from saving my entire life is among
2:15:02my most valuable, useful, and enjoyable
2:15:05assets today. I don't feel like I'm just
2:15:07saving for the future. Savings has given
2:15:10me independence that allows me a degree
2:15:12of doing what I want, when I want, with
2:15:15whom I want. That makes today, right
2:15:18now, better than it would have been if I
2:15:20had saved less in the past. Of course,
2:15:22it's a balance. Everything worthwhile in
2:15:24life is independence is the most
2:15:27enjoyable when you also have the ability
2:15:30financially and psychologically to spend
2:15:32what's necessary today to create
2:15:34memories with the people you want to.
2:15:37But it's too easy and too common to
2:15:39assume that saving for the future
2:15:41prevents enjoying today when in fact the
2:15:44two go hand in hand. Joining forces in a
2:15:47way that guards against regret. Now for
2:15:49a story about how disastrous envy can
2:15:52be. Chapter 10. Look at them. Jealousy,
2:15:56envy, and the priceless art of not
2:15:58caring what others think. Buzz Uldren
2:16:01became one of the most famous humans on
2:16:03the planet on July 20th, 1969 when he
2:16:07walked on the moon. It was an astounding
2:16:09feat, possibly the most incredible thing
2:16:12humans have ever accomplished. But Buzz
2:16:14was the second human to walk on the
2:16:16moon, stepping foot on the lunar surface
2:16:18minutes after Neil Armstrong. Fellow
2:16:20astronaut Michael Collins once explained
2:16:23of Aluldren, known to be canankerous and
2:16:26for fame not wearing well on him, I
2:16:28think he resents not being first on the
2:16:31moon more than he appreciates being
2:16:33second. Jealousy is such a powerful
2:16:35thing. It's difficult to appreciate what
2:16:38you have and what you've accomplished
2:16:40because beyond a basic level of
2:16:42necessities, what you often want is to
2:16:44place yourself in a higher ring of the
2:16:47social hierarchy. So everything you've
2:16:49accomplished is relative to other
2:16:51people. And you often crave most
2:16:53whatever someone else has, but you
2:16:55don't. That's important for spending
2:16:57money because for so many people the
2:17:00question of whether you're buying nice
2:17:01things is actually are these things
2:17:04nicer than other people's things. The
2:17:06question of whether your home is big
2:17:08enough is actually is my home bigger
2:17:10than my neighbors. It's understandable
2:17:13and unavoidable. A lot of life is a
2:17:16competition for resources, for money,
2:17:18time, mates, attention, friends, land,
2:17:22where what matters is not how good you
2:17:25are, but how good you are relative to
2:17:28other people. Russian biologist Gorgi
2:17:30Gaus became famous for an ecology
2:17:33concept now known as Gaus's principle,
2:17:36which says that two species competing
2:17:38for the same limited resources cannot
2:17:41coexist. One will always out compete the
2:17:44other until it's extinct. So, of course,
2:17:46it's natural to constantly look around
2:17:48at others, mildly paranoid, driven by
2:17:51what they have and you don't. But let me
2:17:53make a point that's critical but easy to
2:17:56overlook in the art of spending money.
2:17:58There's a fine line between being
2:18:00motivated by what others have and you
2:18:02don't, potentially good, and being
2:18:05envious of what they have and you want,
2:18:07always dangerous. Being motivated by
2:18:10what others have can be fun. Their
2:18:12success is like an effective form of
2:18:14advertising for things you didn't know
2:18:16existed. But being envious of others is
2:18:19mental torture, like a contract you've
2:18:21made with yourself to be miserable. Few
2:18:24topics are as important because we all
2:18:26look around at others potentially
2:18:28jealous of what they have and set our
2:18:30spending desires accordingly. When
2:18:33entrepreneur Josh Kushner was in
2:18:35college, a wealthy friend took him to a
2:18:37Knicks basketball game. The seats,
2:18:39Kushner recalled, were astounding.
2:18:41Courtzside, like you could literally
2:18:43smell the players. He was in awe. Then
2:18:45Kushner's friend looked five seats over
2:18:48and said, "My seats are good, but that
2:18:50guy's seats are better." The author CS
2:18:53Lewis once defined this feeling so well
2:18:55in an essay called The Inner Ring. Life,
2:18:58he described, is often viewed as a
2:19:00series of social rings, and people's
2:19:02desire is to break into the next level,
2:19:05the more exclusive ring. If you're
2:19:07outside of a ring, nothing seems better
2:19:09than the thought of being on the inside.
2:19:11But once you're on the inside of one
2:19:13ring, you realize you're not nearly as
2:19:16happy as you thought you'd be, and you
2:19:18shift your attention to the next ring
2:19:20where nirvana seems to reside. So much
2:19:22of life is like that. A constant
2:19:24struggle of viewing other people as
2:19:26having something we want. And then once
2:19:28you have that thing, you spot yet
2:19:30another person who has something new
2:19:32that you want. And around and around you
2:19:34go, ever disappointed. Lewis wrote,
2:19:37"Unless you take measures to prevent it.
2:19:40This desire is going to be one of the
2:19:42chief motives of your life from the
2:19:44first day on which you enter your
2:19:45profession until the day when you are
2:19:47too old to care." And he wrote that more
2:19:50than 80 years ago. It's so much worse
2:19:52today. JP Morgan's observation that
2:19:55watching your neighbor become rich
2:19:57undermines your financial judgment was
2:20:00true when he said it more than a century
2:20:01ago. Today, everyone is effectively your
2:20:05neighbor, where social media turns envy,
2:20:07and comparison into an Olympic sport.
2:20:10When it comes to envy, jealousy, and
2:20:12spending money, let me share a few of
2:20:14the most important points to keep in
2:20:16mind. It's nearly impossible to win the
2:20:19status game. What's unique and enviable
2:20:21in one period becomes common and bland
2:20:24in the next. Wired magazine's founding
2:20:26executive editor, Kevin Kelly, once told
2:20:28me something I loved. If you want to
2:20:30know what lower income groups will
2:20:32aspire to spend their money on in the
2:20:34future, look at what higher income
2:20:36groups exclusively do today. European
2:20:39vacations were once the exclusive
2:20:41playground of the rich. Then they
2:20:43trickled down. Same with college. It was
2:20:46once reserved for the highest income
2:20:48group. Then it spread. Same with
2:20:50investing. In 1929, the peak of the
2:20:53roaring 20's bubble, 5% of Americans
2:20:56owned stock. Virtually all of them the
2:20:59very wealthy. Today, 58% of households
2:21:02own stocks in some form. Same with
2:21:04twocar households, lawns, walk-in
2:21:07closets, granite countertops, sixburner
2:21:11stoves, jet travel, and even the entire
2:21:13concept of retirement. Part of the
2:21:15reason these products spread to the
2:21:17masses is because they got cheaper. But
2:21:19the reason they got cheaper was because
2:21:21there was so much demand from the
2:21:23masses, hungered by their aspirations
2:21:25that pushed companies to innovate new
2:21:27ways of mass production. And it shows
2:21:30why you can't permanently win the status
2:21:32game. What makes something high status
2:21:34is the fact that others don't have it.
2:21:36Once they eventually get their hands on
2:21:38that thing, it's no longer high status.
2:21:41Author Rob Henderson once noted that
2:21:43when he was a student at Yale, his
2:21:45classmates loved the Broadway play
2:21:47Hamilton. But once the play was released
2:21:50on Disney's streaming platform available
2:21:52to the masses, they hated it, found it
2:21:55boring, and stopped talking about it.
2:21:57The Yale students didn't care about the
2:21:59play as much as they cared that they
2:22:01could watch something others couldn't.
2:22:03Hamilton was cool when it was exclusive
2:22:06to their social ring, much less so when
2:22:08anyone could watch it. People like to
2:22:10mimic those who appear to be living
2:22:12better lives, which can make those in
2:22:14enviable positions always feel uneasy
2:22:17and never satisfied because they are
2:22:19constantly being chased by others who
2:22:22covet their lifestyle and possessions.
2:22:24That's why you can never truly win the
2:22:26status game. It's a moving target. When
2:22:29you realize that status is a game that
2:22:31is never permanently won, you see why
2:22:33chasing it can be so unfulfilling. Being
2:22:36jealous of what others have and assuming
2:22:38your life would be better if you were
2:22:40like them is misleading because you're
2:22:42not getting a full picture of their
2:22:44lives. If I want what you have, I
2:22:46overlook that you want what someone else
2:22:48has and therefore you feel exactly like
2:22:51I do and that someone else wants
2:22:52something another person has on and on
2:22:55like one continuous chain of social
2:22:57envy. Once you realize how neverending
2:23:00the status and jealousy game can be, you
2:23:02realize the only way to win is to stop
2:23:05playing. Being jealous of what others
2:23:07have is outsourcing your critical
2:23:09thinking to strangers. As natural as
2:23:11social comparison is, it's a depressing
2:23:14thing to ponder when you think about it.
2:23:16If you left me alone with my friends and
2:23:18family, people I love and whose
2:23:20attention I really want, I would form
2:23:22one set of desires. But when you expose
2:23:25me to a group of millions of strangers
2:23:27who I don't know and don't care about, I
2:23:30form a completely new and grander set of
2:23:32desires. One of my favorite writers,
2:23:34Lawrence Yay, once wrote, "Envy is
2:23:36inversely correlated with
2:23:38self-examination." The less you know
2:23:40yourself, the more you look to others to
2:23:43get an idea of your worth. But the more
2:23:45you delve into who you are, the less you
2:23:47seek from others, and the dissolution of
2:23:50envy begins. That's so smart. If you
2:23:52view one of the main goals of money as
2:23:54being independent, you start to view
2:23:57social comparison as its nemesis. I want
2:23:59to fit into the social group I choose,
2:24:02and spending money to look a certain way
2:24:04or occupy my time a certain way can be
2:24:06part of that. But once you anchor your
2:24:08expectations to an endless group of
2:24:11strangers, you're assuring yourself that
2:24:13you'll never be independent or even
2:24:16satisfied. Here's an easy way to show
2:24:18what I mean. Telling someone they are
2:24:20jealous is always an extreme insult
2:24:23because no one wants to admit that they
2:24:25are chasing what others have. They want
2:24:27to think they're independent because
2:24:29deep down independence is the goal. Envy
2:24:32is admitting to inferiority. The more
2:24:35you know yourself and become closer to
2:24:37what you want, the less you envy others
2:24:40even when they have what you don't.
2:24:41FOMO, the fear of missing out, is one of
2:24:44the most dangerous financial reactions
2:24:46that exists. FOMO is the intersection of
2:24:49social comparison and recklessness. You
2:24:52see someone with something you want and
2:24:54lose all inhibition to get it. Having no
2:24:57FOMO might be the most important
2:24:59financial skill. Being immune to the
2:25:02siren song of other people's success,
2:25:04especially when that success is sudden,
2:25:07extreme, and caused by factors outside
2:25:10their control, is so powerful and
2:25:12important that it's practically
2:25:14impossible to do well over time without
2:25:16it. When strategizing, Dwight Eisenhower
2:25:19used to quote Napoleon who said, "A
2:25:21military genius is the man who can do
2:25:24the average thing when everyone else
2:25:26around him is losing his mind." It's the
2:25:28same with money. FOMO is recklessness
2:25:31masked as ambition. You see someone else
2:25:34getting rich or living a great life and
2:25:36think, "If they can do it, I can too."
2:25:39That feels like a good emotion. It feels
2:25:41like you're learning through observation
2:25:43and following a datadriven path to
2:25:45success. But what's actually occurring
2:25:47is you are outsourcing your emotions to
2:25:50people whose quick windfall or flashy
2:25:53life has probably left them in a fragile
2:25:55emotional state to begin with. If you
2:25:57chase them, you might follow them right
2:26:00over the cliff. An astounding example of
2:26:02this in play. A study by three
2:26:04researchers once showed that if your
2:26:06neighbor wins the lottery, you are more
2:26:08likely to borrow money and go bankrupt
2:26:11in the future. Charlie Mer once said,
2:26:13"Someone will always be getting richer
2:26:16faster than you." This is not a tragedy.
2:26:18The idea of caring that someone is
2:26:20making money faster than you are is one
2:26:22of the deadly sins. Remove FOMO from the
2:26:25equation and what's left. You only care
2:26:28about your own financial goals. You only
2:26:30care about the opinions of those you
2:26:32care about. You think long-term and
2:26:34avoid getting sucked into fads and
2:26:36bubbles, and you don't need much else to
2:26:38do well over time. Your propensity to be
2:26:41jealous of what others have can increase
2:26:44as you become wealthier. If you can't
2:26:46afford rent or food, the desire for more
2:26:48money is existential and has a very
2:26:50clear objective and finish line. But if
2:26:53you're already financially comfortable,
2:26:55the desire for more money is mostly
2:26:57about status, which has no upper limit
2:26:59and is insatiable. Researcher Sunnia
2:27:02Luar once did a study of teenage mental
2:27:04health, drug and behavioral issues among
2:27:07poor inner city kids. As a control
2:27:10group, she compared them to rich
2:27:12suburban kids who, in a shock to many,
2:27:15were comparatively much worse off by
2:27:17several metrics. One theory is that when
2:27:19rich kids are surrounded by other rich
2:27:21kids, the urge to climb the insatiable
2:27:24social ladder explodes. Freed from the
2:27:27burdens of struggling to pay rent and
2:27:29buy groceries, your entire life becomes
2:27:31a quest to become richer and more
2:27:33popular than the person next to you.
2:27:35I've seen this so often. When you have
2:27:37everything you need, you immediately
2:27:39shift to focusing on everything you
2:27:41might want, which is a never-ending
2:27:43list. When you're poor, you want a
2:27:45stable paycheck and a small house. When
2:27:47you're rich, you want to be on the
2:27:49Forbes list of billionaires and have a
2:27:51private jet. The curve of social
2:27:53comparison grows exponentially with
2:27:56income. It sounds crazy, but sometimes I
2:27:58think the most status starved and
2:28:00moneyhungry people are rich celebrities
2:28:03because their social comparison group
2:28:05are ultra rich mega celebrities.
2:28:07Realizing that your aspirations and for
2:28:10some people their entire sense of
2:28:12self-worth can anchor to the social
2:28:14group you closest associate with makes
2:28:17you think harder about who you choose to
2:28:19associate with. Which brings me to the
2:28:21most important point. Be careful who you
2:28:24socialize with. Good advice for a lot of
2:28:26things in life is to remember that you
2:28:29are a reflection of the three or four
2:28:31people you socialize with the most. If
2:28:33your friends have expensive tastes, your
2:28:35expectations converge on that lifestyle.
2:28:38If your friend's idea of an awesome
2:28:40Friday night is skipping rocks into a
2:28:42lake while chatting about life, your
2:28:44material expectations stay more
2:28:45grounded. Everything worthwhile in life
2:28:48is just the gap between expectations and
2:28:50reality. And when your frame of
2:28:52reference is rich people trying to
2:28:54impress each other, that gap can close
2:28:56quickly. I used to live in the woods in
2:28:58the middle of nowhere. Then I moved to
2:29:00the beach in Los Angeles. It was
2:29:02stunning how quickly my definitions of
2:29:04success, rich, and luxury exploded once
2:29:08I became surrounded by rich people.
2:29:10Ambition can be a wonderful thing, but
2:29:12I'm not sure it is a positive thing
2:29:14overall. a dentist or small business
2:29:16owner can feel like they're swimming in
2:29:18wealth and success in one town, but like
2:29:21an impoverished failure by comparison to
2:29:23peers in another. Who you socialize with
2:29:26can have as big an impact on your
2:29:28material happiness as how much money you
2:29:30make and how much you spend. When you
2:29:32think of it that way, you choose wisely
2:29:35who you spend your time with. CS Lewis
2:29:37ended his essay by noting, "The quest of
2:29:40the inner ring will break your hearts
2:29:42unless you break it." What breaking it
2:29:44meant was simple. Once you become
2:29:46satisfied with whatever ring you
2:29:48currently reside in, jealous of no one,
2:29:51envious of nothing, appreciative of what
2:29:54you have and what you're good at,
2:29:55grateful for friends and family, you are
2:29:58indeed snug and safe at the center of
2:30:00something which seen from without would
2:30:03look exactly like an inner ring. A lack
2:30:05of envy brings another gift, freedom.
2:30:08Let's tackle that. The simplest formula
2:30:10for a pretty nice life. How to live a
2:30:12good life is endlessly complicated. But
2:30:15sometimes the best way to understand a
2:30:17complicated topic carry the most weight.
2:30:19Let me propose one. The simplest formula
2:30:22for a pretty nice life is independence
2:30:24plus purpose. Independence plus purpose.
2:30:28Independence plus purpose. The
2:30:31independence to do what you want and the
2:30:33wisdom to want to do meaningful things.
2:30:36It's not everything, but boy does it
2:30:38move the needle. There are many ways to
2:30:39be independent. Being free from poor
2:30:42health, cultural influences, and an
2:30:44arbitrary boss. But financial
2:30:47independence is obviously a big one.
2:30:49Spending on independence can be the most
2:30:51wonderful thing money can buy, and it's
2:30:53more in your control than you might
2:30:55think. That's the next chapter. Chapter
2:30:5711. Wealth without independence is a
2:31:00unique form of poverty. Money you
2:31:02haven't spent buy something intangible
2:31:04but valuable. Freedom, independent, and
2:31:06being able to spend time in your own
2:31:08way. The people I look up to the most
2:31:11are not necessarily the richest or most
2:31:13successful. Almost always they're the
2:31:15freest, the most in control of their own
2:31:18lives. It took me a while to realize
2:31:20that. Rich to me used to mean having
2:31:23lots of fancy toys. Now it means not
2:31:25being hurried, spending time with my
2:31:27family, control over my schedule, and
2:31:30intellectual independence. Doing life my
2:31:33way. Independence. That's true rich. A
2:31:35related perspective I hold, one that
2:31:37many either disagree with or find
2:31:40counterintuitive, is that there's no
2:31:42such thing as unspent money. You spend
2:31:44every single cent you've ever earned.
2:31:47You spend every dollar in your bank
2:31:48account, whether you know it or not.
2:31:50Money you haven't spent buys something
2:31:52intangible but valuable. Freedom,
2:31:55independence, and being able to spend
2:31:57time in your own way. Every dollar of
2:31:59savings buys a claim check on the
2:32:01future. And every dollar of debt you
2:32:03hold is a piece of your future that
2:32:05someone else controls. I've always been
2:32:07a big saver, but I've never viewed my
2:32:09savings as idle money. I've never even
2:32:12viewed it as saving up for a purchase in
2:32:14the future. I view every cent of savings
2:32:16as a ticket toward a greater degree of
2:32:19financial independence, which is my true
2:32:21goal. If I move $500 into my savings
2:32:24account, I view that as having purchased
2:32:26$500 of independence. It has almost no
2:32:29different meaning to me than if I had
2:32:31purchased a $500 television. The money
2:32:33is spent in either scenario, just spent
2:32:36on different things that offer different
2:32:38value. And I spend frivolously on
2:32:40independent. I blow tons of money on
2:32:43having control over my calendar. I have
2:32:45no budget for how much I'm willing to
2:32:47spend on autonomy and spending time with
2:32:49the people I want to when I want to, for
2:32:52as long as I want to. For me,
2:32:54independence has the highest ROI, more
2:32:56than anything else I've spent money on.
