Ten Percent Happier with Dan Harris - 543: The Psychology of Money | Morgan Housel

Episode Date: January 9, 2023

Money is often a messy and complicated topic that provokes a lot of anxiety. Today’s show is the first episode of a two-part series on managing our relationship to money and understanding what role money really plays when it comes to our happiness. Morgan Housel is the author of The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness. Translated into over 50 languages with over two million copies sold, Housel is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. In this conversation we talk about: The difference between happiness and contentmentThe difference between being rich and being wealthyThe elusive but crucial concept of “enough”The importance of not moving the goalposts when it comes to enough-nessWhy financial success is more about behavior than intelligenceHow our lived experiences impact our perspectives on money Full Shownotes: https://www.tenpercent.com/podcast-episode/morgan-housel-543See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This is the 10% happier podcast. I'm Dan Harris. Hey, everybody, after more than a decade of meditating, writing books about meditation, happiness, and love, and hosting this show where I interview gurus and researchers of all stripes, after all of that work, if I had to pick the one place where I am still the least regulated, the place that provokes most of my anxiety, it would be money.

It's such a rich and messy and complicated topic. It links back to our childhoods, our need for safety, our desire for love, our compulsion to keep up with other people. In that regard, actually, there's an old expression I love. It runs something like this. A happy man makes a hundred bucks more than his brother-in-law. But now, we don't just compare ourselves to our in-laws, social media has allowed us to compare ourselves to literally everyone. So that's fun. So how to manage this? How to handle our relationship to money

safely. Today we are launching a two-part series. On Wednesday, we're going to talk to a Dharma teacher who's done a lot of thinking about our relationship to money and we'll talk about it in Buddhist terms. Today, though, it's Morgan Housel, author of the best-selling book, The Psychology of Money, which has sold more than two million copies, Morgan is a partner at the Collaborative Fund and a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers. In this conversation, we talked about what role money really plays in our happiness, the difference between happiness and contentment, the difference between being rich and being

wealthy, the elusive but crucial concept ofment, the difference between being rich and being wealthy, the elusive but crucial concept of enough, the importance of not moving the goal posts when it comes to enoughness, his contention that your success with finances has less to do with intelligence and more to do with behavior, having more control over greed and fear

when it comes to our money, how our lived experiences impact our perspective on money when it comes to our money, how our lived experiences impact our perspective on money for the rest of our lives, why we overestimate the social benefit of having nice stuff, why you should save for savings sake, and why it's so important to leave room for error in your financial planning. So a lot here. It's a very rich episode to be a little cute. And we will get started with Morgan Housel right after this.

Before we jump into today's show, many of us want to live healthier lives, but keep bumping our heads up against the same obstacles over and over again. But what if there was a different way to relate to this gap between what you want to do and what you actually do? What if you could find intrinsic motivation for habit change that will make you happier instead of sending you into a shame spiral. Learn how to form healthy habits without kicking your own ass unnecessarily by taking our healthy habits course over on the 10% happier app. It's taught by the Stanford psychologist Kelli McGonical and the great meditation teacher

Alexis Santos to access the course just download the 10% happier app wherever you get your apps or by visiting 10% calm all one word spelled out okay on with the show hey y'all it's your girl Kiki Palmer I'm an actress singer and entrepreneur on my new podcast baby this is Kiki Palmer I'm asking friends family and experts the questions that are in my head. Like, it's only fans only bad, where the memes come from. And where's Tom from MySpace?

Listen to Baby This is Ski-E Palmer on Amazon Music or wherever you get your podcast. Morgan Housel, welcome to the show. Thanks so much for having me, Dan. I'm excited to talk to you. Let me quote you back to you. You say early in your book, the premise of this book is that doing well with money has little to do with how smart you are and a lot to do with how you behave. Can you unpack that?

Well, I think it's true in finance. I'll go into that in a second, but I think the more important part is that it is not true in almost any other field. In most fields, whether it's medicine or engineering or technology, how well you do in your career is heavily tied to your intelligence, your education, how well you did in school. You're not going to find any doctors who didn't go to med school. They're just really smart people and they do what they do. Like every doctor went to med school.

It's very hard. You need to be intelligent, et cetera. So people understand that connection. In finance, I think it is so much looser, if not just non-existent, where you can have people who have a PhD in finance from Harvard. And they know all the formulas, all the techniques, they have all the data, and they fail miserably.

