Money Rehab with Nicole Lapin - Is Insurance a Scam? with Entrepreneur Scott Galloway

Episode Date: October 22, 2024

Sought-after financial expert Scott Galloway is back on the pod. Once again, Nicole and Scott geeked out so much that we are splitting their conversation into two parts. Today you’re going to hear Scott’s take on money myths— from insurance to homeownership and everything in between. Then, they take a surprisingly vulnerable turn and talk about the role money has played in Scott’s childhood, and how the pressure to provide financially affects men in relationships. Don't miss tomorrow's episode where you'll hear the second part of this conversation, where Scott shares which stocks he is bullish and bearish on. $ Take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Visit: http://chime.com/MNN  $ Looking for the perfect holiday gift for your coworkers, friends, and everyone in between? Choose Nicole’s favorite wine, Justin. Get 20 percent off your order for a limited time with the code “MONEY20” at http://justinwine.com/  $ Ready to find a financial advisor that’s right for your financial goals? Get matched with a trusted, vetted financial advisor at: http://moneypickle.com/MNN  All investment strategies involve risk of loss. The information shared in this podcast is for informational and entertainment purposes only. Listeners should do their own research and consult a financial advisor before making any investment decisions. See terms for additional details: https://moneynewsnetwork.com/terms/ 

I love hosting on Airbnb. It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to

line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no

maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A.

Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Scott Galloway is back on the pod. Scott, of course, is a sought-after expert in business and finance. He's an NYU professor, bestselling author, entrepreneur, investor. He's the host of three top pods, the Prof G Pod, Pivot, which he co-hosts with Kara Swisher, and a new investing pod, Prof G Markets.

If you listened last time Scott was on Money Rehab, you know that we geek out together, so much so that like last time, we have to split this conversation up into two parts. So today you're going to hear Scott's take on money myths from insurance to home ownership and life insurance and everything in between. And we take a surprisingly vulnerable turn and talk about the role money has played in Scott's childhood and how the pressure to provide affects men in relationships. Then tomorrow, you're going to hear which stocks Scott is bullish or bearish on. But for now, let's start with real estate. Welcome back to Money Rehab.

Nicole, it's always good to be with you. So we spoke last January, not quite a year ago, but close. So much has happened since then. So I wanted to check in on a lot of it. But first and foremost, I wanted to check in on your assistant. When we talked in January, you said she was looking for homes in Florida. How is she doing with the recent hurricanes? Oh, it's a really interesting question. She's looking for a small condominium in one of those big developments in Sunny Isles because she wants to be close to her family.

And the difficult part in the opportunity is that a lot of these big condo buildings have a ton of supply because they're about to incur inordinate assessments because of the disaster, the building collapse. So the government has come in and told all of these buildings that they need to substantially upgrade their foundation and infrastructure. So all of these owners are facing $40,000, $50,000 assessments, which they can't afford. So there's been a flood of places onto the market, which both presents a challenge, but potentially an opportunity. So she's been looking, but in general, Florida real estate has leveled off or is down is the way I would describe it from the massive COVID bump. Down seems generous. You lived in Delray

Beach for a while, right? Can we say that Florida real estate is officially a bad investment? Well, no. Like anything, it's when you bought. I bought a home in 2011, then I bought another one in 2017. And the home I bought in 2017, which I still own in Delray, is arguably the best investment I've ever made. I mean, the surge there has been incredible. Housing has ripped up. So even if it's come down 10 or 20 percent, if you bought more than two or three years ago, you're fine. We talked about this last time, what a big fan of homeownership you are, but we didn't talk about it in the realm of natural disasters and how prevalent they've become. How do you think insurance should factor in, especially in California and in Florida? It's

not only gotten so expensive, but it's hard to even get. Yeah, so first off, just to back up, I think that before you make that type of purchase, the American dream, which is supposed to be homeownership, is brought to you by the National Realtors Association. For a lot of people, it turns into the national nightmare. And you should not grow up thinking

that you're not an adult, or that you can't mate, or you can't be a real American unless you own a home. That's just not true. well or better than you. Because in some regions, it's all about kind of yield, right? So in some regions where you can, if you can come up with a down payment, and sometimes there's first time homebuyers loans, it just makes all sorts of sense to buy a home. In places like San Francisco or New York, when you do the actual math, in many cases, it makes sense to hold onto that down payment, put it into the market, and not put all of your money into a home because it's more economical to rent. So I don't think it's a foregone conclusion. I just started a podcast called Raging Moderates with a woman named Jessica Tarloff, who's- How many podcasts do you have now?