2:32:58That whole idea, trading money for time
2:33:01rather than trading it for stuff,
2:33:03because having more time is going to
2:33:05provide greater joy in your life is
2:33:07probably the most overlooked aspect of
2:33:09spending money. Because to most people,
2:33:12the extra time and mental clarity you
2:33:14get from independence and savings
2:33:16doesn't feel like spent money. Let me
2:33:18tell you a quick story about two
2:33:19athletes, each of whom made lots of
2:33:21money, but used it in different ways.
2:33:24Antoine Walker made 108 million playing
2:33:2712 seasons in the NBA, call it $25,000 a
2:33:31day. After Walker signed a six-year
2:33:33contract in 1999, Boston Celtics
2:33:36president and coach Rick Patino said
2:33:38Walker will never have to worry about
2:33:40money again in his life. Walker agreed.
2:33:42I thought I was set for the rest of my
2:33:44life," he said in 2015, which was 5
2:33:47years after he filed for bankruptcy.
2:33:49During his playing years, Walker had, by
2:33:51his own count, six or seven cars that
2:33:54were replaced when he saw someone
2:33:55driving a nicer one, a personal payroll
2:33:57that included supporting 30 friends and
2:34:00family and a house for his mother that
2:34:02had 10 bathrooms and a full-sized
2:34:04basketball court. He allegedly never
2:34:06wore the same suit twice. He gambled
2:34:09millions in casinos. The final score
2:34:11before the bankruptcy judge was $12.7
2:34:14million in liabilities against $4.3
2:34:17million in asset. He's now a financial
2:34:19adviser to athletes, admirably begging
2:34:22players to learn from his mistakes. John
2:34:24Ursel had nowhere near the same level of
2:34:26athletic talent or stardom. A fifth
2:34:28round pick of the Baltimore Ravens in
2:34:302014, Ursel played three seasons and
2:34:33made even fewer headlines as a player.
2:34:35He earned less in his entire career
2:34:37playing football than Walker did every
2:34:4011 weeks playing basketball. His salary,
2:34:43about $600,000,
2:34:45was close to the league's minimum wage.
2:34:47But the way Ursel chose to spend his
2:34:49earnings was astounding. He lived a fine
2:34:51life, luxurious by any standard, but he
2:34:53saved the vast majority of his paycheck.
2:34:56Why? I'm thankful for the money I was
2:34:58able to make. I'm not a billionaire, but
2:35:00I'm at a point where I'm financially
2:35:02stable. I don't ever need to worry about
2:35:04money. And by all accounts, he did not.
2:35:06He retired from football in 2017 and
2:35:09went back to school to get his PhD. He's
2:35:12now a professor at MIT. But the point
2:35:14is, he could have done whatever he
2:35:16wanted. The takeaway is not live less
2:35:18like Walker and more like Ursel. They're
2:35:21the extreme ends of the spectrum. But
2:35:23let me ask, whose life, not their sports
2:35:25talent, but the life they lived, do you
2:35:27admire more? This is not a trick
2:35:29question. I'm willing to bet you admire
2:35:31Ursel more than Walker. Even if Walker
2:35:34didn't go bankrupt, but merely stretched
2:35:36himself thin and had to give up some of
2:35:38his luxury, you'd probably still admire
2:35:40Ursel's outcome more. Most people would.
2:35:43That's because Walker lost control of
2:35:45his life. He reached a point where his
2:35:47decisions where to live, what to drive,
2:35:50even what clothes to wear were dictated
2:35:52by a bankruptcy judge. But Ursel
2:35:55maintained control over his life. He
2:35:57could do what he wanted when he wanted.
2:35:59His life was his own canvas to paint.
2:36:01And that control over what you're doing
2:36:04is actually what people admire. They
2:36:06admire it because it's what they
2:36:08actually want. They want it because it's
2:36:10what makes people happy. Nasim Taleb
2:36:13says, "What matters isn't what a person
2:36:15has or doesn't have. It is what he or
2:36:17she is afraid of losing. The more you
2:36:19have to lose, the more fragile you are."
2:36:22So many people, regardless of income,
2:36:24have a lot to lose because they are so
2:36:27reliant on other people for their
2:36:28security and satisfaction. As I'm
2:36:30writing this, I read this morning in the
2:36:32newspaper a story of a CEO who was once
2:36:35worth several hundred million dollars
2:36:37whose bankers are liquidating his assets
2:36:39because he borrowed so much money that
2:36:42he now can't repay. Bankers sold his
2:36:44yacht and his home. The debacle got him
2:36:46ousted from his company. I was struck.
2:36:48Here's someone in the top 0.001%
2:36:52of income and wealth with less financial
2:36:54independence than someone you might
2:36:56consider to be poor. Wealth without
2:36:58independence is a unique form of
2:37:01poverty. It's easy to scoff at the mere
2:37:03mention of financial independence
2:37:05because it seems like something reserved
2:37:06for spoiled trust funders and
2:37:09billionaires. I once had a friend who
2:37:10refused to save any money because it all
2:37:13felt so trivial to him. His view was,
2:37:15why save $50 when it moves the needle by
2:37:18so little? That's a mindset that I'd
2:37:20like to break. Financial independence is
2:37:22not black and white. It exists on a
2:37:24spectrum. At every point on the
2:37:26spectrum, every additional dollar of
2:37:28savings, you move up a little bit and
2:37:30your life can improve a little more.
2:37:32Here's how I view the spectrum of
2:37:34financial dependence and independent. Do
2:37:36yourself a favor and find yourself on
2:37:38this list. Level zero, total financial
2:37:41dependence on the kindness of strangers
2:37:43who have no vested interest in your
2:37:45success. Think of panhandlers and CEOs
2:37:47asking for government bailout. You have
2:37:49a complete lack of control in the
2:37:51direction of your financial life in a
2:37:53way that leaves you vulnerable to a
2:37:55fragile, often cruel world. Level one,
2:37:58complete financial dependence on people
2:38:00who want you to succeed because they
2:38:02like you and their reputation is
2:38:05attached to your success. Think about
2:38:06kids under age 15 who are supported by
2:38:09their parents but too young to work.
2:38:11Borrowing money from friends and family
2:38:13who realistically know you can't repay
2:38:15them also fits this category. Level two
2:38:18is the ability to partially support
2:38:20yourself by adding value to others while
2:38:23still somewhat reliant on external
2:38:25support. Young people who work but still
2:38:27rely on their parents to support what
2:38:29they consider basic lifestyle
2:38:31necessities fit this category. Same for
2:38:34workers who rely on government
2:38:35assistance and semi-retired workers who
2:38:38rely on pension. A major part of your
2:38:40financial well-being relies on the
2:38:42decisions of people who may or may not
2:38:45keep it going in the future. Level three
2:38:48is the ability to fully support yourself
2:38:50by adding value to others, but with a
2:38:52value that is marginal and easy to
2:38:54replace. This is a common category for
2:38:57both people and businesses. It is
2:38:58grinding and tenuous. It smells like
2:39:01independence in the sense that you can
2:39:03pay all your bills, but a boss or
2:39:05customer still owns your day and can
2:39:07dictate your future. Your future relies
2:39:10on their decision. If you lose your job,
2:39:12you may struggle to find a new one, and
2:39:14you have little savings to fall back
2:39:16onto. Level four, enough savings to
2:39:19cover run-of-the-mill problem. You can
2:39:21endure hassles that every person should
2:39:23expect to experience on a regular basis
2:39:25without getting wiped out. A small
2:39:27medical bill, you're okay. It's cold and
2:39:30you need to spend more on heating this
2:39:31month. You're okay. Your kid needs new
2:39:34pants. You're okay. This is the level at
2:39:36which you realize that having literally
2:39:38just a few dollars in savings provides a
2:39:40small degree of independence over life's
2:39:43hassles. Level five, enough savings to
2:39:45cover larger unforeseen problem. You
2:39:47still rely on the whims of your boss to
2:39:49get by monthtomonth, but if a crisis
2:39:51struck, you'd probably be okay for a
2:39:54reasonable period of time. Your car
2:39:56breaks down, you're okay. Your furnace
2:39:58breaks, you're okay. You now have some
2:40:00degree of independence and protection
2:40:03against what you might consider bad luck
2:40:05in life's day-to-day risks. Level six,
2:40:07some retirement savings, education
2:40:10savings, and the avoidance of credit
2:40:12card debt. You feel like you have one
2:40:14hand on the financial independence
2:40:15wheel. You still rely on bosses, but you
2:40:18can foresee a time down the road when
2:40:20your current savings will grow into a
2:40:21new level of independence for you and
2:40:23your family. You may not be fully
2:40:25independent, but you have sufficient
2:40:27hope that both fuels your optimism and
2:40:30helps you sleep at night. Level seven,
2:40:32the ability to pick a job that avoids
2:40:34the most egregious examples of
2:40:37and unnecessary hassles in your life.
2:40:39You still rely on a boss for your
2:40:41paycheck, but have the freedom and
2:40:43marketable job skills to say, "No, not
2:40:46you. You're a terrible boss, and this is
2:40:49a terrible job. I'll find someone else
2:40:51to work for." A big part of this is
2:40:53having sufficient savings that allows
2:40:55you to both quit when you want to and
2:40:57take the time you need to find a new
2:40:59better job. This is a wonderful and
2:41:02realistic goal for the majority of
2:41:03people. If you make it to level seven,
2:41:06you're crushing it. Level eight,
2:41:07becoming comfortable enough with your
2:41:09socioeconomic status that you don't feel
2:41:11the need to show off to strangers. This
2:41:13is the first glimpse of not just
2:41:15financial independence, but intellectual
2:41:17and identity independence. The inability
2:41:20to do this is a hidden form of debt and
2:41:22dependence. Level nine, the ability to
2:41:25avoid most debt, including auto loans,
2:41:28student loans, and even mortgages. Debt
2:41:30can be cheap capital, but it keeps you
2:41:32beholdened to strangers who own a piece
2:41:35of your future decisions. I once knew a
2:41:37guy who hated his job and had a clear
2:41:39vision for what he would rather do, but
2:41:41felt like he had to stay at his job to
2:41:43be able to repay his student debt. The
2:41:45debt, therefore, cost so much more than
2:41:48its interest rate. It cost him his
2:41:49career independence. A similar fate hits
2:41:52people who borrow so much for their
2:41:54house that they're stuck in a city they
2:41:55no longer want to live in if they can't
2:41:58sell their home for more than they
2:41:59borrowed. Once you view debt as a claim
2:42:01check on your future options, you stop
2:42:04asking what is the interest rate and
2:42:06start wondering how much independence is
2:42:08this going to cost me. Level 10. Few
2:42:11realistic economic situations would
2:42:13cause you or your family to be pushed
2:42:15back below level five. You could support
2:42:17yourself for a year or more off your
2:42:19liquid savings if you got hit by a
2:42:21medical emergency or a huge recession.
2:42:24It's the first true stage of financial
2:42:26independence. You can now say no, go
2:42:29away to almost anyone or any employer or
2:42:32any economic event with high odds of
2:42:34recovering from the repercussions. Level
2:42:3711. Passive income like interest and
2:42:39dividends covers a meaningful portion of
2:42:42your living expenses. You still work for
2:42:44a paycheck, but your portfolio is now
2:42:46providing enough income to reduce the
2:42:48common stresses and time commitments
2:42:50that restrict most people's
2:42:52independence. It's common for this level
2:42:54of independence to be owed to a slim
2:42:56lifestyle as much as a large investment
2:42:58portfolio. Once you taste this
2:43:00independence, you realize that lifestyle
2:43:02desires can compound faster than almost
2:43:05any asset. Level 12. Your investments
2:43:07and their reasonable return expectations
2:43:10will cover basic living expenses for
2:43:12longer than your life expectancy.
2:43:14Congrats. You are no longer reliant on
2:43:17others for work. You can deal with them
2:43:18if you want, and you probably will, but
2:43:21only if you want, when you want, with
2:43:23whom you want, which feels amazing. Many
2:43:26people reach this level with self-funded
2:43:28retirement saving. Level 13. Your assets
2:43:31and their reasonable return expectations
2:43:34cover above basic living expenses. You
2:43:36can live the lifestyle you prefer and
2:43:38have something left over for family or
2:43:40charity. Above basic expenses can be
2:43:42defined however you want. It varies by
2:43:44person. Just be careful about
2:43:46unnecessary lifestyle creep that can
2:43:49pull this independence down like
2:43:50gravity. And remember what comedian
2:43:52Chris Rock says. If Bill Gates woke up
2:43:54with Oprah's money, he'd jump out the
2:43:57window. Level 14. Your independence lets
2:43:59you do and say what you please
2:44:01unconcerned with other people
2:44:03disagreeing with you since you don't
2:44:05rely on the financial support or
2:44:07opportunities they could offer you. One
2:44:09note here, the concept of fu money,
2:44:11having so much money that you can tell
2:44:13people to f off without fear of
2:44:15repercussions is great, but so is
2:44:17kindness and civility. So I aspired to
2:44:20no thank you. I'm not interested in
2:44:22that. I respectfully disagree and I'm
2:44:25free to ignore you money. One is
2:44:27rationalizing being a jerk. The other is
2:44:30intellectual independence. Level 15. You
2:44:33wake up every morning realizing that you
2:44:35can spend your time doing what you want
2:44:37with whom you want for as long as you
2:44:39want. Bosses don't control your day.
2:44:42Social debt doesn't influence your
2:44:44decisions. Actual debt doesn't control
2:44:46your options. You beat the game. And you
2:44:49realize that while this doesn't
2:44:50guarantee happiness and there are still
2:44:53plenty of opportunities for you to screw
2:44:55up your life, you have unlocked a
2:44:56lifestyle boost that 99.99%
2:45:00of humans who have ever lived have not
2:45:02experienced. The only risk is that you
2:45:04forget how grateful you should be to be
2:45:07in this situation. Regardless of where
2:45:09you sit on this spectrum and regardless
2:45:11of how high you aspire to get, the key
2:45:13is realizing that independence is a
2:45:16spectrum. Independence is not something
2:45:18you either have or don't have. It's not
2:45:20binary like that. Every little bit of
2:45:23savings and every little bit of lower
2:45:24expense pushes you higher on the
2:45:27independent spectrum. Now, some people
2:45:29value independence more than others.
2:45:31Some people want to be higher on the
2:45:32spectrum than others. There's no right
2:45:34answer on how much you should want. But
2:45:36too many people don't bother chasing
2:45:38independence because it seems out of
2:45:40reach when in fact they could easily at
2:45:43any income level be improving their
2:45:45independent spectrum and in turn improve
2:45:48their lives. The trick is viewing every
2:45:50bit of savings as having actively
2:45:52purchased something even if it doesn't
2:45:54come with a receipt. You have purchased
2:45:56the ability to do what you want when you
2:45:58want with whom you want for as long as
2:46:01you want and it is priceless. Hush
2:46:04money. I think bragging is the inverse
2:46:06of how satisfied you are with life. It's
2:46:08one of the most reliable psychological
2:46:10formulas around. In the movie Broadcast
2:46:13News, Tom Grunnik asks, "What do you do
2:46:15when your real life exceeds your
2:46:17dreams?" Aaron Altman replies, "Keep it
2:46:20to yourself." The more you want people's
2:46:22attention, and the more you try to focus
2:46:24that attention on how smart, rich, and
2:46:26successful you are, the higher the odds
2:46:29that you're trying to fill some sort of
2:46:31emotional hole. When I see people
2:46:33clearly bragging about how much money
2:46:34they make or spend, I try not to judge.
2:46:37I'd rather ask, "Who are you trying to
2:46:39impress? What do they actually think of
2:46:42your boasts? And is your bragging
2:46:44unintentionally doing more harm than
2:46:46good?" Chapter 12. Social death. When
2:46:49how you spend your money influences what
2:46:51people think of you in unwanted ways.
2:46:53Frank Lucas was a drug dealer, and a
2:46:56very good one at that. By the 1970s, his
2:46:59heroin empire in New York City was
2:47:01bringing in $1 million per day, day
2:47:04after day, year after year. Part of the
2:47:07reason he got away with his crimes for
2:47:08so long, was that he kept a low profile,
2:47:11living a mostly unremarkable material
2:47:14life, which helped him avoid unwanted
2:47:16attention. He wasn't on the police's
2:47:18radar. But hubris caught up, as it has a
2:47:21way of doing. Other low-level drug
2:47:23dealers lived flashy lives. And
2:47:25eventually, Lucas had had enough. He
2:47:27wrote in his memoir, "I could not have
2:47:29people who made less money than me
2:47:31walking around thinking they ruled the
2:47:33world. I screamed it out to all who
2:47:35would listen. Y'all think you going to
2:47:37outshine me?" At the March 8th, 1971
2:47:41fight of the century between Muhammad
2:47:43Ali and Joe Frasier at Madison Square
2:47:45Garden, Lucas wore a floorlength
2:47:48$100,000 chinchilla coat with matching
2:47:51hat, clothes worth roughly $1 million in
2:47:54today's dollars. He sat in the best seat
2:47:57in front of Frank Sinatra and Vice
2:47:59President Spiro Agnu. For the first time
2:48:01ever, I actually felt like showing off,
2:48:04he wrote. It worked. Strangers lined up
2:48:06to take pictures with him and his fancy
2:48:08coat. The press went wild. "Everybody
2:48:11that night paid attention to Frank
2:48:13Lucas, including the New York Police
2:48:15Department." "I came to the fight an
2:48:18unknown man," Lucas wrote. "I left that
2:48:20fight, a marked man." Stunned at how an
2:48:23unknown man could be living like a king,
2:48:26law enforcement began investigating
2:48:28Lucas, and that was that. He was caught,
2:48:30arrested, and sentenced to 70 years in
2:48:33prison. Lucas was a criminal. But let me
2:48:36introduce you to a concept that applies
2:48:38to all of us ordinary people. I call it
2:48:41social debt. Social debt is what happens
2:48:43when how you spend your money influences
2:48:46what people think of you in unwanted
2:48:48ways. It's often a hidden form of debt
2:48:51which makes it especially dangerous.