They go bankrupt. And then on the other end of the spectrum, you can have a country pumpkin who has no education whatsoever, and doesn't know anything about finance, but they have total control over their sense of greed and fear. They save, they invest for the long term, and they retire fully independent, multi-millionaires donating their money to charity. And I think that disconnect just doesn't happen in any other field, which makes finance and money a pretty important and just unique topic in people's lives. That's easy to overlook. You use the phrase total control over greed and fear. Who has that? And you know, that's a very subjective phrase that I use, but you have people who, let's

just say, have invested consistently every month in a low-cost index fund in the stock market and they do it for 30 or 40 or 50 years. Those people exist. They are out there. And during the market crashes, when the stock market crashes in the economy plunges in 2008 or the year 2000 or March of 2020 with COVID, they did nothing. They didn't panic. They didn't do anything.

They didn't even check their accounts. They weren't even thinking about it. There are people for whom their investments are so out of sight even check their accounts, they weren't even thinking about it. There are people for whom their investments are so out of sight out of mind, they're not even thinking about it. And those are the people that, in my view, in my subjective definition, would have complete control over their sense of green and fear.

They're not getting overly excited when the market is booming. They're not freaking out when it's going down. They're just letting it ride for literally decades. Those people are out there and they are some of the wealthiest and most successful investors you'll ever meet.

And one of the common denominators about those people is that by and large, they are not professional investors. They are not Wall Street investors. They are not people who even know that what they are doing is so special and rare. There are people that don't have any financial background and whatnot that are just leaving it alone and letting it run. And there is such a tendency and finance for the smartest, most educated people. The people on Wall Street, or we have PhDs from Harvard or MIT, to want to fiddle with

the knobs and pull the levers as much as they can to try to earn higher returns from their investments to do better with their money. And by and large, not always, but overwhelmingly, it ends up backfiring on them. And the novices who are just leaving it alone forever, if you can invest consistently in the stock market for 30 years or something like that, you will end up in the top 5% of investors. You will be 95% of the pros who are fiddling with the knobs, so to speak. And again, to repeat, that just doesn't happen. That situation does not happen in almost any other field. It's interesting. I know we're both going to self disclose in the course of this

conversation. You talk about people who just let it ride. So my parents did that. They were both academic physicians, which is not an extremely high paying job. We had a solid upper middle class upbringing, but you know, they were not CEOs of major companies or anything like that. But they use their income after paying for their household expenses and whatever things their children demanded to save. And they just let it ride in these index funds or maybe a few mutual funds forever. And didn't pull it out, didn't freak out about it. And you know, so that's how I invest. I never, or maybe once a year, look at the total number of the bottom line for what we have

and savings, et cetera, et cetera. But I would definitely not describe myself as somebody who has total control over his greeting fear. I just have so much fear that I won't allow myself to look. I just let it ride. I trust that it's in the hands of experts. I understand the idea that if you, I guess it's called dollar cost averaging, that if you

just continue to save, you're buying one at a time, you're buying one at a slow over time, that means you're getting a bargain. Anyway, any response to anything I've just said? Well, it's interesting because my parents were almost the exact same. My dad was an ER doctor, so not an academic physician, but he was a physician, no financial training, no financial education or background,

or even I would say even high interest in investing, in terms of him being like excited or that interested in it. But he dollar cost averaged into Vanguard index funds. He's done it for going on 40 years now. And I honestly think that if you put my parents, if you rank them against professional investors, they would be the top 5%.

Top 5%. Maybe even less, top 3%. It's astounding. And again, that just doesn't happen in any other field. So I think maybe one analogy that might be close to it is that you can be a Harvard trained doctor, let's say, but if you drink too much and smoke and you're stressed out and you don't sleep, your health is going to be terrible. And on the other hand, you can know nothing about biology or medicine, but if you eat healthy

and exercise and you're low stress, you'll be very healthy. That's one analogy of how people with more education, like how smart you are, doesn't merely make that much of a difference. It's how you behave that has all of the impact in the world. And I think there is a truth too that the people like our parents, my parents and your parents, how they invested, the way that they did it is very boring and hands off.

It's the least exciting thing that you could do. Dollar cost average into an index fund of boring, just a broad index and leave it alone for three decades. So boring. And if you are a financial professional and you're trying to be intellectually stimulated by your career or you're trying to justify your fees to your clients, you can't do something that boring. You can't do it. You have to be, again, like pulling the levers and fiddling the knobs to try to keep yourself excited and to show that your clients that you're doing something for them. And there's a very well-known correlation. This has been studied in many different studies of the more activity you have in investing, the more you are buying and selling and trading, the worse that you do on average. And so that's why you have all these professional investors that end up doing so much worse than the novices who have no idea what they're doing, so to speak.