To resist is futile, Nicole. I'm trying to catch you. I have three. You have three too, right? That's right. Yeah. But Jessica was saying that her and her husband, and they make a very good living. He works at a hedge fund. She's a kind of a cable TV star. They decided rather than spending

five, seven, $10 million on a place in New York, which is the kind of place they would want to live in. And that sounds like a lot of money, but it doesn't get you a ton in Manhattan. They'd rather put that money in the market and keep it working than going all in on real estate. And bottom line is, I want to say it's opportunistic and you should definitely talk to people because the last thing you want is at a young age to be house poor, constantly struggling to make your mortgage. And then two years later, you find out you bought at the top and you're down 30% and it's just every day you walk into a place and you just feel depressed and discouraged. So now with respect to insurance and what you're talking about, it's just every day you walk into a place and you just feel depressed and discouraged.

So now with respect to insurance and what you're talking about, it's a huge issue. And insurance is a couple of things. One, if you need that sort of insurance against a potential financial disaster, insurance is a must. And in some areas, you just can't get it. Having said that, and I'm curious what you think of this, I don't have insurance. I don't have health insurance. You don't have any insurance? Almost none. Yeah. I might buy some insurance to qualify to get into what's called an insurance-directed fund such that my short-term gains can grow tax-deferred, but that's another talk show.

But I gave up my health insurance seven years ago. I was spending about $50,000 a year. But you live in London, so you don't really need health insurance, right? I don't use NHS. I know I sound like a total douchebag here, but I have all privacy. You do, slightly. But we mean like across the board. You have cars, right? No car insurance? We have to have car insurance. I don't own any cars. But health insurance, I used to have life insurance. I gave that up. So let's do the math. I gave up health insurance. I'm a narcissist, so I have to have the best gold-plated insurance plan for me and my

family. Found that most of the time we were paying out of pocket. Insurance companies are really good at encouraging breakage. Wasn't in the network, no matter how expensive the insurance is. And once I got to a point where I can afford, let me be clear, this is a story of privilege. I can afford any health crisis. Anything that comes our way, I could manage. So I thought, okay, insurance is really for the big one. And so I gave it up. And in seven years, do the math, I've saved $350,000. That'll buy a lot of healthcare. So yet again, insurance is another transfer of wealth from the poor to the rich. Because here's the thing, Nicole, insurance, 45 cents on the dollar goes to profits and administration, meaning when you put a buck

into health insurance, you're getting 55 cents back, unless you're really old, in which case you're getting more back and young people are subsidizing you. So I think insurance is a total racket. There's no business where you pay a lot of money and hope to never use the product. And if I had it to do over again, I just would have invested in and gone to work for an insurance company. Every year they raise the premiums at about double the rate of inflation. And insurance companies have consistently outperformed every other, as far as I can tell, every other stock. Insurance, in sum, is regulatory capture, which is my way of saying it's a total ripoff if you can afford not to have it. I own 30 properties in Florida.

I don't have insurance on any of them. We did the math around a lot of different kinds of insurance and also concluded that it was a scam in a lot of cases where you could put money in an escrow account and then when you need it, go get it. I got in a car accident a couple of years ago and it was even hard for me to get any payout from what I paid in. And I had like fancy chub insurance, and they just fought me to get the one payout that I needed. But homeowners insurance, I find that really interesting. Nothing in Florida. You have no homeowners policies on any of your properties. So I own some rental properties, and they're worth $200,000 to $300,000 each, something like that. I mean, these are little casitas and gated communities. Unless a Category 8 hurricane comes along and takes them all away, it's just hard to imagine that if you got really unlucky and you moved in and a massive hurricane came along and blew out everything and flooded it, but the kind of premiums you have to pay now, if you can afford to lose the entire property, it's like every 12 or 15 years, I could

rebuild the whole thing. These aren't expensive places. My primary property, I don't know if we have insurance on it. Unfortunately, see above regulatory capture, a lot of mortgage companies are in bed with the insurance industry. And in order to get certain type of mortgages, you have to show proof of insurance. But unless I'm legally mandated to have insurance, which is total bullshit and opposite of every capitalist notion, if I want to take the risk, I should be able to. But in order to have a mortgage, sometimes you have to have insurance. It's like the biggest ripoff in the world when you buy a stereo at Circuit City and they say, do you want insurance protection?