2:48:53Sometimes it's people being envious of
2:48:55you. Sometimes it's you suddenly feeling
2:48:57superior to people whose company you
2:48:59used to enjoy. It can even be your own
2:49:01higher expectations that come from
2:49:03inflating your lifestyle. There are some
2:49:05purchases for which every dollar you
2:49:07spend changes how the rest of the world
2:49:10thinks of you and what you think of
2:49:12yourself in ways you might come to
2:49:14regret. An important topic in
2:49:15pharmarmacology is called the aren't
2:49:18schulz rule which states that for every
2:49:21substance small doses stimulate moderate
2:49:24doses inhibit large doses kill. A little
2:49:28bit of sun exposure is healthy, even
2:49:30necessary. A moderate amount can cause
2:49:32sunburn. Way too much can cause lethal
2:49:35cancer. Same for alcohol, tobacco,
2:49:38caffeine, and even mental anxiety.
2:49:41There's a tipping point when helpful
2:49:43stimulation turns to danger than
2:49:45disaster. And it's often very difficult
2:49:48to know the tipping point until it's too
2:49:50late. Money works in the same way. It
2:49:53sounds crazy, but I think there is an
2:49:54ideal net worth for everyone. When money
2:49:57not only brings pleasure but becomes a
2:50:00social liability, your ideal net worth
2:50:02threshold might be different from other
2:50:04people's. But for most people, the level
2:50:07is lower than you probably imagine
2:50:09because the more money you make and
2:50:11spend, the more social debt seeps into
2:50:14your life. A few years ago, I read a
2:50:16story about lottery winners who lost
2:50:18everything. A common denominator of
2:50:20these stories is that lottery winners
2:50:22often become overwhelmed, even bankrupt,
2:50:25by social debt. The minute people learn
2:50:27how much money they have, friends,
2:50:29family, and strangers feel entitled to
2:50:32ask, beg, and steal in a way that leaves
2:50:35the winners not only broke, but socially
2:50:38exploited. Take the tale of one of the
2:50:40winners. After winning $3.9 million in
2:50:43October 1985 and $1.4 million 6 months
2:50:47later, Miss Adams found that she no
2:50:49longer had the privilege of privacy. She
2:50:52said, "I was known and I couldn't go
2:50:54anywhere without being recognized." A
2:50:56problem that's easy to overlook with
2:50:58money is that assets are simple to
2:51:00measure, but liabilities can be hidden.
2:51:03Measuring how much you won in the
2:51:04lottery is simple. $3.9 million down to
2:51:08the penny. But how do you measure losing
2:51:10your privacy or the nagging doubt that
2:51:12some friends only like you for your
2:51:14money? That's way harder. Tiger Woods is
2:51:17a billionaire. That asset is easy to
2:51:19measure. But he once admitted that he
2:51:21loved scuba diving because it was the
2:51:24only place in the world where no one
2:51:25recognized him and no one asked anything
2:51:28of him. How do you measure that
2:51:30depressing social liability? It's not on
2:51:32any spreadsheet, but it's a very real
2:51:35debt in his life. Henry David Thorough
2:51:37once explained this concept well. How
2:51:40much an item costs is so much more than
2:51:42what you see on the price tag. He wrote,
2:51:44"The cost of a thing is the amount of
2:51:47what I will call life which is required
2:51:49to be exchanged for it immediately or in
2:51:52the long run." I once spoke to a group
2:51:54of NBA rookies. We discussed how to
2:51:56avoid the common tragedy of athletes who
2:51:59make a fortune in their 20s and are
2:52:01bankrupt by age 30. One player mentioned
2:52:04something I found so insightful. He
2:52:06said, "Most people think athletes go
2:52:08broke because they frivolously blow
2:52:10their money on jewelry and cars.
2:52:12Sometimes that's true, but the most
2:52:14common cause of athletes going broke is
2:52:16social debt. He said, "When you grow up
2:52:18in poverty and then you're making 10
2:52:21million when you're 22, that's not your
2:52:23money. That's mom's money, dad's money,
2:52:26grandma's money, cousins money, friends
2:52:28money." You can't just tell them, "I got
2:52:31mine. Good luck to you all." Athletes
2:52:33buying themselves a mansion wasn't the
2:52:35problem. It was buying a modest house
2:52:37for their fifth cousin, whom they'd
2:52:39never met, but felt obligated to help.
2:52:41that pushed athletes to bankruptcy.
2:52:43These might seem like rich people
2:52:45problems, but social debt creeps up
2:52:47everywhere in its own way for normal
2:52:50people. The more your identity becomes
2:52:52attached to your physical possessions,
2:52:54the more other people's thoughts about
2:52:56you influence your spending decisions,
2:52:59and the more eager you are to constantly
2:53:01wow those people with something newer,
2:53:04bigger, better, and more expensive. So,
2:53:06the cost of the new car that you think
2:53:08will impress people is not, say,
2:53:11$50,000. It's $50,000 plus the $60,000
2:53:15car you'll feel pressured to replace it
2:53:17with in 2 years just to keep the
2:53:19spotlight on you. There's an ironic
2:53:21saying, it's very expensive to be rich,
2:53:24which is as true as it is absurd. The
2:53:26expense comes when people desperately
2:53:28try to keep up with spiraling social
2:53:30debt that's attached to living a rich
2:53:32lifestyle. Another way social debt
2:53:34creeps into your life is your own
2:53:35expectations. I used to ride the Amtrak
2:53:37train from DC to New York City
2:53:39regularly. The train has a quiet car, a
2:53:42section where everyone is supposed to be
2:53:43quiet so you can sleep or get some work
2:53:45done. People use the quiet car because
2:53:47they want serenity. But it was
2:53:49astounding how often it backfired. When
2:53:51you expect quiet, you become ultra
2:53:54sensitive to the slightest noise. If
2:53:56someone in the quiet car speaks in more
2:53:57than a whisper, the entire car plunges
2:54:00into a state of deep irritation. I'd bet
2:54:02that sitting in the peaceful, quiet car
2:54:04actually leaves people with higher blood
2:54:06pressure. The same thing happens when
2:54:08you buy nice stuff. Maybe you didn't
2:54:09mind when your old car was dirty or
2:54:11dinged, but now that you bought a nicer
2:54:13car, you can't stand it when it gets
2:54:15muddy, and you lose your mind when
2:54:17someone scratches it in the parking lot.
2:54:19That angst is a social debt, and some
2:54:21people who own nice things are nearly
2:54:23bankrupt with it. Maybe when you bought
2:54:25a new, bigger house, you thought you'd
2:54:26be happier. But then you realized that
2:54:28the reason you wanted a nicer house was
2:54:30to socially compete with other people
2:54:32who had nice houses. So once you got a
2:54:34nice house, you just started dreaming
2:54:36about even nicer homes. Once you accept
2:54:38that having the nicest home in your
2:54:40social group is your goal, it becomes
2:54:42not only an obsession, but a game that
2:54:45cannot be won. Since the group you
2:54:47compare yourself to shifts with each
2:54:49new, nicer house that you buy, the more
2:54:51money people have, and the more they
2:54:53spend, the more social debt they tend to
2:54:55be burdened with. Past a certain level
2:54:57of basic spending, every notch of higher
2:54:59lifestyle comes with social obligations,
2:55:02judgments by others, and shifts in your
2:55:04own expectations that are very real
2:55:06liabilities, but easy to ignore. The
2:55:09point is not to say you should avoid
2:55:10nice cars and nice homes. I like both.
2:55:13It's a realization that once money goes
2:55:15from being a tool you can use to make
2:55:17yourself happy to a symbol of what other
2:55:19people measure you by, you've lost the
2:55:21game. Author Kent Nurburn once wrote to
2:55:23his sons, "I want you to know that
2:55:25possessions are chameleons that change
2:55:28from fantasies into responsibilities
2:55:30once you hold them in your hands and
2:55:32that they take your eye from the heavens
2:55:34and rivet it squarely on the earth." I
2:55:36once did some consulting for a family
2:55:38that was worth $8 billion. If you
2:55:40Googled their name, nothing came up. No
2:55:42Forbes list, no Gayla photos, no
2:55:44profiles, no Wikipedia pages, nothing.
2:55:47That was intentional. They mastered what
2:55:50so many other people, the rich, the
2:55:52middle class, the aspiring rich, and
2:55:54everyone in between failed to recognize.
2:55:56They lived the most amazing life you
2:55:58could imagine. And they had virtually no
2:56:00social debt. They had total freedom,
2:56:02privacy, and independence. They chose
2:56:05their friends carefully and gave money
2:56:07away anonymously. Their lack of social
2:56:10debt may have been their most valuable
2:56:11asset. It reminded me of what Naval
2:56:14Ravikant once said, "The best position
2:56:16to be in is rich and anonymous." It's a
2:56:19wonderful sentiment, but still leaves us
2:56:21with the question, how do ordinary
2:56:23people like you and I avoid social debt?
2:56:25How do we actually become rich and
2:56:28anonymous so our spending decisions
2:56:30don't influence our social lives in
2:56:32disastrous ways? My strategy is called
2:56:34Quiet Compounding. That's the next
2:56:37chapter. Chapter 13, quiet compounding.
2:56:40The fastest way to get rich is to go
2:56:43slow. Nature is not in a hurry, yet
2:56:46everything is accomplished, said Chinese
2:56:49philosopher Lasu. Giant sequoas,
2:56:52advanced organisms, towering mountains.
2:56:54Nature builds the most jaw-dropping
2:56:57features of the universe, and it does so
2:56:59silently where growth is almost never
2:57:01visible right now, but staggering over
2:57:04long periods of time. It's quiet,
2:57:07compounding, and it's a wonder to see. I
2:57:10love the idea of quietly compounding
2:57:12your money. It's perhaps my most
2:57:14cherished and important financial belief
2:57:17because it's so simple but encapsulates
2:57:19so many powerful financial traits we've
2:57:22already discussed in this book. And just
2:57:24like in nature, it's where you'll find
2:57:26the most impressive results. Every few
2:57:29years, there's a story of a country
2:57:30bumpkin who has no education and a
2:57:33low-wage job, but manages to save and
2:57:36compound tens of millions of dollars.
2:57:38It's the same story over and over. They
2:57:41just quietly saved and invested for
2:57:43decades. They never bragged, never
2:57:46flaunted, never compared themselves to
2:57:48others or worried whether their
2:57:49investments trailed their benchmark last
2:57:52year. Their entire financial universe,
2:57:54their thoughts, their goals, their
2:57:56beliefs was contained to the walls of
2:57:59their home, which allowed them to play
2:58:01their own game and be guided by nothing
2:58:03other than their own desires. That was
2:58:05their superpower. It was actually their
2:58:07only financial skill, but it's the most
2:58:10powerful one of all. They were masters
2:58:12at quiet compounding. Regardless of the
2:58:15lifestyle you live or how much money you
2:58:17spend, it is such a powerful idea to
2:58:20grasp. Imagine if after your first date
2:58:22with a partner, you had to make every
2:58:24phone call, every text, every
2:58:26conversation with that person public on
2:58:29social media or even just with a small
2:58:31group of friends and family. You know
2:58:33what would happen? People would tell
2:58:34you, "You're doing this wrong. You're
2:58:36doing that too much. You should say more
2:58:38of this and less of that. On and on.
2:58:41You'd be so embarrassed, nervous, and
2:58:43influenced by other people's goals and
2:58:45different personalities that you
2:58:47wouldn't be you. No relationships would
2:58:49work. Money is similar. People become so
2:58:52nervous about what other people think of
2:58:54their lifestyle and investing decisions
2:58:56that they end up doing two things.
2:58:58Performing for others and copying a
2:59:01strategy that might work for someone
2:59:02else but isn't right for them. Let me
2:59:05reiterate the two ways to use money. One
2:59:08is as a tool to live a better life. The
2:59:10other is as a yard stick of success to
2:59:13measure yourself against other people.
2:59:15The first is quiet and personal. The
2:59:17second is loud and performative. It's so
2:59:20obvious which leads to a happier life.
2:59:22Quiet compounding means a few things to
2:59:25me. One, an emphasis on internal versus
2:59:28external benchmarks. I found it helpful
2:59:30to always ask, "Would I be happy with
2:59:33this result if no one other than me and
2:59:35my family could see it?" And I didn't
2:59:37compare the result to the appearance of
2:59:39other people's success. Remember that
2:59:41it's impossible to win the social
2:59:43comparison game because there's always
2:59:45someone getting richer faster than you.
2:59:48Once you stop playing the game, your
2:59:50attention instantly shifts internally to
2:59:53what makes you and your family happy and
2:59:55fulfilled. It makes it so much easier to
2:59:58enjoy your money regardless of how you
3:00:00choose to spend it. Two, an acceptance
3:00:03of how different people are and a
3:00:05realization that what works for me might
3:00:07not work for you and vice versa.
3:00:09Christopher Moley said, "There is only
3:00:11one success, to be able to spend your
3:00:14life in your own way." So many financial
3:00:17mistakes come from trying to copy people
3:00:19who are different from you. So be
3:00:21careful who you seek advice from. Be
3:00:23careful who you admire and even be
3:00:25careful who you socialize with. When you
3:00:27do things quietly, you're less
3:00:29susceptible to people with different
3:00:31goals and personalities telling you
3:00:33you're doing it wrong. My friend Brent
3:00:35Behore says, "I am 100% happy to watch
3:00:38you get really rich doing something that
3:00:41I have no interest in doing." You can
3:00:43apply that philosophy to how people
3:00:45spend and save their money, too. We're
3:00:47all different. Life isn't zero sum. Live
3:00:50and let live. Three, a focus on personal
3:00:53independence over social dunking. Once
3:00:56you do things quietly, you become
3:00:58selfish in the best way. Using money to
3:01:00benefit your life more than you try to
3:01:03influence other people's perception of
3:01:05your life. I'd rather wake up and be
3:01:07able to do anything I want with whom I
3:01:09want for as long as I want than try to
3:01:12impress you with nice stuff. Four, a
3:01:14realization that quick wealth is fragile
3:01:17wealth. Money that was earned quickly
3:01:19tends to be loud, while quiet
3:01:21compounding is a long-term endeavor.
3:01:24That's important because how quickly
3:01:25your money was made can greatly
3:01:28influence how you manage it. I love the
3:01:30idea that the speed in which you made
3:01:32your wealth is the half-life for how
3:01:34fast you can lose it. Double your money
3:01:36in a year, don't be surprised when you
3:01:38lose half of it just as quickly. It's
3:01:40the same in business. Blitz scaling,
3:01:43blitz failing. Two things happen with
3:01:45quick, fragile wealth. One is that money
3:01:48that comes easily tends to be spent
3:01:50easily. When money comes quickly, the
3:01:52emotional cost of blowing it on
3:01:54something frivolous is low. You're only
3:01:56careful with something when it's dear to
3:01:58you. Spending quick money that you
3:02:00didn't invest much time or energy into
3:02:02earning can feel like the equivalent of
3:02:04a one night stand, impulsive and prone
3:02:07to regret. That's why old money wants a
3:02:10tax shelter, and new money wants a
3:02:12Lambo. The other is that the quicker the
3:02:14wealth was made, the higher the odds it
3:02:16came from luck that will revert just as
3:02:19fast. If you experience a quick windfall
3:02:21and ratchet up your lifestyle
3:02:23accordingly, the pain you'll feel when
3:02:25the windfall can't be repeated can be
3:02:27existential. When you accept these
3:02:29realities, the beauty of quiet
3:02:32compounding, slow, inconspicuous,
3:02:35non-performative, on your own terms,
3:02:38becomes so clear. Five, an appreciation
3:02:41that the fastest way to get rich is to
3:02:44go slow. What happens when quiet
3:02:46compounding becomes your goal? The first
3:02:48thing is that you feel less pressure to
3:02:50perform for others. And when you stop
3:02:52performing for others, your attention
3:02:54naturally peers further out into the
3:02:56future as you ask how to create a better
3:02:59life instead of seeking more attention.
3:03:01That allows you to foster one of the
3:03:03most powerful financial skills,
3:03:05endurance. A great irony in finance is
3:03:08that the fastest way to get rich is
3:03:11often to go slow. You're never in a
3:03:13hurry, never impatient, rarely worried
3:03:16or influenced by others doing things
3:03:17differently. You know that longevity and
3:03:20the ability to keep something going for
3:03:22the longest period of time is the true
3:03:24magic of finance. Like so many things in
3:03:27life, speed gets all the attention, but
3:03:30slow has all the power. A lot of people
3:03:33want to be long-term investors but
3:03:35struggle to actually do it. One reason
3:03:37is they get caught up in comparison.
3:03:39Comparison to peers, benchmarks, and
3:03:42wondering what other people will think
3:03:44of them if they find out they lost money
3:03:46in the last 6 months. In investing,
3:03:48long-term money success is about being
3:03:50able to absorb manageable volatility.
3:03:53And if you can't do that, you're pushed
3:03:55into the much harder trick of attempting
3:03:57to avoid short-term volatility. You're
3:04:00only durable when you care more about
3:04:02surviving volatility than looking dumb
3:04:05for getting hit by it in the first
3:04:07place. Instead of trying to look smarter
3:04:09than everyone else, you make a quiet
3:04:11long-term bet that things will slowly
3:04:13get better over time. You're not in a
3:04:16hurry yet everything is accomplished.
3:04:18Now for a discussion about what happens
3:04:20when you look in the mirror and all you
3:04:22see is money. Chapter 14. Identity. When
3:04:26money controls who you are, money is
3:04:29like gasoline during a road trip, says
3:04:32author Tim O'Reilly. You don't want to
3:04:34run out of gas on your trip, but you're
3:04:36not doing a tour of gas station. One of
3:04:39the most common ways that money stops
3:04:41being a tool and becomes a master is
3:04:44when your financial goals and beliefs
3:04:46become part of your identity. Everyone's
3:04:49different, but my identity is dad,
3:04:52husband, son, friend. That's what's
3:04:54truly important to me and what I base my
3:04:57life around. If I can use money to
3:04:59enhance those things, great. But never
3:05:02do I want money to be one of those
3:05:04things. Harvey Firestone, then one of
3:05:07the richest men in America, wrote in his
3:05:091926 biography about how he often missed
3:05:13the simple life he lived before he
3:05:15became wealthy. I paid $25 a month for a
3:05:19little house. Our grocery bill hardly
3:05:21averaged $5 a week. Sometimes it seems
3:05:24that it might be better to go back to
3:05:26those simpler days that one might get
3:05:28more out of a less complex life but it
3:05:31cannot be done. One changes with
3:05:33prosperity. We all think we should like
3:05:35to lead the simple life and then we find
3:05:38that we have picked up a thousand little
3:05:39habits which we are quite unconscious of
3:05:42because they are a part of our very
3:05:44being. There is no going back except as
3:05:47a broken man. He wanted to go back to
3:05:49his simple life, but there was no going
3:05:52back except as a broken man because
3:05:54being a rich man became part of his very
3:05:58being. What an admission. And what an
3:06:00example of what happens when your
3:06:02relationship with money becomes an
3:06:04ingrained part of your identity.