So if we have people listening to us who are in veteran, compulsive, knob, twiddlers, what would you recommend as a way to have a little bit more control over greed and fear so that you can actually do better in the long run? I think there's a few things to bring up here. One is I'm making up these numbers, but I think they're directionally right. 10% of people, 10% of society does not need any help with their finances. They were born understanding intuitively,

compound interest and how much they should save. They just get it. Sounds like both of our parents are probably in that group. That's 10% of people. Another 10% of people cannot be helped with their money. They're compulsive gamblers, no matter what you tell them or what information you show them. They're gonna make terrible decisions with their money. They're compulsive gamblers, no matter what you tell them or what information you show them, they're gonna make terrible decisions with their money.

That's another 10%. And then there's 80% of people who want and need good advice. And for those people, if you show them the right data and tell them the right stories, they will say, oh, this makes sense, I get it now. I'm gonna try to do something a little bit differently. To me, the most important data that exists in investing for investing in the stock market,

is how common historically major volatility has been. So in the stock market right now, if anyone follows it, even just loosely follows it, you will know that the stock market is down a lot this year. It's down 25% year to date. You've lost a quarter of your money in the last nine months. That seems like a crazy outcome, like something broke somebody made a huge mistake, like shame on policymakers. If you look historically over the last 100 years, that kind of decline is something that occurs on average every three or four years and has for the last century.

It's a very normal thing to occur. And by the way, during the last century, the stock market increased 200 fold. You made 200 times your money. But during that period, it is a constant chain of loss and pullback in bear market. So I think just understanding how common those things are makes it so that when you deal with a pullback like we are, it's a little bit more palatable than it otherwise might be. The other way to think about this that I think goes a long way in changing your mindset

and how you think about greed and fear is most people when they lose money in the stock market, their portfolio goes down, they view it as a fine. And a fine means you're in trouble. You made a mistake, like here's your punishment shame on you, that's what a fine is. A much better way to think about it though is viewing your volatility as a fee. And a fee doesn't mean you're in trouble, doesn't mean you made a mistake. A fee is just the cost of admission to get something better on the other side. And if you view volatility as, oh, this isn't fun, I don't enjoy it. But this is the cost of admission. I'm just paying my dues in order

to get good long term returns over the next 10 or 20 years. Again, it makes it so this volatility is just more palatable. It's not fun, it's not enjoyable, but you say, I'm just paying the bills here, but I know, I'm an optimist over the next 10 or 20 years and paying these bills is actually worth it to get something better on the other side. We've been talking about the psychology of investing, but let me just ask you a question about the psychology of money writ large.

What do you think, and I'm sure you've thought a lot about this, the connection is between money and happiness. The old saw about how money can't buy you happiness. But then there's the old expression about how rich or poor it's nice to have money. So what is the connection as far as you can see? There's a quote from the movie Boiler Room that I think sums it up well. He says, people who say money doesn't buy happiness don't have any. That's a good way to kind of sum it up too.

I think there's two things to think about here. One is what kind of happiness might money buy you. And most people when they think about the purpose of money, the knee jerk reaction is money buys you stuff. It buys you homes and cars and vacations and clothes and fancy restaurants. That's what money buys you. It's more stuff. That's one thing and I don't want to poo poo that because I like nice stuff as well.

But there's another thing that money buys you that is so easy to overlook and discount, which is just freedom and control and autonomy. And just being able to wake up every morning and say, I can do whatever I want today. I'm not reliant on anyone else. I have my own money, my own wealth, to live where I want, retire what I want, work in the kind of job that I want, work for whom I want. Having that freedom and independence and autonomy that comes from the money that you've saved is that to me is by far and away the most important thing that money can buy in terms

of actually giving you a better life and making yourself happier. The other thing that's important here is the word happy can throw a lot of people off. Happiness is always a very fleeting emotion. I was using the example, like, if I told you the funniest joke in the world, you've never heard of funnier joke, you might laugh for 20 seconds. And then you're done laughing. And if I repeated that joke to you every day, it would not be funny anymore. Happiness is the same. It's not that happiness doesn't exist, of course. It's just always very fleeting. It's a moment in time. I think what money can buy you though,

is not necessarily happiness, it's contentment. And that's what a lot of these studies would show, is that are rich people happier than people with less money? No, not necessarily. Are they more content in life? Are they more likely to say, I've accomplished most of my goals?

Are they more likely to say, I'm pretty okay with where I am right here. I'm not necessarily happy, but I'm okay with my lot in life. Yes, they're more content, but that's very different from happiness. They're not waking up every morning smiling ear to ear. And in fact, a lot of the richest people in the world are what I would describe as distinctly unhappy. I mean, there are 14 divorces in the top 10 richest people in the world. 14 and the top 10 richest people in the world. 14 and the top 10 richest people.