Insurance is a shitty trade. And again, all it is is preying on middle and lower income consumers who can't afford the risk. So what you're doing is you're taking a series of small losses, trying to avoid a big one. And the small losses amount to much more than the big loss over the medium and the long term. So what would you suggest people do instead? Do the math and decide what kind of risk you're comfortable with. I'm very missed to say to people, don't have health insurance, right? I personally think young people, the reality is other than giving birth, young people don't incur health expenses. Young people are generally speaking very healthy. Disease and healthcare is a function of age for the most part. And the kind of things you want done when you're

younger, your insurance company doesn't cover anyways. It's a calculation on whether or not you really do the math and ask yourself, okay, could I be in a position to absorb this kind of hit and take this type of risk? It's similar to the risk profile you would look at when you invest in a stock or do something risky. But again, I would say with situations like this, have a kitchen cabinet and talk to people because the automatic gag reflex that the industries want you to have is you have to own a home and you have to have insurance. And neither of those are absolutes.

It's situational. Talk to people and do the math. Do you think the government has a responsibility to cover people who don't have property insurance, especially with all the Florida stuff and FEMA running dry and the National Flood Insurance Program in danger and Small Business Administration disaster loan running out of money? I think it'd be populist to say yes. I think no, because I think the only way we're going to solve climate change and address these issues is if people get hit really hard. I hate student loans because, or student loan forgiveness, because the only way we're going to bring down education costs is when students become better consumers and start saying, why am I paying $100,000 a year and taking on $60,000 a year or a quarter of a million dollars in loans to get a degree that's

not going to pay? And until people start saying, I am not moving into this area, I am not, until there is real incentive and it starts to really bang up the economy and you're not thinking, oh, I'm going to get bailed out by the government. I don't think we address issues like the crazy spiraling costs of education or we shouldn't build in areas that are becoming hurricane areas or the government needs to get more serious about climate change instead of giving everyone the sense of security that they should be bailed out by the government. I just, I don't like government. I don't like this, this moral hazard of companies taking exceptional risk and then getting bailed out when they should go bankrupt and go away. I think Delta Airlines

should have gone out of business during COVID. I can't stand these companies that have private capture in good times and then socialize the losses in bad times. I believe in winners and losers, and I don't like the notion that the government should come in and bail us out. So the banks should have gone away? Well, the banks didn't go away. We bailed them out. No, I know. Should they? Would you say they should have if you were in charge of the world? That's a really interesting combination. What I would say is we should have never let them get to a point. We should have bailed them out because they could have taken down

the global economy if JP Morgan and Goldman Sachs went away. What we should do though is have more antitrust such that similar to the restaurant industry, if McDonald's goes out of business, it doesn't matter because there's Chick-fil-A and Jack in the Box. When one company can go down and take down the global economy, it means that industry is not robust and needs to be broken up. So we should have industries such that they are allowed to fail. Because while the banking industry, and this is my problem with the COVID relief plan, look, we wanted to ensure that the banking system was robust in the US. And they did pay the money back. You got to give it to them. They paid the money back. It was the right thing to do. Bailing out everyone and everything in the CARES Act and

PPP and flushing $7 trillion in the economy was nothing but a transfer of wealth from the poor to the rich because 85% of that money wasn't needed. People weren't spending it on food or healthcare. It went into the market, which took housing from the average of 290 pre-pandemic to 410 post-pandemic, and it took stocks all-time highs. So if you're like me and you're a baby boomer and you own stocks or houses, champagne and cocaine, it's great. If you're young and trying to buy a house and thinking about investing in stocks, where do you find disruption? The reason I am in the position I am in right now is that back to 2008, while they bailed out the banks, they didn't bail out the economy. And Apple, Netflix, and Amazon crashed to $8, $10, and $12 a share respectively, and now they're trading at $180 to $720.

So disruption and churn are key for opportunity for young people. So all the young people have gotten to do over the last several years is loan me their credit card so I can ensure my prosperity on their debt. We need churn. We need winners and losers. Hold on to your wallets. Money Rehab will be right back. I love hosting on Airbnb. It's a great way to bring in some extra cash. I love hosting on Airbnb. It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or

something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself.

Find a co-host at Airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that

I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details.