3:06:06Investor Paul Graham has a saying, "Keep
3:06:08your identity small. The more labels you
3:06:11have for yourself, the dumber they make
3:06:14you." He writes, "If people can't think
3:06:16clearly about anything that has become
3:06:18part of their identity, then all other
3:06:20things being equal, the best plan is to
3:06:23let as few things into your identity as
3:06:26possible." Anytime in life you say, "I
3:06:28am a regardless of what it is." You
3:06:32formed an identity. And identities are
3:06:34so important that people will often go
3:06:36to absurd lengths to defend them. Let me
3:06:39share the most common financial identity
3:06:42that can harm people in ways they never
3:06:44imagined. I am a saver. It seems like
3:06:47such a good trait and it sounds so
3:06:49innocent and of course both are true,
3:06:51but a lot of financial planners will
3:06:53tell you that one of their biggest
3:06:55challenges is getting clients to spend
3:06:58money in retirement. Even an appropriate
3:07:00conservative amount of money. Frugality
3:07:03and saving become such a big part of
3:07:05some people's identity that they can't
3:07:07ever switch gears. I call it frugality
3:07:10inertia. It's what happens when a
3:07:12lifetime of good saving habits can't be
3:07:15transitioned to a reasonable spending
3:07:17phase. I think what many people really
3:07:20want from money is the ability to stop
3:07:22thinking about money, to save enough
3:07:24money that they can stop thinking about
3:07:26it and focus on other stuff. But that
3:07:29ultimate goal can break down when your
3:07:31relationship with saving money becomes
3:07:33an ingrained part of your personality.
3:07:36You struggle to break away from focusing
3:07:38on money because the focus itself is a
3:07:40big part of your identity. You associate
3:07:43life success with your bank account
3:07:44going up up up and you're never able to
3:07:47actually spend it even in a reasonable
3:07:50way. If you develop an early system of
3:07:52saving and living well below your means,
3:07:54congratulations. That's great. But if
3:07:56you can never break away from that
3:07:58system and insist on a heavy saving
3:08:01regimen well into your retirement years,
3:08:03what is that? Is it still winning? Those
3:08:06whose ultimate goal is to stop thinking
3:08:08about money are stuck refusing to
3:08:10recognize that you've met your goal can
3:08:12be as bad as never meeting the goal to
3:08:15begin with. Charles Darwin once noticed
3:08:17that some animals have traits that
3:08:18hinder their survival. peacock feathers
3:08:21that attract predators or huge antlers
3:08:24that hinder maneuverability when being
3:08:26chased. Why didn't evolution find a fix?
3:08:29It was simple, Darwin reasoned. Some
3:08:31traits are beneficial for reproductive
3:08:33success, even if they pose a long-term
3:08:36risk. There are so many examples of this
3:08:38in nature with evidence that a
3:08:40particular gene related to reproductive
3:08:42success in humans is also linked to
3:08:44Alzheimer's disease. Nature is very good
3:08:47at promoting one behavior, even if it
3:08:49comes with some harm down the road. It's
3:08:52so similar with money. Once you get
3:08:54ingrained with one smart behavior, a
3:08:56good saving regimen or a way of spending
3:08:59money that you enjoy, or even an
3:09:01investing strategy, you run the risk of
3:09:04becoming blind to when it might be
3:09:06reasonable to do something different,
3:09:08and you've set yourself up for eventual
3:09:10trouble. Anytime you formed a money
3:09:12identity, I am a saver. I am a rich
3:09:15person. I am a poor person. I always buy
3:09:19this. I always buy that. You formed a
3:09:22roadblock to eventually switching gears,
3:09:25changing your mind, or trying something
3:09:27new. It's common in investing where
3:09:30people take on labels like value
3:09:32investor, trader, and tech investor. The
3:09:35labels seem harmless, but once you label
3:09:38yourself, you formed an identity that
3:09:40can prevent you from seeing the big
3:09:42picture, finding other opportunities, or
3:09:45changing your mind when you need to. At
3:09:47some level, these labels can turn
3:09:49cultlike. The FIR movement, financial
3:09:52independence, retire early, in
3:09:55particular, started with a worthy goal,
3:09:57financial independence. But that goal
3:10:00can become so ingrained in its followers
3:10:02identities that they quit jobs they may
3:10:05have enjoyed harming their social lives
3:10:07and leading to boredom. Who is in
3:10:09control at that point? You or your
3:10:11devotion to a financial philosophy? I
3:10:14once met a guy whose parents are
3:10:16multi-billionaires and have been for
3:10:18decades. This guy now in his 40s grew up
3:10:21in a life almost none of us could
3:10:23imagine. multiple mansions, private
3:10:25jets, chauffeers, butlers, everything
3:10:28money could buy, as much as he wanted,
3:10:31whenever he wanted it. And I was
3:10:33astounded to quickly learn when I met
3:10:35him that he was so regular, so down to
3:10:38earth, so humble, so polite, so
3:10:40empathetic, genuine, and dare I say,
3:10:44relatable. Whatever the opposite of
3:10:46spoiled is, he seemed to be it, which is
3:10:48astounding given the life he was raised
3:10:50in. I asked how his parents managed to
3:10:53pull that trick off. How do you raise a
3:10:55kid to be so normal when their
3:10:57surroundings are so extreme? "It's not
3:10:59complicated," he told me. "Money has
3:11:02never been part of our identity." "What
3:11:04was?" I asked. "Loving each other, being
3:11:07good employees, being good citizens.
3:11:10That's what we talked about, and that's
3:11:12what we judged others by." He said
3:11:14despite knowing from a young age that
3:11:16his family had more money and toys than
3:11:18anyone else he knew, his parents never
3:11:20so much as implied that this made them
3:11:23superior to anyone else. Money was a
3:11:25tool to leverage who they were, but it
3:11:28never controlled or defined who they
3:11:30were. When kids are spoiled and bratty,
3:11:33it's usually not just because their
3:11:34parents buy them a lot of stuff. It's
3:11:37because the parents teach the kids that
3:11:39having more than other people makes you
3:11:41better than them. And the parents of
3:11:43spoiled kids often come to believe that
3:11:46because making money, having money, and
3:11:48spending money is an integral part of
3:11:50who they are. They look in the mirror
3:11:52and that's what they see. Money, money,
3:11:55money. I am a person with money. That's
3:11:58their identity. Even Charlie Munger, one
3:12:01of the most astute and rational
3:12:02financial minds of the last century,
3:12:04seemed to fall for being trapped by a
3:12:06financial identity. Shortly before he
3:12:08died in 2023, the legendary
3:12:10multi-billionaire Munger told an
3:12:12interviewer that I could have done a lot
3:12:14better if I had been a little smarter, a
3:12:16little quicker. "What are you talking
3:12:17about? You've had success in everything
3:12:19you've done in life," said the
3:12:21interviewer. CNBC's Becky Quick. "Well,
3:12:23I might have had multiple trillions
3:12:25instead of multiple billions," said
3:12:27Munger. "Do you sit around thinking
3:12:29about this? What would you have done
3:12:30differently?" asks Quick. "Yes, I do
3:12:33think about it. I think about what I
3:12:34nearly missed by being just not quite
3:12:37smart enough or hardworking enough, says
3:12:39Munger. You can interpret those comments
3:12:41many ways. He was a professional money
3:12:43manager, so having money tied to his
3:12:45identity was probably unavoidable. But
3:12:47think about an ordinary person with the
3:12:49same mentality. You've achieved
3:12:50financial success. You can retire. You
3:12:53can do what you want. But all you can
3:12:54think about is how you could have made
3:12:56more money, saved more money, invested
3:12:58more money. There's so many of these
3:13:00people. Money is their identity. And
3:13:02then you have to ask, is the money
3:13:04serving you or are you serving it? Is it
3:13:07your tool or your master? Does it serve
3:13:09you or do you serve it? A couple things
3:13:12to keep in mind to prevent your money
3:13:13from infiltrating your identity in a
3:13:15harmful way. Value the ability to change
3:13:18your mind, change your lifestyle, alter
3:13:20your spending, and try something new.
3:13:22The shest sign that something has become
3:13:24a dangerous part of your identity and
3:13:26controls you rather than the other way
3:13:28around is the inability to change your
3:13:30mind when you or the facts change. Visa
3:13:33founder Dehawk had a great saying, "A
3:13:35belief is not dangerous until it turns
3:13:37absolute. Religion and politics are
3:13:39contentious because almost by
3:13:41definition, your beliefs are part of
3:13:43your identity. You're not just dealing
3:13:44with ideas and philosophies, but tribes
3:13:47and belonging." Another dehawk quote
3:13:49also applies here. We are built with an
3:13:51almost infinite capacity to believe
3:13:53things because the beliefs are
3:13:55advantageous for us to hold rather than
3:13:57because they are even remotely related
3:13:59to the truth. Things get dangerous when
3:14:01people let their financial beliefs fall
3:14:02into the same category. I love the
3:14:05concept of mental liquidity. It's the
3:14:07ability to quickly abandon previous
3:14:08beliefs and strategies when the world
3:14:10changes, you change, or when you come
3:14:13across new information. So much of what
3:14:15people call conviction is actually a
3:14:17willful disregard for facts that might
3:14:19change their minds. It's dangerous
3:14:21because conviction feels like a good
3:14:23attribute, while its opposite, being
3:14:25wishy-washy, makes you feel and sound
3:14:27like you don't know what's going on. The
3:14:29strategy of having strong beliefs,
3:14:31weakly held, is often helpful. At my
3:14:33current age, I strongly believe in
3:14:35saving for the future, but I'll be fine
3:14:37letting go of that strategy as I age,
3:14:39work less, and want to enjoy what I've
3:14:41saved. Same for what I like to spend
3:14:43money on today. and even the
3:14:44socioeconomic class I think I belong to.
3:14:47The goal is to be able to live the life
3:14:48you want to live and have money serve
3:14:51you. You want to get there when your
3:14:52financial beliefs aren't tied to your
3:14:54identity. Wanting more money than you
3:14:56need to be independent and happy is an
3:14:58accounting hobby. Money should always be
3:15:00a tool to leverage who you are, not a
3:15:03goal in itself. Recognize what true
3:15:05independent thinking looks like. The
3:15:07best definition of independent thinking
3:15:09is when your beliefs on one topic can't
3:15:11be predicted from your beliefs on
3:15:13another topic. If you tell me what
3:15:14political party you belong to and I can
3:15:16instantly and accurately guess your
3:15:18views on immigration, abortion, guns,
3:15:21and taxes, are you really thinking
3:15:22independently or just going along with
3:15:24your tribe? It's the same with money,
3:15:26particularly for those with an above
3:15:28average income. If you tell me your
3:15:30salary and I can accurately guess how
3:15:32much you spend on cars, homes, clothes,
3:15:34and vacations, are you using money as a
3:15:36tool to leverage your unique
3:15:38personality, or are you just going along
3:15:40with what society says you should want
3:15:42to spend your money on? The people I
3:15:43know who've used money best have
3:15:45inconsistent spending habits. They spend
3:15:47a lot of money on this and very little
3:15:49on that. They value this and couldn't
3:15:52care less about that. They're
3:15:53independent thinkers, forcing their
3:15:55money to work for them, not the other
3:15:57way around. It's like what poet Ruddard
3:15:59Kipling writes, "If you can talk with
3:16:01crowds and keep your virtue or walk with
3:16:03kings nor lose the common touch, you're
3:16:06on your way to greatness." Next, a
3:16:08discussion about what you need to keep
3:16:10identity from controlling your money
3:16:11beliefs, trying new things. Chapter 15,
3:16:15try something new. I can't recommend
3:16:18this enough. within the confines of your
3:16:20budget. Experiment with as many types of
3:16:23spending as you can, cutting quickly and
3:16:25without mercy the things that aren't
3:16:28working for you. Francis Crick, who
3:16:30discovered the double helix structure of
3:16:32DNA, was once asked what it takes to win
3:16:34the Nobel Prize. He responded, "Oh, it's
3:16:37very simple. My secret had been, I know
3:16:40what to ignore." Lots of brilliant minds
3:16:43work like this. Albert Einstein once
3:16:45said that his main scientific talent was
3:16:47his ability to pour through thousands of
3:16:50papers and experiments, find the few
3:16:52that were important, and ignore
3:16:54everything else. It sounds trivial. Find
3:16:57what works and just do that. Ignore the
3:16:59rest. Thanks, Einstein. But there is so
3:17:02much wisdom in this strategy and it
3:17:04applies perfectly to finding the thing
3:17:06you should be willing to spend money on.
3:17:08First, let me tell you an idea I have
3:17:10about books. When finding a new book to
3:17:12read, my strategy is to have a wide
3:17:15funnel and a strong filter. I want to
3:17:17start reading as many books as possible,
3:17:19but finish few of them. Reading becomes
3:17:21a chore if you insist on finishing every
3:17:24book you begin because the majority of
3:17:26books are either adequately summarized
3:17:28in the introduction or just not for you.
3:17:31So, insisting on finishing every book
3:17:33you begin can be a slog. It can be
3:17:36boring, unfulfilling, and a waste of
3:17:38time. And once you see reading through
3:17:40that lens, your willingness to pick up
3:17:42another book waines. This, I've come to
3:17:45believe, is why some polls show that
3:17:47half of Americans don't read books at
3:17:49all, which of course is tragic. The man
3:17:52who doesn't read good books has no
3:17:54advantage over the man who can't read
3:17:56them, said Mark Twain. Every smart
3:17:58person I know is a voracious reader who
3:18:01also says, every smart person I know is
3:18:04a voracious reader. There are so few
3:18:06exceptions to this rule. There are more
3:18:08than four million books for sale in the
3:18:10English language. If you only pick up
3:18:12books that you know with certainty that
3:18:14you're going to enjoy, reading the same
3:18:16authors, the same genres, or the same
3:18:18topics, you are missing out on so many
3:18:21potentially life-changing books that you
3:18:23never realized you may have enjoyed. The
3:18:25conflict between these two, most books
3:18:28don't need to be read to the end, but
3:18:30some books can surprisingly change your
3:18:32life means you need two things to make
3:18:34the most of reading. lots of inputs and
3:18:37a strong filter. You should be willing
3:18:39to start reading any book that looks
3:18:41even mildly interesting. Anything, even
3:18:43the faintest tickle of interest should
3:18:45be enough to make the cut. Fiction,
3:18:47non-fiction, romance, military history.
3:18:50Try all of it. You want the widest
3:18:53funnel possible, exploring as many new
3:18:55ideas as you can. But then you need a
3:18:58strong filter. If the book isn't working
3:19:00for you, move on quickly. The filter
3:19:02should be ruthless, taking no prisoners
3:19:05and offering no mercy. Similar to
3:19:07dating, a book you're not into after 10
3:19:09minutes of attention has little chance
3:19:11of a happy ending. You should feel no
3:19:13shame, no guilt for failing to finish a
3:19:16book, even if you quit after the first
3:19:18few pages. There are so many good books
3:19:20out there. Go find a new one. Since I
3:19:22started using this strategy, I have
3:19:24found so many amazing books that I never
3:19:27knew I would have enjoyed. I never liked
3:19:29fiction until I forced myself to try 10
3:19:31different fiction books and found one
3:19:33that I loved. Same with history, which
3:19:35felt like the worst high school lecture
3:19:37until I finally found a few topics that
3:19:40I couldn't get enough of. Some books
3:19:41with bad reviews I love. Other books
3:19:44with stellar reviews I couldn't make it
3:19:45past the first page. What I learned,
3:19:48it's impossible to know what you're
3:19:49going to like until you try it. So, you
3:19:52have to try everything. But the only way
3:19:54to try a million new things is to have a
3:19:56strong filter that immediately rejects
3:19:59what isn't for you. And boy, that is
3:20:01also so true for spending money. There
3:20:04are so many different ways to spend
3:20:05money that are right for one person but
3:20:08crazy for another. Some people live for
3:20:10international travel. Others can't stand
3:20:13being away from home for any reason. For
3:20:15others, it's nice restaurants. Others
3:20:17don't get the hype and prefer cheap
3:20:19pizza. I know people who think spending
3:20:21money on first class plane tickets is a
3:20:23borderline scam. Others would not dare
3:20:26sit behind the fourth row. I have a
3:20:28friend who owns more than 500 pairs of
3:20:30sneakers which give him so much joy. I
3:20:33can't understand it for the life of me.
3:20:35Author Rammit Seafi has advice that I
3:20:38love. You should spend extravagantly on
3:20:40the things you love as long as you
3:20:42mercilessly cut the things you don't.
3:20:44his specific example, he loves clothes
3:20:46but isn't a car guy. So, he dresses like
3:20:49a rich man and drives like money's type.
3:20:52If you disagree with Ramit's choices,
3:20:54you've discovered the point. Everyone's
3:20:56different. Everyone has their thing, and
3:20:58the only way to find your thing is to
3:21:00try a million different things,
3:21:02rejecting what doesn't bring you joy
3:21:04until you find the odd thing that does.
3:21:07Spending money is an area of life where
3:21:09you want a wide funnel and a tight
3:21:11filter. I can't recommend this enough.
3:21:13Within the confines of your budget,
3:21:15experiment with as many types of
3:21:17spending as you can, cutting quickly and
3:21:20without mercy the things that aren't
3:21:22working for you. Try spending more than
3:21:24you currently do on food, travel,
3:21:27clothes, sporting events, experiences,
3:21:30whatever it is, but immediately stop if
3:21:32it's not making you happier, just as if
3:21:35you were reading a bad book. If you do
3:21:37this enough, you will find by process of
3:21:40elimination the potentially weird thing
3:21:42that's right for you to spend money on.
3:21:44And if you cut the other stuff that
3:21:46brings you no joy, you'll likely have
3:21:48enough money to actually spend on what
3:21:50makes you happy. The more different
3:21:52kinds of spending you test out, the
3:21:54closer you'll likely get to a system
3:21:56that works for you. The trials don't
3:21:58have to be big. A $10 new food here, a
3:22:01$50 treat there, slightly nicer shoes,
3:22:04etc. Albert Einstein and Francis Crick
3:22:06were not born knowing the fine details
3:22:08of their field. No one is. They had to
3:22:11sift through piles and piles of research
3:22:13quickly rejecting what they found to be
3:22:15trivial. It's a useful strategy for
3:22:17spending money. There is no guide on
3:22:19what will make you happy. You have to
3:22:21try a million different things and
3:22:23figure out what fits your personality,
3:22:25ruthlessly cutting the rest. Wide
3:22:28funnel, tight filter. A few points are
3:22:30critical to understand in this endeavor
3:22:32to find your thing. If you can't find
3:22:35your thing, there's a good chance that
3:22:37money has entrapped you, controlling
3:22:39your personality, and you are either
3:22:41addicted to saving money or ignorant of
3:22:43its potential, becoming unable to use it
3:22:46as a tool to provide joy in your life.