And I think if you look at a lot of the lives of Bill Gates, Elon Musk, Warren Buffett, a lot of them, if you really dig into their biographies, do not live lives that I think most of us would want to have or emulate. Warren Buffett has been, I don't know if I would use the word hero, but someone who I've been always fascinated with and admired, and I still do. I just think he's lives a fascinating life. That is so amazing.

But his personal life, if you dig into his biography, his biography is called Snowball. It was written by an author named Alice Schroeder. His personal life has not been great at all. In fact, there's been a lot of moments in his personal life that are disastrous. And it's important when you are looking up to other people who you want to be. And oftentimes, particularly for younger people, who they want to be and look up to are the richest, wealthiest people. It's important to realize that if you want their life,

you can't just pick parts of their life. You can't just say, I want his house and his money and his good looks. It doesn't come like that. If you want to be Warren Buffett, you also have to have the terrible personal life that has come with it. If you wanna be Warren Buffett, you also have to have the terrible personal life that has come with it. If you wanna be Bill Gates,

you have to have the personal life that kind of fell to pieces over the last two years with Bill and Melinda Gates. All those things are wrapped up into one in a way that I think it makes it very easy to overlook what money can and cannot do for you in terms of your happiness. Why do you think the super rich have so much tumult in their lives?

What's going on there? I think by and large, it's actually pretty easy to explain. You become super rich by having an oddball personality. Every single one of them, with the exception of, I guess, of people who have inherited it, for people who have earned their own dynastic riches, every single one of them without exception is an oddball. They're a curious character of a crazy obsessive personality. I mean, Elon Musk, when he was in his thirties, he said, I'm going to take on NASA and general motors. In his thirties, the only kind of person who thinks they can do that is a maniac, a complete

nutcase maniac is the only person who would say that's what I'm going to do with my life and my money. And we should not be surprised when people who have oddball personalities that lead to positive attributes also have oddball personalities that lead to negative attributes. Bill Gates is known as just a horrific, horrendous person to work for. And now his driving personality and his ability to be kind of a jerk as a boss is why he was successful. They had all these negative attributes as well. And I think maybe the easiest way to summarize this, the common denominator is they are rich

and successful because they have a 24-7 obsession that verges on like a tortured mindset. And that tortured mindset that has led to their success also makes them just not a very balanced and happy and enjoyable life. I sometimes hear my seven-year-old son, I know you have a seven-year-old as well, I sometimes hear my seven-year-old son playing with his buddies and they will reference with some frequency Elon Musk because they know him as the world's richest man. I guess what I'm hearing from you is that we shouldn't shoot for that, because in order to get that, we would have to be a true outlier, which most of us are not.

And I guess I'm hearing a little bit in there that in order to have that kind of success, you've got to have this grinding mindset that would probably not be a fun one to inhabit. Right. I mean, if you asked most adults, what is the pride and joy of your life? The most common answer you would probably get is my children, my marriage, something around your family, your friends, the people he hung out with. But there's so many stories of Bill Gates

has mentioned that he went, I think it was 25 years of working seven days a week. He didn't take a day off for 25 years. Honestly, and a lot of those days where he was working, he would say, he came home from work at 11 o'clock at night, crashed on the couch, and went back to work at 6am. And he did that seven days a week for 25 years.

You wanna talk about the memories that were missed with your children, and relationships of just hanging out, just having a glass of wine by the fire with your friends kind of thing. All those things get missed when you have that completely obsessive personality. Elon Musk has talked about this as well that you know, Tesla went came very close to going bankrupt in 2018. That's now a well-known thing. And Elon Musk talks about for Beiges to do the entire year. He was sleeping in the factory.

He was literally never leaving the factory. He was working 24 hours a day effectively and during that period He spent no time with his children and there's an interview where he gave where he comes to tears over this fact that the success of Tesla Comes directly at the time he has spent with his children That is not something if I were if I were on my deathbed and I said, you know looking back at my life What would I be prouder of my net worth or the relationship with my children? It is so obvious, so just abundantly clear which I would rather have. And I think this is something that most young people,

you mentioned are seven-year-old sons. My seven-year-old son talks about Elon Musk as well, exactly like yours do. But especially if you're talking about a young man in their late teens or early 20s, that is when, particularly I think for young men, But especially if you're talking about a young man in their late teens or early 20s, that is when particularly I think for young men, the allure in life of who you want to be is rich and famous.