And now for some more money rehab. more money rehab. You're on this big kick about debunking financial myths or money myths out there. So we talked about homeownership. We talked about insurance. Are there other money myths that we take as gospel or we take as truth that we should be rethinking? EMBC, every hedge fund, every mutual fund, every mutual fund, the entire financial services industry is a giant fucking grift. Add up every mutual fund, add up every hedge fund, add up every alternative investments, anything with a logo on it, and add up all the returns, and they've exactly underperformed the S&P by their fees. And here's the thing. Money is so insecure. As you get money, you like to think

you want to be a smart consumer. So you get convinced you get into a private equity fund, or you get into a mutual fund, or you get into a tech growth, whatever it is. The fees are nothing but a grift. You should go into Vanguard low-cost index funds. The entire industry is nothing but preying on your ego. Well, you're smarter than everyone else. I went into this fund or you went into this fund. SPY, low-cost index funds. BL.

That's right. You've heard the data. Donald Trump inherited $430 million. If you just put it into SPY, it'd be worth $20 billion. Instead, he's worth $8 billion because he keeps thinking he can build golf courses and casinos and shit. Go straight into index funds, all of those fees. Jack Bogle from Vanguard did the math. A third of your returns are eaten up by fees. And there's a huge industry that depends on making you feel insecure or convincing you that you're smarter than your average bear and can pick stocks or pick hedge funds or pick mutual funds. No, you can't. I work with the absolute brightest people

in the history of finance. My sum conclusion around working with the brightest people, academics and hedge fund managers is the following. None of us have any fucking idea. That's the bad news. The good news is that with demographics and productivity and technology, generally speaking, over the medium and the long term, the markets are up and to the right, especially in America. We have rule of law, an incredible alchemy of capital, education, innovation. So here's what you do. You automatically find automatic savings. Find a way such that the money never gets into your hands because 99% of us will fall victim or prey or be susceptible to the brightest people in the world and the best technology that will give us the exact best offer at the exact right moment and take all our spare cash, figure out automated

savings that are hopefully tax deferred or government matched or company matched and put it in low cost index funds. That is all you need to know. And then keep track of it. And when you get to a point of privilege and you have a lot of money and maybe 95% of your assets are in American funds, then maybe diversify internationally and make sure you can't get hit too hard, start diversifying. But this notion that anybody knows any more than the market, the S&P 500 is a lie. And it's one of the most expensive lies that's been fomented over the last 15 years with the emergence of the alternative investments community. I wish we could spread fee fertilizer. Totally agree. Can't beat the market,

and all the Morningstar stuff is a bunch of BS. Well, 100%. And there's money. There's so much money in it. You will hear, I don't know what the bias is called, selection bias. You like to think that you picked the right fund and you like to believe in heroes and that this person has outperformed the market. And occasionally they do. And Warren Buffett has outperformed the market. Basically, Berkshire Hathaway is an insurance company. has become not perfect but accessible, it is very hard to create alpha or create any sort of advantage. There will always be well-publicized exceptions of really bright people. I think there are some instances, private equity, the top VCs that get the best deal flow, distress credit, people who really go in there and really understand it. Yeah, I think some of those people can create alpha and outsize returns. Assume you are not one of those people. Most of us do not have access to those types of deals and deal flow. And people are going to pray again on your insecurities or desire to have a brand on your financial life. Just go into index

funds. I want to get into the algebra of wealth. It came out after you were on the show the last time. But the last lie that we've been told, and I'd love your thoughts as we segue into your book, that money makes you happy or secure. Well, okay, so there's bad news. And that is money can buy happiness. And that is middle income households are happier than lower income and upper income households are happier than middle income. The resting blood pressure of a kid in a low home that's suffering from poverty is higher than the resting systolic blood pressure of a child in a middle income home. That's the bad news. Money can buy happiness. The good news is that it tops out. And that is once you get to a certain point where you have

housing, can take nice vacations, pay for your kid's school, absorb a health care crisis. And by the way, if you're living in California or New York, that's a shit ton of money. That's not easy. But once you get to that point, anything above that is just a law of diminishing returns. Above a certain point, additional money isn't going to buy you any criminal happiness. Now, the other myth is that billionaires are unhappy. No, billionaires are no less happy than millionaires, but they're no happier. Millionaires are happier than people making $60,000 a year, but they're no less happy than billionaires. So at some point, and again,