3:22:48If you met someone who said, "I don't
3:22:50like food, any of it. I've never had a
3:22:53meal that I thoroughly enjoyed." You
3:22:54would immediately spot a person who
3:22:56hasn't tried enough food. Money can be
3:22:59similar. There's a line in the movie
3:23:00Boiler Room that goes, "People who say
3:23:02money can't buy happiness don't have
3:23:05any." I would amend that to say, "People
3:23:07who say money doesn't buy happiness
3:23:09haven't yet found their thing. They
3:23:11should keep trying." Wider funnel. And
3:23:13that doesn't have to be about material
3:23:15possessions. Your thing can be giving
3:23:17money away or using it as a form of
3:23:20independence. Everyone has a thing if
3:23:22they just try hard enough to find it.
3:23:24It's common for people to default to
3:23:26whatever society tells them they should
3:23:28like, which is usually that whatever
3:23:30product is most expensive will bring
3:23:32them the most joy. Sometimes that's the
3:23:34case. Very often, it's not even close.
3:23:37Using price as a measure of how much joy
3:23:39you'll get out of a purchase can miss
3:23:41one of the most important lessons in
3:23:43business history. Premium prices are
3:23:45often found on branded product. And the
3:23:48purpose of a brand is not to signal
3:23:50quality. It's to signal consistency. An
3:23:53important feature of life in the United
3:23:55States before 1850 was that most people
3:23:58never traveled more than a few dozen
3:23:59miles from their birthplace. Life was
3:24:02local. You ate food grown in your town.
3:24:05Your house was made of local lumber.
3:24:07Your clothes were sewn by a local
3:24:08seamstress. You knew the person who made
3:24:10them. That person was often yourself.
3:24:13The industrial revolution and the Civil
3:24:15War changed that. Millions of people and
3:24:18soldiers were suddenly on the move, and
3:24:20railroads provided a way to transfer
3:24:22goods farther and faster than ever
3:24:24before. Robert Gordon writes in his
3:24:26book, The Rise and Fall of American
3:24:28Growth. As America steadily became more
3:24:31urban, and as real incomes rose, the
3:24:34share of food and clothing produced at
3:24:36home declined sharply. Many American men
3:24:38had their first experience of canned
3:24:40food as Union soldiers during the Civil
3:24:43War. This was one of the biggest
3:24:45breakthroughs in history. But it posed a
3:24:47problem. For the first time, consumers
3:24:49were disconnected from the person who
3:24:52made their food. For most of history, a
3:24:54bad product was either your own fault or
3:24:56could be taken up face to face with a
3:24:58local merchant. But canned food came
3:25:00from dozens of suppliers, none of whom
3:25:03customers knew or could identify.
3:25:05Without accountability, quality was
3:25:07horrendous. Harper's Weekly wrote in
3:25:101869, "The city people are in constant
3:25:13danger of buying unh wholesome canned
3:25:15meat. The dealers are unscrupulous and
3:25:18the public uneducated. No one knew who
3:25:20to trust. The William Underwood Company
3:25:23solved this problem. Underwood was one
3:25:25of dozens of canned meat suppliers.
3:25:27Recognizing that canned meat had a
3:25:29reputation for inconsistency. Underwood
3:25:31created a Red Devil logo consumers would
3:25:34recognize. It added a tagline branded
3:25:37with the devil but fit for gods. The
3:25:39logo recreated the familiarity that
3:25:42face-to-face commerce had achieved for
3:25:44most of history. No matter what part of
3:25:46the country they were in, consumers who
3:25:48saw the Devil logo knew they were
3:25:50getting a specific product made by a
3:25:53specific company under specific quality
3:25:55standards. They were happy to pay more
3:25:57for Underwood Meat because it reduced
3:25:59the gamble they would otherwise take
3:26:01with an unknown product. In 1867,
3:26:05Underwood took the logo to Washington DC
3:26:07and filed the first federal trademark.
3:26:10It was in many ways the nation's first
3:26:12brand. The point is that brand has
3:26:15always been about signaling consistency.
3:26:17McDonald's does not make the best
3:26:19hamburgers, but you know that a
3:26:21McDonald's hamburger in Detroit will
3:26:22taste the same as one in Denmark.
3:26:24There's value in that and often a
3:26:27premium price to pay for it. But it
3:26:29means that so much premium pricing in a
3:26:31modern economy can be detached from the
3:26:34quality of the product. You're not
3:26:35necessarily paying for quality. You're
3:26:37paying for consistency. When you realize
3:26:40that higher prices don't automatically
3:26:42signal higher quality, the need to
3:26:44experiment with more types of spending
3:26:46is even greater. I have found more joy
3:26:49out of a local hole-in-the-wall $7
3:26:51burrito than I have at some famous
3:26:53five-star restaurants and better
3:26:55t-shirts that cost $12 than others
3:26:58costing more than $100. When you strip
3:27:01away the allure of a brand and focus on
3:27:03whatever makes you the happiest, a new
3:27:05world of opportunities arises if you're
3:27:07willing to experiment. Learning what to
3:27:09quickly say no to can be more important
3:27:12than what to buy. Trying a million new
3:27:14things doesn't work unless you foster
3:27:17the skill of quickly rejecting what
3:27:19isn't for you. Like the bored reader who
3:27:21nods off after the first page. Part of
3:27:23the danger with modern spending is the
3:27:25assumption that you're supposed to like
3:27:27what's advertised, popular, and
3:27:29expensive. Maybe you will, but perhaps
3:27:32you're falling hook, line, and sinker
3:27:34for the psychological power of
3:27:35advertising. Knowing when to quickly
3:27:37reject the kind of spending that doesn't
3:27:39sit your personality is one of the most
3:27:42overlooked skills in money. It requires
3:27:44a fierce independence, free of being
3:27:47shamed into believing that what other
3:27:49people appear to enjoy is what's best
3:27:51for you. I have a theory. The more
3:27:53susceptible you are to advertising, the
3:27:56less satisfied you are with your own
3:27:58life. You're desperate for someone to
3:28:00tell you what you should like because
3:28:02you haven't yet figured it out for
3:28:03yourself. The solution is less about
3:28:05figuring out what to buy than it is
3:28:08rejecting what doesn't work for you. The
3:28:10opposite of falling for marketing.
3:28:12Evolution, the strongest force in the
3:28:14world, teaches by destroying what
3:28:16doesn't work. Selecting what does by
3:28:19process of elimination. Spending money
3:28:21can be the same. The wide funnel only
3:28:23works if you have a tight filter. Nasim
3:28:26Talb says, "You are rich if money you
3:28:29refuse tastes better than money you
3:28:31accept." As a corollary, you are
3:28:33spending wisely if the purchases you
3:28:35reject taste better than the ones you
3:28:38buy. The more you can say, "I tried
3:28:40buying this or that. It didn't work for
3:28:42me." The more you know you're on the
3:28:44right path. Trying new things creates
3:28:46variety in life, which is a value all of
3:28:48its own. There's a well-known idea that
3:28:50time feels like it speeds up as you age.
3:28:53Summer break feels like an eternity when
3:28:55you're 9 years old, but your 60s can
3:28:57skip by in a flash. One theory for why
3:29:00this happens is that the perception of
3:29:02time relies on the number of new and
3:29:04surprising memories formed in a period.
3:29:06The monotony of commuting to work on the
3:29:09same road for 20 years passes without
3:29:11leaving a mark. But every day is a
3:29:13memorable surprise to a child
3:29:15experiencing her first summer camp or
3:29:18learning how big the universe is for the
3:29:20first time. Monotony makes time speed
3:29:22up. Variety makes it slow. So it is with
3:29:25spending money. New experiences and new
3:29:27products that you've never tried before
3:29:29add the level of excitement that's hard
3:29:31to replicate any other way. Even when
3:29:34the new purchase didn't work for you,
3:29:36the memory and knowledge you gain by
3:29:38trying something new can be more
3:29:40thrilling than the monotony of the same
3:29:42experiences repeated day after day, year
3:29:45after year. Variety also protects you
3:29:47from the variability of life. Anthony
3:29:49Dlo, always wise, says, "If you learn to
3:29:53enjoy the scent of a thousand flowers,
3:29:55you will not cling to one and suffer
3:29:58when you cannot get it." Now, let me
3:30:00tell you about money and kids. What
3:30:02money can't buy. I once heard a story
3:30:05from a priest that I'll never forget.
3:30:07This priest spent decades delivering
3:30:09last rights in hospitals. It's the kind
3:30:11of experience that puts you in a unique
3:30:13position. You become familiar with how
3:30:15people say goodbye to loved ones. When a
3:30:17parent is dying, their children often go
3:30:19to the priest with a sense of despair.
3:30:22How do I say goodbye to a parent who was
3:30:24so instrumental in my life? How can I
3:30:26possibly tell them how much they meant
3:30:28to me? The priest's advice to the kids
3:30:30is to go into the room one by one and
3:30:33thank the dying parent for the one thing
3:30:35they're most grateful for. He said, "In
3:30:38families that I know have had a lot of
3:30:40problems, strained relations, the child
3:30:42will often thank the parent for
3:30:44something that cost money. Thank you for
3:30:46putting me through college. Thank you
3:30:48for putting food on the table. Thank you
3:30:50for buying me a car." He said, "In the
3:30:52best families, the ones I know have
3:30:54solid relationships, the kids say the
3:30:57same thing every time. Thank you for
3:30:59believing in me. What your kids want. I
3:31:02once heard a story that went like this.
3:31:04A dad played a game with his son every
3:31:06week. He offered the son a dime and a
3:31:08nickel and told him to pick one. The son
3:31:11picked the nickel every time. His
3:31:13brother told him he's crazy because the
3:31:15dime is worth more. No, because if I
3:31:18pick the dime, dad might stop playing
3:31:20this game, the son replied. If you're
3:31:22fortunate enough to have enough money to
3:31:24spend some on your kids, or your
3:31:26friends, your neighbor, your partner,
3:31:29whoever it might be, remember that the
3:31:31ones who love you almost certainly don't
3:31:33want your money as much as they want
3:31:35your love and attention. Chapter 16.
3:31:39Your money and your kids values, hard
3:31:42work, support, and the opposite of
3:31:44spoil. John D. Rockefeller, then the
3:31:47richest man in the world, once walked
3:31:49into the Waldorf Histori Hotel in New
3:31:52York City. He needed a room while his
3:31:54home was being remodeled. He asked the
3:31:56hotel agent for the cheapest room
3:31:58available. The agent said, "Mr.
3:32:00Rockefeller, surely we can get you
3:32:02something better. When your son stays
3:32:04here, he takes the presidential suite."
3:32:06Rockefeller responds, "Yes, but my son
3:32:09has something I've never had, a rich
3:32:12father. Managing money and kids is so
3:32:15difficult." And this is not a topic that
3:32:17only applies to the very wealthy. Nearly
3:32:1960% of American parents with kids aged
3:32:2218 to 34 have supported their kids
3:32:25financially in the last year. Middle
3:32:28class families grapple with weekly
3:32:29allowances. How much financial support
3:32:32you'll offer your kids when they go off
3:32:33to college and small inheritances. But
3:32:36like so much with money, this is not a
3:32:38financial problem that can be solved on
3:32:40a spreadsheet. It's all psychology,
3:32:43sociology, and emotions. Money and kids
3:32:46might actually be the most emotional of
3:32:49all financial problems. I have yet to
3:32:51meet a parent who is totally unemotional
3:32:53about their children's financial future.
3:32:56One of the most treacherous topics with
3:32:58kids and money is how you, as a parent,
3:33:00use your money to help them without
3:33:03spoiling them. Charlie Mer was once
3:33:05asked by one of his rich friends if
3:33:07leaving his kids a bunch of money would
3:33:09ruin their drive and ambition. Charlie
3:33:12said, "Of course it will." "But you
3:33:14still have to do it." "Why?" the friend
3:33:16asked. "Because if you don't give them
3:33:17the money, they'll hate you," Charlie
3:33:20said. Like a lot of Munger advice, I
3:33:22think this interaction is designed to be
3:33:24memorable. But by and large, he's right.
3:33:27Those are the two options for the rich
3:33:29when giving money to their children.
3:33:30ruin their ambition with inheritance or
3:33:33risk some form of strife by denying them
3:33:36an easy life. Warren Buffett once said
3:33:38that he often hears rich people talk
3:33:40about how dangerous a welfare society
3:33:42is, creating a generation of moochers
3:33:45reliant on food stamps and unemployment
3:33:47benefits, but these same people are
3:33:50leaving their kids a lifetime supply of
3:33:52food stamps and beyond. He said instead
3:33:55of having a welfare officer, they have a
3:33:58trust fund officer. And instead of
3:34:00having food stamps, they have stocks and
3:34:02bonds that pay dividends. Of course,
3:34:04there are exceptions, but most of the
3:34:06exceptions, rich kids who inherit money
3:34:09without it impacting their ambition, are
3:34:11because the kids are special, not
3:34:13because the parents necessarily made a
3:34:16smart decision. If 18-year-old Bill
3:34:18Gates inherited $1 billion, it wouldn't
3:34:21have stopped his ambition. Same with
3:34:23Steve Jobs and Elon Musk. Mark
3:34:25Zuckerberg was offered $1 billion cash
3:34:27for Facebook. when he was 22 and he
3:34:30didn't blink. Didn't even consider it.
3:34:32But those are the rare birds. Most
3:34:34people need to be driven by fear of not
3:34:36making it. My friend Chris Davis grew up
3:34:39in a wealthy household. His grandfather
3:34:41is legendary investor Shelby Davis, who
3:34:44turned $50,000 into almost a billion
3:34:47dollars and was told when he was young
3:34:49that he wouldn't see a penny because his
3:34:52family didn't want to rob him of the
3:34:54opportunity of making it on his own.
3:34:56Chris now jokes, "They could have robbed
3:34:58me just a little." It's never easy. One
3:35:01nuance here is that it's dangerous for
3:35:03you as a parent to live one lifestyle
3:35:05while you demand your kids live a
3:35:07different, more modest one. As a parent,
3:35:09you may have good intentions for wanting
3:35:11to make your kids live a comparatively
3:35:13humble existence to teach them virtue,
3:35:16hard work, and respect. But you risk
3:35:18teaching them something completely
3:35:19different, which is resentment. To take
3:35:22an extreme example, if you fly first
3:35:24class while making your kids fly in
3:35:26coach, the message you intend to send
3:35:29them is, "Work as hard as I have and you
3:35:31may get this one day." But the message
3:35:33they may hear is, "I am more worthy than
3:35:35you and enjoy watching you squirm." "I
3:35:38Vanderbilt once demanded that his son
3:35:40Billy quit smoking." "Your wish is
3:35:42sufficient," said Billy as he threw his
3:35:45cigar into the sea. Then Cornelius
3:35:47reached into his pocket, pulled out a
3:35:49cigar, lit it, took a puff, and blew the
3:35:52smoke into Billy's face. You can laugh,
3:35:55but similar power moves occur when
3:35:57parents attempt to teach their kids hard
3:35:59work and frugality without practicing
3:36:01those values themselves. A good friend
3:36:04tells the story that when he went on
3:36:05family ski trips as a kid, his
3:36:08grandfather would say, "If you want me
3:36:09to buy you a lift ticket, you first need
3:36:12to hike up the mountain once." The
3:36:14lesson the kids learned from the
3:36:15experience was not hard work and virtue.
3:36:18It was grandpa's an You can do
3:36:21as much damage trying to instill dignity
3:36:23in your children as you can by spoiling
3:36:25them rotten. Every family finds their
3:36:27own way. But everything I've seen tells
3:36:30me that when kids are young and living
3:36:31with their parents, the parents and the
3:36:33kids have to live the same material
3:36:35lifestyle. So you, the parent, need to
3:36:38pick that lifestyle carefully. You
3:36:40haven't earned what I have can be a less
3:36:42effective message than let me teach you
3:36:44the value of hard work by doing it
3:36:46together. Lead by example, not by
3:36:49humiliation. Another point here about
3:36:51picking your lifestyle carefully is the
3:36:53extent you as a parent set your
3:36:56children's lifestyle expectations when
3:36:58they're young. If you're fortunate to
3:36:59have some disposable income and say buy
3:37:02a luxury car when you have young kids,
3:37:05but then your kids go on to decide to
3:37:07become kindergarten teachers and can
3:37:09only afford modest cars. Do they feel
3:37:11ashamed like they failed relative to
3:37:13their parents? Will they in fact pick a
3:37:15career they don't enjoy but that pays
3:37:17well because they feel pressure to at
3:37:19least match the lifestyle they grew up
3:37:21with? Does my desire to give my kids a
3:37:23good material life today set them up for
3:37:26disappointment down the road if they
3:37:28can't afford the same lifestyle they
3:37:30grew up with? Generational growth, the
3:37:32feeling that you have matched or
3:37:33exceeded the life built by your parents
3:37:36is an important part of most people's
3:37:37well-being. Author Jennifer Bhenny
3:37:40Wallace writes, "The parent child bond
3:37:42is the most important relationship for a
3:37:44child's mental health. When a child
3:37:46cannot meet a parent's high
3:37:48expectations, that bond becomes
3:37:50jeopardized. Find your own way. I don't
3:37:52judge, but consider these points and
3:37:55pick your lifestyle carefully. Once your
3:37:57kids are grown, stable, and on their
3:37:59own, my philosophies of handling kids
3:38:01and money adapt. When they're older, I
3:38:03want to use my money to be a last resort
3:38:05safety net for my kids, but never as a
3:38:08fuel. So much of success in life is
3:38:10learning how to fail without failing so
3:38:13hard you can't recover. I want to
3:38:15prevent collapse, but I never want to
3:38:17use money as a crutch for my kids to
3:38:19avoid learning on their own the values
3:38:22of hard work, dignity, and managing
3:38:24failure. Here's how I put it in a letter
3:38:26to my kids. This may sound harsh, but I
3:38:29hope you're poor at some point. Not
3:38:31struggling and not unhappy, of course,
3:38:33but there's no way to learn the value of
3:38:35money without feeling the power of its
3:38:38scarcity. Your parents will work hard to
3:38:40support you and open the doors of
3:38:42opportunity. But we're not going to
3:38:44spoil you. We're not trying to be mean.
3:38:46Learning that you can't have everything
3:38:47you want is the only way to understand
3:38:50the difference between a need and a
3:38:52desire. It will teach you how to budget,
3:38:54how to save, and how to value what you
3:38:56already have. Learning to be frugal
3:38:59without it hurting is an essential life
3:39:01skill that will come in handy during
3:39:03life's inevitable ups and downs. Author
3:39:05Rob Henderson makes a related point that
3:39:07stuck with me. A noble goal as a parent
3:39:10should not be to raise successful
3:39:12children. Success should be an offshoot
3:39:13of raising children who feel confident
3:39:15enough to find success on their own. He
3:39:18writes, "I've come to believe that
3:39:20upward social mobility shouldn't be our
3:39:22priority as a society. Rather, upward
3:39:25mobility should be the side effect of
3:39:27far more important things. Family
3:39:29stability and emotional security for
3:39:32children." I tell my kids that true
3:39:34success is when the people who you want
3:39:36to love you do love you. And that love
3:39:38comes overwhelmingly from how you treat
3:39:41people rather than what you spend or a
3:39:43level of net worth. The most important
3:39:45financial advice I can give to my kids
3:39:48is that money alone won't provide the
3:39:50thing that they and almost everyone want
3:39:52most in life. No amount of money can
3:39:54compensate for a lack of character,
3:39:56honesty, and genuine empathy toward
3:39:59others. When I think of it like that,
3:40:01it's so obvious what I want to teach
3:40:02them. The character, psychology, and
3:40:05attitude needed to be confident workers,
3:40:07trusted friends, and good citizens,
3:40:10which in turn will help them thrive
3:40:11financially. A few other things about
3:40:13money and kids I've always found
3:40:15important. One, Warren Buffett says it's
3:40:17good to have people in your life who you
3:40:19don't want to disappoint. There may be
3:40:21no better example of this than having
3:40:23kids. It's common for parents to ask how
3:40:26their money will influence their
3:40:27children, but the reverse is often as
3:40:29meaningful. How do your children
3:40:31influence your financial decisions?
3:40:33Financial adviser Carl Richard says,
3:40:35"The point of a good financial adviser
3:40:37is to put a gap between you and stupid
3:40:41to guard against your worst impulse."
3:40:43Having kids in your life who you don't
3:40:44want to disappoint can do that in such a
3:40:47powerful way. Which leads to the next
3:40:49point. Two, your kids are paying
3:40:51attention always and all the time,
3:40:54whether you realize it or not. If the
3:40:56parents are spoiled and materialistic,
3:40:58the kids will be too. If the parents are
3:41:00hardworking with good values, watch what
3:41:03happens to the kids. There are several
3:41:04studies showing kids inherit most of
3:41:06their political beliefs from their
3:41:08parents. One Pew study showed that eight
3:41:10in 10 parents who lean Republican had
3:41:13teens who identify as Republican. For
3:41:15Democrats, it's nine and 10. What I
3:41:17think is remarkable about those numbers
3:41:19is that most parents don't sit their
3:41:21kids down to intentionally explain why
3:41:24one political party is better than the
3:41:26other. There's almost never a detailed
3:41:28explicit lecture of pros and cons,
3:41:31counters and rebuttals, but the kids
3:41:33still inherit the views because they're
3:41:35always paying attention. They notice the
3:41:38off-hand comments, the winces while
3:41:40watching the news, how the parent
3:41:42responds to this election or that
3:41:44neighbor's opinion. Over time, through
3:41:46the accumulation of thousands of subtle
3:41:48clues, few of which the parent meant to
3:41:51be explicit, the child builds up what
3:41:53become firm political beliefs. Money can
3:41:56be so similar. You don't have to sit
3:41:58your kids down at the dinner table and
3:42:00explain your money values to them. They
3:42:02already know since they were small
3:42:04children, they have cataloged every time
3:42:06you said, "We can't afford that." Or, "I
3:42:09love that we bought this." They see what
3:42:11you value. They watch what you waste.
3:42:13They made a mental note of how happy you
3:42:15were when you came home and announced
3:42:17that you got a raise or how scared you
3:42:19looked when you got laid off. They
3:42:21noticed when you were envious of your
3:42:23neighbor's new car. They heard you and
3:42:25your spouse bickering over spending
3:42:27decisions. They noticed when you were
3:42:29greedy. They noticed when you were
3:42:30frugal. They paid attention to all of
3:42:33it. And by the time they're adults, it
3:42:35will have accumulated into a profound
3:42:37effect on how they think about money.
3:42:39Three, what do you want them to pay
3:42:41attention to? When you realize kids are
3:42:44always paying attention, you realize
3:42:46that every moment is an opportunity to
3:42:48lead by example. I want to show my kids
3:42:51how you can use money as a tool to live
3:42:53a better life. I do not want to burden
3:42:56or even poison them with displays of
3:42:58insecurity and greed. I want to show by
3:43:01example that if you've already covered
3:43:03what matters in terms of family, health,
3:43:05and friends, you feel less desire to use
3:43:08your money to show off for strangers. I
3:43:10want to show by example that no amount
3:43:12of money you have and no material item
3:43:15you possess will cause people to like
3:43:18you if you're also a jerk, lack empathy,
3:43:21or feel superior to those who haven't
3:43:23been as fortunate. I want to show by
3:43:25example that the highest use of money is
3:43:27to use it to control your time, granting
3:43:30freedom and independence and living life
3:43:33the way you choose. Four, remember what
3:43:35they'll remember you by. Jonas Sock,
3:43:37inventor of the polio vaccine, was once
3:43:40asked what his main aim in life was. To
3:43:42be a good ancestor, he replied, "What a
3:43:45wonderful goal for every parent. to
3:43:47leave your kids, grandkids, and future
3:43:49generations the knowledge of how the
3:43:52world works, the wisdom to know what
3:43:54matters, the independence to make their
3:43:56own choices, the confidence to take
3:43:58risks, the prudence to be a long-term
3:44:01thinker, and the values to know how they
3:44:04themselves can become good ancestors.
3:44:06How much of being a good ancestor has to
3:44:08do with money? Buying your kids nice
3:44:10things or leaving them an inheritance?
3:44:13Ah, it's often so little. It's easy for
3:44:15parents to think that spending money on
3:44:17their kids will lead them to a better
3:44:19life. But that thinking can be a crutch.
3:44:21It's often an excuse to avoid teaching
3:44:23some of the life lessons that are more
3:44:25meaningful and enduring or to be there
3:44:27for them or to show your love in
3:44:29different ways. Kids may want your
3:44:31money, but what they'll come to value
3:44:33and remember you by are the deeper
3:44:35values that money can't buy. Chapter 17.
3:44:39Spreadsheets don't care about your
3:44:41feeling. When emotions are more
3:44:43insightful than numbers, my wife and I
3:44:45pride ourselves on making unemotional
3:44:47financial decisions. But a decade ago,
3:44:50we were in the market for our first
3:44:51house. We found one online that we
3:44:53liked, and as we headed out for a tour,
3:44:55we promised ourselves we wouldn't do
3:44:57anything rash. This was just gathering
3:44:59information. Then we pulled into the
3:45:01driveway and my wife gasped. I love it.
3:45:05I did, too. We had an infant son, our
3:45:07first. And there was a kid's tree swing
3:45:09in the front yard. perfect and that was
3:45:12it. Emotion was involved and there was
3:45:14nothing we could do about it. In a
3:45:15perfect world, the decision to buy a
3:45:17home would be a calm analysis made on a
3:45:20spreadsheet. In reality, you walk
3:45:22through a for sale house and imagine
3:45:24where furniture would go. You picked
3:45:26your Christmas morning with your kids
3:45:27and dream about barbecues with your
3:45:29friends. The night before our bid was
3:45:31accepted, I asked my wife how she'd feel
3:45:34if we lost the house. I'd be devastated,
3:45:36she said. I would have been, too. I know
3:45:39this is an awful way to think about the
3:45:40biggest financial decision of your life,
3:45:42but it was the reality of the moment.
3:45:44It's the reality of what almost everyone
3:45:46does. No one thinks about buying a home
3:45:49the same way they think about buying a
3:45:51toaster. We have zero regrets. The house
3:45:53really was great, but no one should
3:45:55pretend that you can make life-changing
3:45:57decisions that will massively impact you
3:46:00and your family and treat it like a math
3:46:02problem you can solve in a spreadsheet.
3:46:04Spreadsheets don't care about your
3:46:06feelings. But sometimes those feelings
3:46:08are the most important part of a big
3:46:10financial decision. The important thing
3:46:12here is realizing that not all emotional
3:46:14financial decisions are reckless. Many
3:46:17of them are profoundly important. Jason
3:46:19Swag of the Wall Street Journal once
3:46:21wrote about his mom selling her longtime
3:46:23home. I have no emotional attachment to
3:46:26the house. I never liked it physically,
3:46:28mom told us. But everything important
3:46:30that ever happened in our life as a
3:46:32family is here, and I can't just leave
3:46:34all that behind. If I said, "How much
3:46:37are the memories with your kids worth?"
3:46:39You'd say, "It's impossible to attach a
3:46:41dollar figure." But if I said, "What is
3:46:43the fair market value of the home where
3:46:45you formed memories with your kids?" You
3:46:48could probably spit out a dollar figure
3:46:49with ease. Understanding the difference
3:46:51between those two helps explain a lot of
3:46:54spending decisions. Who do you think
3:46:56finds a better spouse? the person who
3:46:58makes a spreadsheet of characteristics
3:47:00they demand and only considers someone
3:47:02who checks every box or one who
3:47:04serendipitously meets a partner and
3:47:06knows in their heart that things just
3:47:07seem to click. In truth, the best
3:47:10decisions probably happen at the
3:47:11intersection of the two, head and heart.
3:47:14The sweet spot with money is someone who
3:47:16is driven by equal parts rational math
3:47:19and emotional joy. You want to be
3:47:21responsible with numbers, but also know
3:47:23how to make the numbers work for your
3:47:25soul. But since money looks like a
3:47:27math-based field, too many people trip
3:47:29over themselves, viewing financial
3:47:31problems solely through the lens of
3:47:33what's rational, what's efficient, and
3:47:35what's methodical. Lewis Armstrong, the
3:47:37greatest jazz musician of all time, was
3:47:40once asked, "What makes good music? If
3:47:42it sounds good, you don't worry what it
3:47:44is. Just go and enjoy it. Anything you
3:47:46can tap your foot to is good music." So
3:47:49many things work like that. How do you
3:47:50find music you enjoy or food you love?
3:47:53How do you value the memories you'll
3:47:55make in a home you love? You don't
3:47:57consult the rational part of your brain.
3:47:59The subjective emotional part is not
3:48:01only in control, it should be in
3:48:04control. It knows what you want better
3:48:06than the spreadsheets ever could. I
3:48:08actually think managing money becomes
3:48:10easier when you come to terms with how
3:48:12emotional it can be. Instead of a math
3:48:15problem to solve, you view it as an
3:48:17emotional problem to fulfill within the
3:48:19confines of some budgetary boundaries. A
3:48:22couple more words about those boundaries
3:48:23in the next chapter. Chapter 18, the
3:48:26finer thing. The wisdom and futility of
3:48:29obsessing over small purchases. Author
3:48:31Rory Sutherland writes, "The opposite of
3:48:33a good idea can also be a good idea."
3:48:36With that in mind, let's discuss the
3:48:38topic of obsessing over small expenses
3:48:41in your budget. I want to convince you
3:48:43that doing so can be life-changing and
3:48:45also a complete waste of time. Former
3:48:48President Calvin Culage was notoriously
3:48:50frugal, taking command over a federal
3:48:52budget that spent $21 billion during his
3:48:55term. Kulage's team once sent a card to
3:48:58every clerk at the Department of
3:49:00Agriculture that read, "Government
3:49:02correspondence costs 26 cents per
3:49:04letter. Help reduce the cost. Write
3:49:07fewer letters. Write briefer letters."
3:49:09To make letter writing even more
3:49:10precarious, Kulage's official policy was
3:49:13that each government employee be issued
3:49:15one pencil at a time. And if the pencil
3:49:18was not used down to its eraser, it was
3:49:20to be returned to the government for
3:49:22further use. Do you find this absurd?
3:49:25Well, consider that the federal
3:49:26government employed roughly 585,000
3:49:30people in 1925. If each wrote five
3:49:33letters per day, remember this was
3:49:35before email and was just the early days
3:49:37of widespread telephone use. A 26 cent
3:49:40letter cost the government more than
3:49:42$197 million per year. This was during a
3:49:46time when all government spending was
3:49:48roughly $2.8 billion per year. That's
3:49:51almost 7% of government spending on
3:49:53letters. Let me give you some context.
3:49:55In 2023, the federal government spent
3:49:58approximately 10% of its budget on
3:50:01interest on the national debt. These are
3:50:03not small numbers. Koolage was not an
3:50:05idiot. Author Kevin Kelly writes, "Tend
3:50:07to the small things. More people are
3:50:09defeated by blisters than mountains."
3:50:11Let me give you a crazier example. John
3:50:13D. Rockefeller was once discussing
3:50:16soldering caps onto oil cans with the
3:50:18plant's resident expert. How many drops
3:50:20of solder do you use on each can? 40,
3:50:23the man replied. Have you ever tried 38?
3:50:25Rockefeller asked. No. Would you mind
3:50:28having some sealed with 38 and let me
3:50:30know? 38 drops wasn't enough. The cans
3:50:33leaked, but 39 seemed to work fine. It
3:50:35became the new norm. One drop less than
3:50:38the original 40 drop standard. That one
3:50:41drop of solder. Rockefeller later said
3:50:43saved $2,500 the first year, but the
3:50:46export business kept on increasing after
3:50:49that and doubled, quadrupled, became
3:50:51immensely greater than it was then. And
3:50:53the saving has gone steadily along, one
3:50:56drop on each can, and has amounted since
3:50:59many hundreds of thousands of dollars.
3:51:01That's something like $20 million in
3:51:04today's dollars. The point is that small
3:51:06changes at scale yield massive impact.
3:51:09It's common to find someone who bought
3:51:11their home in say 1974 for something
3:51:14like $60,000. Today it's worth perhaps
3:51:17$350,000.
3:51:19The owners no doubt feel they've made a
3:51:20bonanza investment. But those numbers
3:51:23equate to an average annual return of
3:51:253.75%.
3:51:27Property taxes tend to average roughly
3:51:291%. So that brings our real return to
3:51:322.75%
3:51:33per year. Maintenance and repairs vary
3:51:36greatly, but spending 1 to 3% of your
3:51:39home's value per year on upkeep should
3:51:41be expected. Where does that leave our
3:51:43long-term returns? Ah, quite dim. The
3:51:46small, easy to ignore expenses add up to
3:51:48be so profound over time that they
3:51:51overwhelm the large obvious costs you
3:51:53pay the most attention to. Price is easy
3:51:56to calculate. It's just whatever you
3:51:58paid initially and sold for eventually.
3:52:00Cost is harder to figure out because it
3:52:02tends to be a slow drip over time, which
3:52:05is easy to ignore but adds up quickly.
3:52:07Same for cars, boats, and hobbies. You
3:52:09can even say the cost of smoking
3:52:11cigarettes is the price of a pack plus
3:52:14the long-term cost of medical care
3:52:16associated with the habit. One is easy
3:52:18to calculate. The other is very
3:52:20difficult. I once heard this story. A
3:52:22man notices his coworker drinking a
3:52:24latte. He asks, "How often do you drink
3:52:27lattes?" "Every day," says the coworker.
3:52:29Wow, every day for 30 years of your
3:52:32professional career, says the man.
3:52:34That's so much money. A latte a day
3:52:36means you're spending about $1,900 a
3:52:39year. If you invested that money instead
3:52:41at 8% return, you'd have $250,000.
3:52:45That's enough to buy a Ferrari. The
3:52:47coworker looks puzzled. Do you buy
3:52:49lattes? She asked the man. No. So,
3:52:51where's your Ferrari now? Please, if you
3:52:54enjoy lattes, buy them all day long. The
3:52:57point here is that almost everyone has
3:52:59small expenses that could have added up
3:53:01to a fortune if they were tended to more
3:53:03carefully. And they could have been
3:53:05tended to with so little effort. A few
3:53:07bucks here, a couple bucks there. People
3:53:09expend enormous effort improving their
3:53:12investment returns because they know if
3:53:13you can improve your annual returns by
3:53:15even.1% per year, it can add up to a
3:53:19fortune when compounded over time. But
3:53:21when it comes to little expenses,
3:53:23letters, solder, lattes, that logic is
3:53:26harder to grasp. Warren Buffett was so
3:53:29obsessed with compounding at an early
3:53:31age that he measured current expenses by
3:53:33what that amount would be worth in the
3:53:35future if he instead invested it and let
3:53:38it grow. A haircut in his mind cost
3:53:41$30,000. That's what the few bucks would
3:53:44be worth in the future if he instead let
3:53:46it compound. An expensive suit cost
3:53:48millions in forgone future investment
3:53:50return. A car wash wasn't worth it under
3:53:53this logic. It would cost tens of
3:53:55thousands of dollars in future money to
3:53:57remove some dirt. I'm not sure I want to
3:53:59blow $500,000 that way. Buffett would
3:54:02tell friends when pondering whether to
3:54:04spend a few bucks. Chris Davis tells a
3:54:06story about being in New York as a kid
3:54:08and asking his grandfather for a $1 hot
3:54:11dog. His grandfather said that if he
3:54:13could earn the same investment returns
3:54:15he had earned over his life, that $1 hot
3:54:18dog actually cost $1,000. Chris recently
3:54:21did the actual math and found his
3:54:23grandfather wasn't exaggerating. His
3:54:25grandfather, Shelby Davis, grew his
3:54:27assets many hundreds of times during his
3:54:29lifetime. You might find this behavior
3:54:31miserly. I would not recommend it to
3:54:33ordinary people. Please eat when you're
3:54:35hungry and cut your hair when you feel
3:54:37like it. The point is that when you
3:54:39understand how quickly small expenses
3:54:41compound into enormous lost returns, you
3:54:44view the world differently. You realize
3:54:46that building a long-term fortune has
3:54:49less to do with big, brilliant decisions
3:54:51and more to do with small, consistent
3:54:54decisions compounded over a long period
3:54:56of time. Now, let me provide the
3:54:58opposite view, which I hope you'll find
3:55:00just as persuasive. There's a saying I
3:55:02love. Save a little bit of money each
3:55:04month and at the end of the year you'll
3:55:06be surprised at how little you still
3:55:08have. Historian Siriel Northcoat
3:55:10Parkinson coined a thing called
3:55:12Parkinson's law of triviality. It
3:55:14states, "The amount of attention a
3:55:17problem gets is the inverse of its
3:55:19important." Parkinson described a
3:55:21fictional finance committee with three
3:55:22tasks. Approval of a $10 million nuclear
3:55:25reactor, $400 for employee bike shed,
3:55:28and $20 for employee refreshments in the
3:55:31breakroom. The committee approves the
3:55:33$10 million nuclear reactor immediately
3:55:35because the number is too big to
3:55:37contextualize, alternatives are too
3:55:39daunting to consider, and no one on the
3:55:41committee is an expert in nuclear power.