this is a really good problem, when you have enough money such that investing it and growing it at 6% a year would cover your burn passively, you are officially wealthy and you don't need any more. And this notion that you need to keep growing that number to get happier, no, it's not going to get you any happier. What you need to start focusing on is a series of experience and activities that make you closer to the people you care about and foment and solidify deep and meaningful relationships. Daniel Kahneman's work on this, above a certain level, you don't get any incremental happiness,

which kind of lends itself, quite frankly, to just a crazy incremental tax rate once you get above, say, $3, $5, $10 million a year. Because the person you're imposing that super tax on, you're not really taxing their happiness. Whereas if you can figure out a way to get a family, a household that's making $80,000 a year, an extra $6,000 a year for child tax credit, that will increase their happiness, their well-being. So I've gotten Bernie Sanders or Elizabeth Warren and believe in a super tax on very, very wealthy people. The top 25 wealthiest people in America pay an average tax rate of six to eight percent. So can money make you happier? Yes,

up until a certain level. And then it adds no incremental value. When I was reading your book, I felt like I understood where some of this comes from, knowing you, Scott. And I kept going back to the mitten story as it felt really illustrative of not feeling like you have enough, also thinking about how to raise your kids with the same grit that you had. Can you tell us about the mitten story? You're going to tell it better than I can. That's a generous question. Thank you. So my son, we're skiing and my son comes home. We're actually skiing in France. And my son comes home, he walks in and he's crying. And he was

about 11 at the time. And I'm like, what's up? And he said, I lost a glove. And I'm like, well, that's okay. And he's like, we just bought them this morning and they were 30 euros. And I'm like, that's okay. We have the money. And she's like, no, they're expensive. And mom bought them for me. And he was just so upset. And I said, well, let's retrace your steps. We're looking everywhere for them. And I'm trying to instill this wisdom on them. And all of a sudden we look forward and we see this Christmas tree out in front of a

store. I remember it was the Philippine store. And a really lovely French citizen had taken the glove and stuck it on top of the tree, knowing this little kid had lost it. And he literally just darted out in front of me and jumped of the tree, knowing this little kid had lost it. And he literally just darted out in front of me and jumped on the tree and grabbed his glove and held it to his heart. And I remember thinking, I don't know where he got that. But I remember it took me back to not an ugly place, but I grew up with a single mother. We didn't have a lot of money. The biggest source

of stress in our life was economic stress. My mother lived and died a secretary and was out of work a few times. And I remember my son is like me in that he's always five minutes away from losing everything. And I lost a jacket. I came home. My mom was pissed off, but dealt with it. We went to JCPenney's and said, this is your Christmas present. It was like October. Jackets were 33 bucks. And then 48 hours later, I promptly lost that jacket. And I remember being at home, digesting my stomach, waiting for my mom to come home. My mom came home and I immediately blurted out, I lost my jacket. It's okay. We're going to be fine. And my mom came over and she was very stressed out and she did something that was so unusual. She took her fist and she started pounding on my leg. And my mom was a small woman. And by that time, I was already much bigger than her. that he really understands the value of money.

And I don't know where he got that because I try to teach my kids grit. Meanwhile, my other son wants me to take him out and buy a bedazzled jeweled Philip Klein jacket the next day that's, you know, $400. It's just so weird. Where does that come from? And as a parent, what I've come to realize is that we like to think that we're engineers, engineering the sheep. We're shepherds. We get to choose where they graze. We can point them in the right direction. But that whole story just brought back all of this economic stress I felt as a household and how nice it was that not only we found the glove, but my son has connected money and value and doesn't expect to be given things, that he recognizes there's sacrifice involved in buying things. Anyways, that's my glove story. Sounds like one of them has.

One of them. Yeah, the other. The other has Range Rovers and cocaine, probably. We'll see. Cross our fingers. So do you think some of your drive to succeed, and I know that you struggle with this idea, so do I, of feeling like you have enough or from this abundant mindset versus scarcity mindset, does your drive to succeed come from wanting to be able to buy your nine-year-old self a new coat? Oh, 100%. I can tell you the moment I got my shit together. We didn't have money, and I thought about money a lot, but I wasn't really that driven. I was the classic underachiever. Barely got into UCLA when I had a 76% admissions rate, had to apply twice. Went to work for Morgan Stanley. I was okay, not great. Left there after two years. I was living at home with my mom, and I thought, what am I going to do? So I went to graduate school. living at home with my mom and I thought, what am I going to do? So I went to graduate school and I was just sort of sleepwalking through life. I wasn't that motivated. I never really applied myself. And my mom got very sick. My mom had cancer and she was discharged after having