3:55:43The bike shed gets considerably more
3:55:46debate. Committee members argue whether
3:55:47a bike rack would suffice and whether a
3:55:50shed should be wood or aluminum because
3:55:52they have some experience working with
3:55:54those materials at home. Employee
3:55:56refreshments take up twothirds of the
3:55:58debate because everyone has a strong
3:56:00opinion on what's the best coffee, the
3:56:02best cookies, the best chips, etc. Many
3:56:04households operate the same. Author
3:56:06Rammit Sadi says too many people ask $3
3:56:09questions. Can I afford this latte? When
3:56:12all that matters to financial success
3:56:14are $30,000 questions, what college
3:56:17should I go to? The latte example I use
3:56:19abovet often drives financial advisers
3:56:22mad because they see people wondering if
3:56:24they should cut lattes from their budget
3:56:26when those same people attend colleges
3:56:28they can't afford, own cars they can't
3:56:31afford, and live in homes they can't
3:56:33afford. They obsess over $3 problems
3:56:35while $300,000 problems get far less
3:56:38attention. The amount of attention a
3:56:40problem gets is the inverse of its
3:56:42importance. I think part of the reason
3:56:44this happens is because focusing on
3:56:46small budget items makes you feel like
3:56:48you're being responsible, taking action,
3:56:51and making progress, which makes it
3:56:53easier to ignore the big problems.
3:56:55People can recognize when they're being
3:56:56oblivious, giving zero attention to a
3:56:59problem. But when you can say, "Look at
3:57:01me cutting lattes from my budget like a
3:57:03responsible budgeter," it's harder to
3:57:05recognize that you're being
3:57:06irresponsible with much larger
3:57:08purchases. For the vast majority of
3:57:09people, a handful of budget items make
3:57:12up the vast majority of expenses.
3:57:14College, home, car, health insurance,
3:57:16child care. That's it. That's what
3:57:18should get all your attention.
3:57:20Everything else is a rounding error.
3:57:22Tending to small expenses can compound
3:57:24into a fortune. They can also suck your
3:57:26attention away from much larger
3:57:28problems. I don't think these two points
3:57:30contradict each other. Remember, the
3:57:32opposite of a good idea can also be a
3:57:34good idea. They're equally important. A
3:57:36lot of doing well with money is
3:57:38understanding the barbell approach to
3:57:40good behavior. Save like a pessimist and
3:57:42invest like an optimist. Expect the
3:57:44worst, hope for the best. Live for
3:57:46today, prepare for tomorrow. Let me
3:57:48offer another. It's almost impossible to
3:57:50build wealth without controlling your
3:57:52biggest expenses. And it's very
3:57:54difficult to grow wealth without caring
3:57:56about smaller expenses. Now, let's talk
3:57:58about greed and fear. Chapter 19, the
3:58:01life cycle of greed and fear. It begins
3:58:05innocent, turns crazy, and ends up right
3:58:08where you began. Some she at once
3:58:11crushes beneath her cruel feet. Others
3:58:13she condemns to a fate like that of
3:58:15galley slaves. A few she favors and
3:58:18fondles, riding them high on the bubbles
3:58:20of fortune. Then with a sudden breath,
3:58:22she blows the bubbles out and laughs
3:58:25mockingly as she watches them fall. By
3:58:27James Weldon Johnson on New York City.
3:58:30Greed and fear control so much in life.
3:58:33I think of it like this. There is no
3:58:35amount of success that can't be
3:58:37destroyed by the temptation to grab too
3:58:39much of it. And there is no opportunity
3:58:41so appealing that it will catch the eye
3:58:44of someone who refuses to look. These
3:58:46two innocent emotions are the root cause
3:58:49of most money mistakes. Regrets and
3:58:51embarrassment. Greed and fear are
3:58:54everywhere you look in money. And not
3:58:56just how we invest our money or the
3:58:58booms and busts of markets. They can be
3:59:00central to how we spend money too.
3:59:03Spending money often requires optimism.
3:59:05Saving often requires pessimism. At one
3:59:08level, both of those emotions are not
3:59:10only okay, they are necessary and
3:59:13useful. At another level, they backfire
3:59:16and turn into dangerous liabilities. You
3:59:18often only know when you've crossed the
3:59:20line, when it's too late. So much of
3:59:23success in life is finding the delicate
3:59:25balance of when optimism turns into
3:59:27greed and pessimism turns into fear. And
3:59:31greed and fear are sneaky. People with
3:59:33the best intentions and ethics get
3:59:36sucked into their trap. While you might
3:59:38think of them as opposites, they share a
3:59:40common origin. There is a natural cycle
3:59:43that causes innocent optimism to evolve
3:59:46into greed, which turns into denial,
3:59:49then confusion, then eventually fear. It
3:59:52often drops you off where you began with
3:59:55the lesson you think you learned from
3:59:56experiencing fear setting up your next
3:59:59rendevous with greed. Understanding how
4:00:02powerful and dangerous these two
4:00:03emotions can be requires appreciating
4:00:06the cycle that causes them in the first
4:00:09place. Here's how it happened. All greed
4:00:11begins with the most innocent idea that
4:00:14you deserve to be right. The decisions
4:00:16you've made in the past, the decisions
4:00:18you'll make in the future, the world
4:00:20view you hold today. It's hard to wake
4:00:23up in the morning and look in the mirror
4:00:24without telling yourself that you've
4:00:26made good decisions in the past and you
4:00:28will continue making them in the future.
4:00:30Nothing would get done if people doubted
4:00:32themselves all day. This is especially
4:00:34true if you've had past success in
4:00:37education and work. and you deserve to
4:00:39be right because you've put so much
4:00:41effort into developing your views and
4:00:43decisions. Maybe you went to school for
4:00:45years. You passed hard tests. You dealt
4:00:47with bullies. You did hard thinking and
4:00:49put in long hours. No one wants to hear
4:00:52they went through that grind and still
4:00:54don't deserve to be right. And deserving
4:00:56to be right means you should be rewarded
4:00:58for being right. Effort equals reward.
4:01:01That's how the world works, isn't it? If
4:01:03you have accurate views, you'll make
4:01:05good decisions. And those decisions will
4:01:08be rewarded by your peers with
4:01:09admiration, your bosses with payraises,
4:01:12and your body with health. It's such an
4:01:14appealing, attractive thought. It's hard
4:01:17to make it through the day admitting you
4:01:18don't know how the world works, so
4:01:20almost no one does it. We tell ourselves
4:01:22that our beliefs are correct, and
4:01:24correct views will be rewarded. the
4:01:26conviction that whatever you believe is
4:01:28right and you deserve to be right
4:01:30because you've put in so much effort to
4:01:32form those beliefs and correct beliefs
4:01:35will be rewarded by the world is such a
4:01:37common and innocent idea and it's where
4:01:40things start to get messy. When you are
4:01:42rewarded for being right, a door opens
4:01:45inside your head that invites delusion
4:01:47to step inside. Recognition feels good.
4:01:51Attention feels good. Rewards feel good.
4:01:54They're addictive. It gets back to the
4:01:56first innocent idea. People want to feel
4:01:58like they're right, doing well, and owed
4:02:01something for their efforts. In a
4:02:02rational world, we try to calculate how
4:02:05much of what we did influenced the
4:02:07reward we received. We'd recognize that
4:02:09if you did this and then that happened,
4:02:12there are million other variables you
4:02:14have no control over that also could
4:02:16have influenced that outcome. But that's
4:02:18not a natural way to think. The default
4:02:20assumption when you're rewarded for
4:02:22doing something is to assume that you
4:02:24doing this caused that to happen. If
4:02:27you're looking for an answer to why that
4:02:29happened, it is the path of least
4:02:31resistance because after all, your views
4:02:33are right and deserve to be rewarded. So
4:02:36of course, the reward was caused by the
4:02:38thing you did. Others believe this as
4:02:40much as you. People watch you get a
4:02:42reward and because they imagine how they
4:02:44would feel if they got a reward, they
4:02:47get excited by your achievement. praise,
4:02:49attention, admiration, and yes,
4:02:52jealousy, and envy. It all feels good to
4:02:54you and reinforces the idea that you got
4:02:57a reward because your views and actions
4:03:00were right, and you want more of it.
4:03:02Success makes it easy to say, "I was
4:03:04right before, so now I'm going to double
4:03:07down." It's not a crazy thought. It's
4:03:09part reasonable analysis. You tested the
4:03:11waters and were proven right, so now
4:03:14dive in. And it's part social
4:03:16comparison. The buzz you got from being
4:03:18a little right wore off. Now you want to
4:03:20be right in a bigger way. This is an
4:03:22important part of greed. People justify
4:03:25their actions even when in hindsight
4:03:27those actions were clearly excessive or
4:03:29crazy. It's different than knowing your
4:03:31actions are reckless and harmful and
4:03:33doing them anyway. That's psychopathy.
4:03:36The common form of innocent greed is
4:03:38extrapolating with enthusiasm what
4:03:41worked in the past. It tempts you to do
4:03:43the same thing as before, but with twice
4:03:45the appetite. Maybe you have the same
4:03:48job, but now you demand more pay. You
4:03:50have the same investments, but now with
4:03:52leverage. Or you got some attention for
4:03:55the new car and eager for more. Now you
4:03:58want the new watch, clothes, jewelry,
4:04:00and house. This may be fine to do if
4:04:03your actions directly influence
4:04:05outcomes. if doing this causes that. But
4:04:08if your previous actions aren't
4:04:10sustainable, or if you underestimate how
4:04:12much of your previous outcomes were
4:04:14caused by actions that weren't in your
4:04:16control, then doubling down on what
4:04:19worked in the past increases the odds
4:04:21that doing more isn't going to end well.
4:04:24Greed happens when you double down on
4:04:26actions that at one time worked but
4:04:28aren't sustainable, or that cause you to
4:04:31overestimate how influential your
4:04:33actions were on outcomes. Maybe you
4:04:35underestimate how much of your past
4:04:37success was luck, randomness, or being
4:04:40in the right place at the right time.
4:04:42Maybe the people who in the past
4:04:43rewarded you with attention are no
4:04:45longer around. Maybe people who were
4:04:47excited for your past success are now
4:04:49exhausted from hearing about you.
4:04:51Perhaps your boss, who was happy to
4:04:53reward you for your past contributions,
4:04:55is now tired of you demanding yet
4:04:57another raise. People who used to give
4:04:59you attention now snicker at you.
4:05:01Whatever the cause, sometimes the world
4:05:04views your actions as a taunt, and
4:05:06reality creeps in to remind you that
4:05:09things are more complicated than you
4:05:10assumed. What worked in the past
4:05:12suddenly doesn't work anymore. But since
4:05:15your whole strategy has been to believe
4:05:17that you're right, deserve to be
4:05:19rewarded for being right, and are
4:05:21doubling down on what used to work, now
4:05:23you're in trouble. Peak greed is
4:05:25expecting to get back more than you
4:05:27deserve given what you put in. Which is
4:05:30exactly what happens when you
4:05:31overestimate your ability to do things
4:05:34that will directly lead to rewards. You
4:05:36don't know it yet, but the seeds of fear
4:05:39have been planted. The first reaction to
4:05:41greed backfiring is to view it as an
4:05:43opportunity, especially when you're
4:05:45blinded to the realities of your skill
4:05:47and contributions. When the strategy
4:05:49that used to reward you stops working,
4:05:52you cut off those who go against you and
4:05:54maybe double down on your actions yet
4:05:56again. If a novice with no record of
4:05:59success experiences a loss or a failure,
4:06:02they are likely to take it as a signal
4:06:04that they have no skill and no idea what
4:06:07they're doing. But if you mistakenly
4:06:09think your skill has been confirmed to
4:06:11the point where you've become greedy,
4:06:13experiencing a loss is often interpreted
4:06:16as the world giving you a new
4:06:18opportunity. The company denied my
4:06:20raise, so now I can find a new job at a
4:06:23place that appreciates me. My friends
4:06:24don't appreciate my fancy things, so
4:06:27I'll go find new people who do. You
4:06:29don't praise me for my car anymore.
4:06:30Maybe I need a new, better one. You will
4:06:32rarely find this mindset in someone who
4:06:35hasn't experienced past success. It only
4:06:38comes from someone who's convinced that
4:06:40their past actions have caused their
4:06:43past results. Their response is often to
4:06:45double down yet again with even more
4:06:47confidence. When you've overestimated
4:06:50how much of your actions influence your
4:06:52results, you miss key feedback the world
4:06:55tries to give you, sticking to your guns
4:06:57instead of updating your approach. You
4:06:59keep plugging ahead, which seems like an
4:07:01admirable trait. You may throw more
4:07:03effort at the strategy, convinced it
4:07:05will pay off with even bigger rewards
4:07:08when you're eventually proven right. You
4:07:10think you're being determined, but
4:07:11you're actually being stubborn. Buddhism
4:07:14has a concept called beginner's mind,
4:07:16which is an active openness to trying
4:07:18new things and studying new ideas
4:07:21unbburdened by past preconceptions like
4:07:24a beginner would. Assuming you have
4:07:26skill can be the enemy of a beginner's
4:07:28mind because past success reduces the
4:07:31incentive to explore other ideas,
4:07:33especially when those ideas conflict
4:07:35with your proven strategy. It's
4:07:37dangerous. Being locked into a single
4:07:40view is fatal in an economy where
4:07:42reversion to the mean and competition
4:07:44constantly dismantle old strategies.
4:07:47When you give up a flexible mind, you
4:07:49are now immune to feedback. So now you
4:07:52are less prepared than a beginner or
4:07:54even someone attempting random
4:07:56strategies in the dark. The odds of your
4:07:58continued failure now escalate. After
4:08:01multiple failures, you begin to view
4:08:03yourself as a victim. You have not yet
4:08:05admitted the possibility that perhaps
4:08:07you were never as skilled as you once
4:08:09imagined, even to yourself. You see the
4:08:12world as acting against you. You blame
4:08:14your friends. You blame your boss. You
4:08:16blame the media. You blame politicians.
4:08:19You become angry at others. Anything but
4:08:22looking in the mirror. At this point,
4:08:24greed is dead, but denial about your
4:08:26contributions and skill is at its
4:08:28highest. You try to reduce risk without
4:08:31abandoning ship. You cut back on your
4:08:33actions a little, maybe apologize to
4:08:35those you offended. You have not given
4:08:37up hope, but you recognize you need a
4:08:39change and are confident you can get
4:08:41back on track. At this point, you have
4:08:43admitted to yourself that you engaged in
4:08:46excess, but you still haven't admitted
4:08:48you were wrong. The problem in your mind
4:08:50is that you pushed too much of a good
4:08:52thing, but that thing still looks good.
4:08:55It's still right. It still deserves to
4:08:57be rewarded. So, you carry on with just
4:09:00a little less enthusiasm than before.
4:09:02You can only maintain delusion for so
4:09:04long. You eventually start to give up on
4:09:07your actions. Sometimes it takes days
4:09:09for that to happen, sometimes years, but
4:09:12it will happen. And it is the point
4:09:14where you start to wonder whether you've
4:09:16missed something along the way. You
4:09:17don't yet realize you were wrong.
4:09:19Admitting you were wrong is painful, but
4:09:22perhaps you realize your views were
4:09:24incomplete. This is when people start
4:09:26saying things like, "We've learned a lot
4:09:28in the last year, and this has been a
4:09:31growth experience." Sometimes these
4:09:33statements are honest and correct, but
4:09:35often they are just a barebones way of
4:09:37signaling to others you have not
4:09:39completely lost touch with reality. Deep
4:09:41down your core views and faith in your
4:09:44ability are still mostly intact. There
4:09:46comes a point where it's obvious, even
4:09:48to you, that you are wrong. Privately to
4:09:51yourself, you wonder whether you were
4:09:53wrong. On occasion, you admit to others
4:09:55that yes, you were. To deal with the
4:09:57pain, you often employ denial. When
4:10:00friends ask you how things are going,
4:10:01you change the subject nearly to the
4:10:04point of denying you were ever involved
4:10:06with the thing you once went allin on.
4:10:08It was never that important to me. Or it
4:10:10was always a small part of what I enjoy.
4:10:12Reality rushes in when your mistakes
4:10:14force lifestyle changes. When you're
4:10:17forced to sell your house or your car or
4:10:19cancel a vacation or move into a smaller
4:10:22office, the consequences of your
4:10:24wrongness are now undeniable to anyone
4:10:26watching you. Now you're embarrassed.
4:10:28And once you're embarrassed, your
4:10:30ability to look at a problem with a
4:10:32cool, rational mind becomes as clouded
4:10:34as it was when you were in the peak of
4:10:36greed. A little doubt that you were
4:10:38wrong now cascades into panic. You avoid
4:10:41people you'd normally talk to about your
4:10:43skill, which walls you off even more
4:10:46from the ability to take feedback and
4:10:48gain context on your situation. You're
4:10:50now stuck in your own mind, which
4:10:52becomes a doom loop of fear and doubt.
4:10:54Your mindset shifts from growth to
4:10:57damage control. You stop thinking about
4:10:59opportunity and gain. Your definition of
4:11:01success is now when you stop falling
4:11:04behind. Anything that prevents further
4:11:06loss now looks like an appealing gain.
4:11:08So you sell what you have left. Leave
4:11:11your career, sell your car, abandon your
4:11:13company. It feels like capitulation.
4:11:16When you were greedy, you believe that
4:11:18100% of what you did influenced the
4:11:21gains you received. Now you think
4:11:22there's nothing you can do. that's in
4:11:24your control that will deliver upside.
4:11:27The hard thing is you're as wrong now as
4:11:29you were back then, but you're equally
4:11:31blind to that reality. You begin looking
4:11:34around at everyone else. The people you
4:11:36once looked down upon now sit so much
4:11:38higher than you. What happened? Why
4:11:40aren't they suffering like you? Do they
4:11:42know something you don't? That's a new
4:11:44fear to worry about. When you were
4:11:45successful, people watched what you were
4:11:47doing and tried to copy it. They
4:11:49wondered what you knew that they didn't.
4:11:51They didn't want to miss the rewards you
4:11:53were getting. Now the process goes in
4:11:55the other direction. You start looking
4:11:57at other people who have done better
4:11:59than you and wonder what else they know
4:12:01that you don't. But since you're now
4:12:02gripped with fear, you're not looking
4:12:04for upside opportunities. You wonder
4:12:07what other landmines exist that smarter
4:12:09people have avoided, but you might still
4:12:11be oblivious to. Fear does the most
4:12:13damage when your biggest fear is
4:12:15wondering what else you should be
4:12:17fearful about. You become as blind to
4:12:19what positive things might happen as you
4:12:21were to what negative things might
4:12:23happen when you were greedy. The irony
4:12:25is that chaos is often the most fertile
4:12:28ground for opportunity and a chance to
4:12:30go in a different direction. But
4:12:32opportunity is the last thing you're now
4:12:34thinking about. You're focused on not
4:12:36falling down any further. At some point,
4:12:38you find stabilization. People begin to
4:12:41forgive you. Fear gives way to
4:12:43acceptance. You find a new groove. You
4:12:45lost a lot of what you once had, but now
4:12:48you can think with a clearer head. The
4:12:50first thing you vow is never to make the
4:12:52same mistake again. The pain you went
4:12:54through with fear was 10 times harder
4:12:56than the joy you got from greed. If
4:12:58there's a silver lining from this
4:13:00debacle, it's that you've learned your
4:13:02lesson and can avoid the same errors in
4:13:04the future. You now have a new world
4:13:06view, a new strategy on how to operate
4:13:09in markets, business, and life, shaped
4:13:12by the mistakes you made when you fell
4:13:14for the trap of greed and fear. You now
4:13:16know how to act when opportunity
4:13:18presents itself. You feel confident
4:13:20about this new view. You deserve to be
4:13:22smarter now. Going through something as
4:13:24hard as you've been through, and not
4:13:26coming away smarter seems unfair. You
4:13:29were wrong before, but now you're right.
4:13:31No one wants to hear they went through
4:13:33that painful grind and still don't
4:13:35deserve to be right. And deserving to be
4:13:37right means you should be rewarded for
4:13:39being right. Effort equals reward.
4:13:42That's how the world works, isn't it?
4:13:44It's hard to wake up in the morning and
4:13:46look in the mirror without telling
4:13:47yourself that you can make good
4:13:48decisions. Isn't that an innocent view
4:13:51that you deserve to be right? And now
4:13:54we're right back to where this story
4:13:55began. Chapter 20. How to be miserable
4:13:58spending your money. A brief guide to
4:14:01bad decision. An important fact of life
4:14:03is that it's often difficult to know
4:14:05what will make you happy, but quite easy
4:14:08to identify what will make you
4:14:10miserable. When faced with a difficult
4:14:12problem and how to spend money in a way
4:14:14that will improve your life certainly is
4:14:16it can help to work backward, reducing
4:14:19and excluding what doesn't work until
4:14:21what's left over is a decent
4:14:23approximation of favorable trait.
4:14:25Evolution works in similar ways. so
4:14:28thoroughly destroying what doesn't work
4:14:30that what's left over tends to work
4:14:32quite well. Or think about health. What
4:14:34foods are good for you is an endless
4:14:37debate. And no one who's honest with the
4:14:39evidence can say they know the perfect
4:14:41diet. But what's bad for you is much
4:14:43more settled. I have no idea if a glass
4:14:46of red wine is good for me. I am 100%
4:14:49sure that cigarettes are not. A young
4:14:52boy once asked Charlie Munger, "What
4:14:54advice do you have for someone like me
4:14:56to succeed in life?" Munger replied,
4:14:59"Don't do cocaine. Don't race trains to
4:15:01the track, and avoid all AIDS
4:15:04situations. Succeed by first knowing
4:15:06what to avoid." In the same way, I can't
4:15:09tell you how to spend money because I'm
4:15:11not you. And I can't tell you what will
4:15:13make you happy because I'm still trying
4:15:15to figure that out for myself.
4:15:17Everyone's different and life is
4:15:19complex. But what leads to a miserable
4:15:21life tends to be universal and
4:15:24straightforward. So let me offer you a
4:15:26brief guide on how to be miserable with
4:15:28your money. Direct your gaze at the
4:15:30socioeconomic group just above you,
4:15:33assuming that within it you will find a
4:15:35level of durable happiness. Tell
4:15:36yourself that you'll be satisfied once
4:15:39you make just a little more money, have
4:15:41a little bit nicer home, and can spend
4:15:43just a little bit more than you do now.
4:15:46Ignore the fact that the group you're in
4:15:48now used to be a dream that you thought
4:15:50would bring you contentment and
4:15:52happiness. Pursue status at the expense
4:15:54of independence. Assume that happiness
4:15:57relies on masses of strangers being
4:15:59impressed by the material possessions
4:16:01you own rather than the hidden magic of
4:16:04you owning your own time. Let money, the
4:16:06making of it, the spending of it, the
4:16:08accumulation of it, become a core part
4:16:11of your identity. Spend more time
4:16:13thinking about money than the life
4:16:15you've built with that money. Spend so
4:16:17much of your income that you become
4:16:19completely reliant on the decisions of
4:16:21other people like bosses and bankers,
4:16:24many of whom couldn't care less about
4:16:26you. Fantasize that having more money is
4:16:29the solution to all your problems. Tell
4:16:31yourself that you'd wake up every
4:16:33morning with a smile on your face if you
4:16:35had just a little more money. Imagine
4:16:37that you'd be more liked, more admired.
4:16:40You'd have more friends, and healthier
4:16:42relationships. Believe that none of your
4:16:44current fears, anxieties, doubts, and
4:16:46confusions in life would exist if only
4:16:49you had more money than you do now.
4:16:51Assume money can solve none of your
4:16:54problems, and that it is the root of
4:16:56evil and ego. This can be just as
4:16:58dangerous as the previous point. Money
4:17:01is a remarkable tool capable of offering
4:17:03independence and the joys that come from
4:17:06thousands of years of humans figuring
4:17:08out how to make life more comfortable,
4:17:11entertaining, and enlightening. How
4:17:13tragic it is to live in a world where
4:17:15you believe the accumulated efforts of
4:17:17the 100 billion people who came before
4:17:20you have produced nothing worthy of your
4:17:22time and attention. have such a fierce
4:17:25saving ideology that you're never able
4:17:27to treat yourself to a good life you can
4:17:30afford. Act like money's only purpose is
4:17:32to accumulate in your bank account where
4:17:35instead of a tool to live a better life,
4:17:37you've essentially formed an accounting
4:17:39hobby. When taking stock of your own
4:17:41life, assume that all your success is
4:17:44due to hard work and all your failure is
4:17:46due to bad luck. When judging others,
4:17:49assume all failure is due to bad
4:17:51decisions and all success was due to
4:17:54luck. Place ego over empathy. This is
4:17:57the shest way to become detached from
4:17:59the reality of what you can and cannot
4:18:02control in life. Compare your inside
4:18:04with other people's outside, envying
4:18:07others success without having a full
4:18:09picture of their lives. Assume that
4:18:11other people's cars, homes, clothes,
4:18:13jewelry, and social media accounts are
4:18:16an accurate reflection of how happy they
4:18:18are. Tell yourself that because they
4:18:20have nice toys, they must also have good
4:18:22relationships, good health, moral
4:18:25clarity, emotional intelligence, and
4:18:27overall life satisfaction. Ignore the
4:18:30hidden social, emotional, and
4:18:32expectations costs that come from
4:18:34certain purchases. Ignore what some
4:18:36purchases will do to other people's
4:18:38impression of you. Forget that you may
4:18:40have created a higher bar you'll need to
4:18:42exceed during the next purchase, which
4:18:44is a hidden form of debt. Have no sense
4:18:47of your own tendency to regret. Become
4:18:49so wrapped up in the bubble of the
4:18:51current moment or so fixated on the long
4:18:54run that you eventually look back at
4:18:56your life and wonder what the hell you
4:18:58were thinking. Associate net worth with
4:19:01selfworth for you and others. Think of
4:19:03money as the ultimate scorecard for how
4:19:06well people have done in life. and
4:19:08worse, assume that their material
4:19:10appearance is an accurate indication of
4:19:13how much money they actually have. Treat
4:19:15all financial decisions as math
4:19:18decisions with no appreciation for
4:19:20reasonable emotion, sentimental value,
4:19:23and desire to feed your soul. Become
4:19:25more interested in making the
4:19:26spreadsheets happy than making yourself
4:19:29happy. Be persuaded by the advice and
4:19:31lifestyle of those who need or want
4:19:34something you don't. Want what society
4:19:36says that you should want. Desire what
4:19:38the marketers say that you should
4:19:40desire. Look to other people, including
4:19:43strangers, for answers on what's best
4:19:45for you. Ignore the vast spectrum of
4:19:47people's needs, wants, and desires.
4:19:50Anchor your lifestyle expectations to
4:19:52the most successful people you know.
4:19:54Creating a mindset where even
4:19:56exceptional success in your own life
4:19:58feels inadequate. It's basically a
4:20:00contract with yourself to be unhappy.
4:20:03Become so optimistic that your
4:20:05expectations grow faster than income.
4:20:08Live in a world where things get better,
4:20:10but you appreciate none of it because
4:20:12you expected all of it and more. Risk
4:20:15what you need in order to gain what you
4:20:17don't need. Risk relationships with your
4:20:20family and friends for the potential of
4:20:21a raise that will have little impact on
4:20:24your life, or risk how well you sleep at
4:20:26night for a new car that no one will pay
4:20:28attention to. Overestimate the attention
4:20:31you get from having nice stuff and
4:20:33assume the attention you do get is a
4:20:35reflection of people admiring you versus
4:20:37them fantasizing about having what you
4:20:39have for themselves. Assume you have all
4:20:42the right answers. Try nothing new.
4:20:44Reject the mystery of life and fight
4:20:46against all inclinations you have to
4:20:49grow, adapt, and change your mind. Be
4:20:51curious of no alternative viewpoint.
4:20:54Assume that what you know about money is
4:20:56all there is to know and argue fiercely
4:20:58when you discover information that might
4:21:00go against your current beliefs. Treat
4:21:02money as you might treat religion with
4:21:04devotion above curiosity and orthodoxy
4:21:08above exploration. You will, I
4:21:10guarantee, be on your way to misery.
4:21:13Now, let me tell you how I've tried to
4:21:15avoid it. Chapter 21. The luckier you
4:21:18are, the nicer you should be. My simple
4:21:21path to a good financial life. Kevin
4:21:24Cosner, one of the greatest and most
4:21:26successful actors of modern times, once
4:21:28told a story that stopped me in my
4:21:30track. Cosner had a friend. He doesn't
4:21:32say who, but when you piece together the
4:21:34details, was almost certainly the author
4:21:36Michael Blake, who after years of
4:21:38writing have found little success. I
4:21:40sent him on a lot of jobs. Try to find
4:21:42him work, Cosner said. Every report that
4:21:45came back was that he pissed everyone
4:21:46off. The friend pushed Cosner to make
4:21:48introductions. Even though every writer
4:21:50thinks the last thing they wrote is the
4:21:52best thing they wrote, maybe it's just
4:21:54not good enough. Cosner bluntly told
4:21:56him. One day the friend called Cosner
4:21:58and said, "Hey, I don't have a place to
4:22:00stay. Can I stay at your house?" He was
4:22:02homeless, so he stays there for a couple
4:22:04of months. Cosner says the whole time
4:22:06the friend was writing furiously. He's
4:22:08writing every night. And he says, "Will
4:22:10you read what I wrote today?" I said,
4:22:12"No." He was like Cosner thought of the
4:22:14friend as a stray cat to pity, not a
4:22:16work collaborator to admire and learn
4:22:18from. He started reading it to my
4:22:20daughter who was three. Every night,
4:22:22Cosner said. Finally, my wife said,
4:22:24"Look, he's got to go." I said to him,
4:22:26"Yeah, you got to go." Away the friend
4:22:29went. He eventually found himself in
4:22:31Arizona washing dishes in a Chinese
4:22:33restaurant. Months later, he called and
4:22:36asked, "Did you ever read what I wrote?"
4:22:37"No," Cosner said. Feeling bad, Cosner
4:22:40sent the friend, still ostensibly
4:22:42homeless, a sleeping bag. Later, the
4:22:44friend called and asked again, "Did you
4:22:46ever read what I wrote?" Annoyed, Cosner
4:22:48relented. "Finally, I read it," Cosner
4:22:51said. "It was Dances with Wolve. It went
4:22:53on to be a blockbuster. The film
4:22:55adaptation won seven Academy Awards and
4:22:58catapulted Cosner's career into
4:23:00superstardom. You never know where luck
4:23:03might come from in life." More on that
4:23:04in a second. My mom says, "I started
4:23:06counting pennies when I was 3 years old.
4:23:08I didn't want to count anything else,
4:23:10just money. Charlie Mer once said that
4:23:12when teaching money to young people,
4:23:14they either understand it instantly or
4:23:16never at all. I don't think it's that
4:23:18black and white, but when I think about
4:23:20my own life, I wonder. Since receiving
4:23:22my first paycheck as a teenager, I've
4:23:24saved and invested a double-digit
4:23:27percentage of every dollar I've made. It
4:23:29always just seemed like the right thing
4:23:31to do. I don't think anyone taught me,
4:23:33and it was never a challenge. It just
4:23:35felt obvious. My wife and I don't spend
4:23:37a lot because we don't want a lot. We
4:23:39live a very nice life, but most of what
4:23:41we value and enjoy doing doesn't cost
4:23:43much. Hikes, gardening, reading,
4:23:46writing, taking our dog for a long walk,
4:23:48quality time with our kids, that sort of
4:23:50thing. The amount of income we've earned
4:23:52over the years has changed dramatically,
4:23:55but what we enjoy has not. We would love
4:23:57each other just as much if we were poor,
4:23:59and indeed we did. But we've used the
4:24:01money we've saved over the years to
4:24:03become independent. And I can't describe
4:24:05how fulfilling that's been. To be
4:24:07specific, my wife became a stay-at-home
4:24:09mom, and I pick and choose the work that
4:24:11seems interesting to me and reject the
4:24:13rest, valuing independence over income
4:24:16at every turn. Both of those decisions
4:24:18have a financial component, but neither
4:24:20felt like rejecting money as much as
4:24:23purchasing time. My only financial goal
4:24:25is to go to bed every night with a sense
4:24:27of calm, knowing my family is okay, and
4:24:30that I can spend the next day doing what
4:24:32I want, when I want, with whom I want,
4:24:35for as long as I want. Beating the stock
4:24:37market has no appeal to me. Impressing
4:24:39my neighbors has never crossed my mind.
4:24:41Those seem like external benchmark goals
4:24:44where victory is not defined by how well
4:24:46you're doing, but merely by whether
4:24:48you're doing better than random
4:24:49strangers. It always seemed like a
4:24:50pointless game to me. Independence
4:24:52offers the highest ROI that money can
4:24:55buy. And I don't think it's even close.
4:24:57Our financial life is so simple. My wife
4:24:59and I met in college, merged our
4:25:02finances soon after before we married.
4:25:04And we really don't talk about money
4:25:06that much because there's not much to
4:25:07discuss. There are no budgets, no
4:25:09detailed spreadsheets, no elaborate
4:25:11strategies or arbitrary targets. Our
4:25:14entire net worth is a house, cash, index
4:25:17funds, and shares of Marco Group where
4:25:19I'm on the board of directors. We have
4:25:21no debt at all. We buy just about
4:25:23anything we want. But since we don't
4:25:25want much, it's never been an issue.
4:25:26That was true when we made next to
4:25:28nothing, and it's been true during our
4:25:30highest income years. We've also
4:25:31experimented with so many different
4:25:33lifestyle spending choices over the
4:25:35years that we're confident we're not
4:25:37depriving ourselves of enjoyment for the
4:25:39sake of saving more. It hasn't been
4:25:41perfect. I've made bad investments, dumb
4:25:43decisions, and like most parents, my
4:25:45wife and I wonder whether we're passing
4:25:47along the right financial values to our
4:25:49kids. No one can recognize how many
4:25:51different ways there are to live a life
4:25:53and how imperfect they are and honestly
4:25:55say they're doing everything right. I've
4:25:57also changed my mind about plenty over
4:25:59the years. And the right lesson from
4:26:00changing your mind is wondering which
4:26:02other of your beliefs you'll eventually
4:26:04update. When you accept how messy money
4:26:06can be, you value good enough simplicity
4:26:09over the false comfort of complexity.
4:26:11Over the years, I've come up with a few
4:26:13simple thoughts that guide how I think
4:26:15about money in my own house. Spend less
4:26:17than you make. Quietly compound. Money
4:26:19serves you, not the other way around. No
4:26:22one is thinking about you as much as you
4:26:24are. Independence is wealth. Health is
4:26:26wealth. Aim to be a good ancestor. Love
4:26:29your family. That's a pretty
4:26:30comprehensive list. Now, back to Kevin
4:26:32Cost. Benjamin Franklin didn't say
4:26:34honesty is the best morals. He said it's
4:26:36the best policy. It's what's going to
4:26:38help you and put you in the best
4:26:40position, earning you the most money in
4:26:42the long run. There's a correlary there
4:26:44with kindness. There are two reasons to
4:26:46be kind to everyone. One is moral. The
4:26:49other is selfish. Morally, you should do
4:26:50it because you're empathetic. Selfishly,
4:26:52you should do it because it's easy to
4:26:54underestimate how many people you may
4:26:56eventually rely on to help you. And
4:26:58you'll only gain their cooperation if
4:27:00you remain in their good graces. Kevin
4:27:02Cosner's story is such a good example of
4:27:04never realizing where help in life might
4:27:06come from and how people who don't look
4:27:08like the picture of success might
4:27:10actually hold the wisdom you're looking
4:27:12for. The world is unequal. Always has
4:27:14been and always will be. Skill is
4:27:16unequal. So that's for the better. But
4:27:18the knee-jerk association between wealth
4:27:20and wisdom turns dangerous when you
4:27:22think it's absolute. We're fortunate to
4:27:25live in a world that's so wealthy with
4:27:26so much opportunity and so much material
4:27:29abundance. But it's also become easier
4:27:31than ever to dangerously assume that
4:27:33only those who dress a certain way, live
4:27:36a certain way, or earn a certain income
4:27:38are worth paying attention to. So, let
4:27:40me propose one last thought about money.
4:27:42The luckier you are, the nicer you
4:27:45should be. Having money can accentuate
4:27:47who you are, but it can also blind you
4:27:49to who others are. If you're fortunate
4:27:51enough to live in a prosperous region,
4:27:53in a prosperous era, surrounded by the
4:27:56ability to learn about the world and
4:27:58express who you are, a beneficiary of
4:28:00the accumulated efforts and wisdom of
4:28:02the 100 billion people who came before
4:28:04you, the more you should go out of your
4:28:06way to appreciate what money can't buy.
4:28:09Realize that having money might
4:28:11highlight or magnify an incredible life,
4:28:13but it cannot create it on its own.
4:28:15Understand that people who have made
4:28:17different decisions than you and ended
4:28:19up with a different outcome than you can
4:28:21be just as smart, funny, insightful, and
4:28:24worthy as you are. They do what makes
4:28:26sense to them, and they're trying to
4:28:28find their way in a complex world. You
4:28:30do what makes sense to you, and you're
4:28:32trying to find your way in a complex
4:28:34world. And so we end right where we
4:28:36began with a reminder that all behavior
4:28:39makes sense with enough information and
4:28:41we are all on our own quest for the
4:28:44simple life. Thank you so much for
4:28:46taking the time to listen to this book.
4:28:49It's been a true pleasure sharing it
4:28:51with you. If you're looking for
4:28:52something to enjoy next, I'd love to
4:28:55offer a suggestion. If you liked Atomic
4:28:57Habits, you may also enjoy the other
4:29:00books available on my channel. New books
4:29:02are uploaded weekly, so be sure to
4:29:04subscribe to stay updated on upcoming
4:29:07books.

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