a mastectomy very early. She was with an HMO and they discharge her too early because it's expensive to get people in the hospital. And she called me when I was at graduate school. I was in my first year at the high school and said, you need to come home. I'm really struggling. And I flew home and my mom was not traumatic. And I flew home and I walked in quite frankly, Nicole, into a situation that was really, really ugly that I just couldn't handle. I didn't know what to do. And I started calling temporary agencies to try and find a nurse and nurses were $35 an hour. And we just didn't have that kind of money. And I just remember feeling so humiliated and emasculated that this woman who'd done such a good job raising me, I couldn't take care of her.

And that moment I realized I really need to get my act together. I need to, you can't decide to be rich, but I decided to try to work very, very hard and control what I could control to getting to economic security. I never wanted to, rapacious place for people who don't have economic security. So for me, I would say my drive to become rich involves women. One, I wanted to take care of my mom, and this is less aspirational, but it's true. I also noticed amongst young men that guys who had their shit together economically had a larger selection set of mates than they deserved. And I figured out, okay, I want all of those things. I want to be able to take care of the people that I love, and I want to be more attractive to women. And I realize how weird that sounds, but I connected the dots very early and was very driven economically. I didn't start companies to save the world or to follow my passion. I started companies to get economic security,

and I was willing to make the trade off. I did very little, but work for 20 years. It cost me my first marriage. It cost me my hair and it was worth it. You're rocking a bald head like no other, Scott. So I think you're crushing it. You talk a lot and I appreciate this, that you talk about the factors setting young men up to fail right now. And money plays a huge role in that. It played a huge role for you. The pressure to be a provider is still really gendered. We had a producer on the show who was dating a woman who dumped him because he didn't make enough money. I've never seen that the other way around. That financial stress obviously really affects self-esteem in men. How do you

think financial pressure affects masculinity and vice versa? I really appreciate you asking this because we don't want to have an honest conversation about it. And that is economic independence is really important. And no group has ascended faster globally than women. Women are more likely now to be seeking tertiary education globally. When you take into account there are a lot of societies that don't want women in school, that is extraordinary. We're going to have three female college grads for every two male college grads over the next five years. More women in America, single women, own homes now than single men. That's wonderful.

In urban areas, women under the age of 30 are making more money than men. And we should do nothing to get in the way of that. Economic independence is important for women. Men are coming off the tracks. They are not attending college. A lot of the jobs that traditionally served as on-ramps to a middle class or financial security have been outsourced. They're spending too much time alone. They're four times as likely to kill themselves. They're three times as likely to be addicted. They're 12 times as likely to be incarcerated. And the externalities of that have impacts on women. One, the country and women aren't going to flourish as long as young men are

floundering. And two, in the mating market, and we don't like to talk about this, but women, generally speaking, and there's a lot of research around this, are attracted to men for three reasons, and I'll go in reverse order. The third is kindness. You want a partner who's going to be kind. Women, generally speaking, might be attracted to assholes in the short run, but over the long term, there's evidence showing they want someone who's kind. Number two is intellect. Guys who make good decisions, people think they'll make good decisions that will benefit me and my children when I'm most vulnerable and make just good

decisions for the family. And by the way, the fastest way to communicate intellect in a mating scenario is humor. But number one is their ability to signal resources. Now, what does that mean? It doesn't mean you have to be rich at that moment. It means you have to have your act together. You have a plan, you're serious about money, and you give the impression that you will be economically secure. Three in four women state that economic viability is key to a mate. It's only one in four men. Essentially, men don't really care. Women care a lot. Marriage is becoming a luxury item, and that is three and four men in the upper decile of income earners get married. Only one in three or one in four men in the lowest decile have the opportunity to get married. So we don't like to talk about this,

but men mate socioeconomically horizontally and down, women horizontally and up. And when the pool of horizontal and up keeps shrinking because men are flailing, there's just less mating and less household formation and lower birth rates. 40 years ago, 60% of 30 to 34-year-olds had at least one child in the house. Now it's 27%. And how many times, and I'd love to get your feedback on this, have we heard, I know all of these great women, high character, professionally shit together, attractive, and they can't find a man. Here's the thing, they can find a man, they just can't find a man they see as viable. They can't find a man they

want to mate with. And so it is creating this crisis and loneliness. crisis and loneliness. Men feel as if they don't have any mating opportunities. There's this income or what I call mating inequality. And that is women, generally speaking, are very drawn to the same man. And when they're on dating apps where you can't express humor, smell, pheromones, kindness, it becomes all about resources and height, quite frankly. quite frankly. And the top 10% of men, it's never been better, but they can engage in what I call Porsche polygamy, where they can have a date every night, but that doesn't encourage good long-term behavior from them. And generally speaking, the bottom 90 of men on dating apps get almost no play. A man of average attractiveness has to swipe right 50 times to get one match. And if he matches with five women for coffee, four will ghost him. So he literally has to swipe right on 200 to 250 people to get one coffee. And when men without the

prospect of a romantic relationship, let me start with the positive. Women, when they don't have a romantic relationship, are much better at finding and giving love across other relationships and channeling some of that energy into their career. Men, without the prospect of a romantic relationship, stop showering. They stop having a plan. They engage more in risky activities. They become much more prone to misogynistic content. They become much less likely to believe in climate change. They become susceptible to conspiracy theory. They start blaming immigrants. They start blaming women. They become really shitty citizens. I think a lot about struggling young men, how some of the wonderful things that are happening for women in concert with some of

the sociological, biological, and economic factors hurting young men is creating a crisis in loneliness. And I think it's a big issue for our country. I'd be curious to hear your thoughts. Well, I'm curious, you're seeing this as you raise two boys, right? Like, how are you seeing this manifest with them? How are you showing them to develop emotional relationships, maybe in non-romantic ways in the world of social media, which I know you don't want them on. But you talk in the book about wealth porn. We're seeing it, we're seeing ads disguised as content. We're seeing it just bombarded, comparing ourselves like never before. How much do you think that plays a role in this epidemic that we're seeing?

It plays a huge role. First off, men are much more susceptible to addiction. And also they're less mature. Their prefrontal cortex literally matures later than a woman's. And what you have is the deepest pocketed, most talented companies in the world are all trying to give young people, and especially young men who are more susceptible to it,

the belief or the myth that they can have a reasonable facsimile of life on a screen with an algorithm. You don't need friends. You can go on Discord and Reddit. It's hard to get friends, right? Well, you don't need to. You can find people with similar interests on Discord or Reddit. You don't need the rejection and effort of trying to make money and going and putting in a tie and interviewing and maybe starting at the bottom. You can make money trading stocks or crypto on Robinhood or Coinbase. You don't need to go through the effort and humiliation, quite frankly, of trying to get a plan together, get to the gym, be attractive, find someone to help you dress,

approach strange people, express romantic interest, and court a woman. That shit's hard. The reason why romantic comedies are two hours and not 15 minutes is this shit is hard. And why do that when you have you porn? And so you have guys who have literally sequestering to a screen in their parents' basement that aren't engaging in life. And a lot of those skills around trying to get a job, trying to get a girlfriend, trying to make friends are key to professional success. Show me someone who has a lot of friends. Show me someone who interviews well. Show me someone who can meet a strange woman at a bar. I'm going to show you someone who develops the skills to be successful professionally. And these guys then get affirmation that they have no worth from the female community online, which has greater inequality than Venezuela around

income inequality in terms of everybody wanting the same person. And they come off the track. So there's definitely social media has ramped up politicization. It's yet another reason that women and men... When I was dating in my 20s and 30s, for the life of me, I couldn't tell you what the political views were of anyone I dated. Now men are getting more conservative, women are getting slightly more progressive. So it's yet another reason that people cross each other off their list. And I worry that young men are not going out, not engaging in society, becoming sequestered, becoming lonely, becoming out of shape, becoming professionally and romantically unviable. And I think it hurts men, I think it hurts women, and I think it hurts society.

And I think a lot about how do we level up young people. I don't think you can just target men, I think it would be too politicized. But I'm involved in a program at UCLA and Cal where you can get not a traditional four-year degree, but a certification in vocational programming and cybersecurity, entrepreneurship, specialty construction, because there's a lot of great job on the mainstream economy. We all knew that guy in high school, woodshop, metal shop, and auto shop, which by the way, have all disappeared, who knew how to fix cars. Well, guess what? That person can make 80 to $120,000 a year out of high school installing energy-efficient HVAC. We're going to need a ton of people who know, have specialty construction skills for all these nuclear power plants that are being fired up again. So I worry

a lot about young men because if they're not economically viable, they're less attractive. And women effectively, 50% of women say they won't date anyone shorter than them. I bet it's more like 80% because it's an uncomfortable thing to own up to. Most women will not date a guy who is shorter than them financially. They're just not attracted to them. And so it is important that we level up men emotionally and economically. And if you look at divorce rates, the majority of it can be reverse engineered 70 of divorce findings for women and i would argue the majority of them can be reverse engineered not to a lack of shared values or infidelity but um economic stress and that is the guy has a breakdown the

guy loses his business um the the household has economic trouble and those hvac jobs scott are now coming back they're they're you saw these articles in the wall street journal that's becoming sexy pe firms are are snatching them up the plumbing firms and and whatnot so maybe what i'm saying is as as parents we got to stop shaming our kids i don't know if you've been into any of these parties but there's a hush tone oh i don't know if you heard, but Bobby dropped out of Rutgers. Oh no, Bobby's a failure. And Bobby's parents have failed. Two thirds of kids in our nation aren't going to end up with a traditional four-year degree. Does that mean two thirds of our kids are losers and two thirds of households have fucked up? No, we need to stop shaming. There's

huge opportunity in the main street economy. Not 11% of LinkedIn profiles in the UK and Germany have the title apprentice. It's 3% in America. We've lost this apprenticeship structure. And I think that has disproportionately impacted young men. But you asked me what I was doing with my boys. If you were to reverse engineer a man who's incarcerated, a kid who's struggling with addiction, to one key pivotal moment where that kid came off the tracks, it's the following. It's when he loses a male role model. We have the second most single-parent homes in the world, just behind Sweden. And what's interesting is the girls in single-parent homes, when we say single-parent,

what we mean is it's mom. 92% of the time, the single-parent home is head by the mother. And that brings up questions about family court and custody awards, but that's a different talk show. The girls in single-parent homes have similar outcomes in terms of college attendance, rates of self-harm, rates of depression. Boys, immediately when they lose that male role model, become much less likely to go to college, much more likely to be incarcerated, much more likely to kill themselves. So what it ends up is that while being physically stronger, boys are emotionally and psychologically much weaker than girls. And what is the mandate?

It's a bunch of social programs, but more than anything, I think that dads need to stay very involved in their kids' lives. One out of three men have no contact with their children after six years. There are so few now male teachers in the primary education system that there are millions of boys entering manhood without having had a single male in their life at school or at home. So I believe that we should have social programs that immediately and part of family court should be, if in fact dad's not going to be around a lot, how do we get more men involved in this young man's life? And I speak

from experience here. My dad and mom got divorced when I was eight. My dad got transferred to Ohio. I saw my dad maybe once every couple months. He wasn't very present in my life. He tried, I'll give him that, but he wasn't very present in my life. But my mom got all these wonderful men involved in my life. There was a neighbor, this nice single guy in his 30s, used to take me horseback riding. I walked into Dean Witter Reynolds when I was 13, because my mom's boyfriend gave me 200 bucks and said, go buy stocks. I walked in and I met this guy named Cy Saro. Every day for two years, three years from Emerson Junior High, I put two dimes in the pay phone and I'd call Cy and he'd give me a lesson in the markets about, I own Columbia Pictures stock. He would say, close encounters of the third kind is a hit. That's why the stock is up 50 cents

today. And he'd give me a lesson in the markets. I have been buying stocks since the age of 13. Also, 46 years later, Cy and I still exchange text messages. I had wonderful men who stepped into the void. And this is a couple of things. We need social programs and third spaces to ensure that boys have men involved in their lives, regardless of their family situation. And also, Nicole, if we want better men, we need to be better men. The ultimate expression of masculinity, I'm writing a book on masculinity, I believe, is to get involved in the life of a child that isn't biologically yours. And if you're a man, you don't have to be a baller, but as long as you're living a virtuous life,

a few questions with your coworkers, your friends, you're going to find there are young men that need guidance and mentors everywhere. There are three times as many women applying to be big sisters in New York than there are men applying to be big brothers. And there are a lot of young men and boys who need that guidance and need that care and need that company of men. So in sum, we need more men to be involved in boys' lives. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.

Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.