That's it. I was like that when I was in my teens and 20s. The top area of life is just having a lot of money. That's it. And you realize as you go on, especially when you have children, that's not even remotely close, that so much of your happiness and enjoyment in life and what you are proud of of and has been most fulfilling is your relationship with your friends, family, and children. And so if you view a grinding career that is very prosperous financially as coming at the direct expense of that, that is something where it's like not only do I not admire that, I want to run

away from that as fast as I can. David Brooks talks about the difference between resume virtues and eulogy virtues. Have you heard that? Shpiel from him. Yes, it's great. You can correct me if I'm wrong, but a resume virtue is I built a billion dollar company. A eulogy virtue is Morgan was a great friend and loving husband and father. What we should really strive for in life are the eulogy virtues. Is that right? Yes. I don't want to speak for David Brooks, but that's my passing understanding of his thesis.

And I gotta be honest, you know, you talked about Bill Gates doing 25 years of seven day weeks. I didn't do that, but I had a period of time, I would say, from my mid to late 30s to pretty recently, when I worked seven day weeks, I did take vacations a few vacations during the year, but I basically worked seven day weeks. And I paid a really high price for that. And I've recently started to change that. And I, by the way, during during this time was like an alleged, you know, happiness expert. So this is a trap that is easy to fall into. But I'm curious, Dan, when you look back on that, do you regret it? Or is it, oh, I learned

from it and I accomplished a lot professionally, but I don't necessarily regret it? Yes, and, you know, I do regret it. I pay to high price in terms of my relationship with my son, which was, you know, we had a good relationship, but it was not nearly as close as it could have been. And the pandemic really changed that because I was grounded. And we all were grounded. You know, our relationship is so much closer now. And then that was part of what led me to seriously quit jobs and get to a place now where I have a much sander schedule.

In fact, he and I just recently spent a week together on the road in LA. And when I was out doing some work, I had a couple days of work and a couple days of nothing to do. And we spent the whole week together, I had been making this joke about that movie. There will be blood where Daniel Day Lewis is an oil magnet who travels around with his little son as his right hand man. And that's kind of what I'm shooting for except for without the Daniel Day Lewis being in the same part. But having a rider die in my seven year old son is really attractive to me. And I know he has a lot of fun.

So I regret the price that he and I paid. I regret that I didn't have as much time with my wife. I really regret not seeing my friends for a long time. And I've been doing a lot of work to rebuild those relationships. And as I look back at it, I did get a lot done. Like, you know, and I got enough done that actually allowed me to kind of retire from my ABC news history. So it's, I have conflicting feelings.

But here's what's so hard about this, too, is that let's say you had not done that. Let's say, and you know, for the last 20 years or whatever, you had worked three days a week and you did the bare minimum and you got by and you made a lot less money, you were a lot less successful, but you spent a lot of time with your family. Do you think if you had done that in that alternative universe, you might be sitting here saying, man, I wish I had worked harder. I wish I had, you know, during the prime of my working years when I had so much energy, I should have worked harder. I should have earned more money so I could send my kids to, you know, live in a better house and maybe they got them better school. A lot of people have

that regret too. So it's never black and white. Coming up next, Morgan talks about why it is so easy to overestimate the social benefit of having nice stuff, the importance of having a sense of what is enough, and why enough isn't a number, but rather a mindset. Life is short, and it's full of a lot of interesting questions. What does happiness really mean? How do I get the most out of my time here on Earth? What really is the best cereal? These are the questions I seek to resolve on my weekly podcast, Life is Short with Just and Long. If you're looking for the answer to deep philosophical questions like, what is the meaning of life? I can't really help you.

But I do believe that we really enrich our experience here by learning from others. And that's why in each episode, I like to talk with actors, musicians, artists, scientists, and many more types of people about how they get the most out of life. We explore how they felt during the highs, and sometimes more importantly, the lows of their careers. We discuss how they've been able to stay happy during some of the harder times,

but if I'm being honest, it's mostly just fun chats between friends about the important stuff. Like, if you had a sandwich named after you, what would be on it? Follow Life is short wherever you get your podcasts. You can also listen to Add Free on the Amazon Music or Wondering App. It's interesting because I have spent time

in hospice environments and there's an old chest note about how nobody ever says on their deathbed, I wish I had worked harder. But I actually side with you, I do know people who regret having slacked off for a lot of their youth and having a lot of doors close to them as a consequence. And like everything in life, this just strikes me as a balance. Yeah, my father who again is a physician, physician, he's talked about some patients who come to him and say, let's say they're in their mid to late 70s and they say, you know, part

of being a doctor is you really just get to understand people socially and what's going on in their lives. And some of these patients will say, I'm 77 years old, I don't have any money saved for retirement, but I'm too old to keep working. I can't keep doing this physical labor job. What am I supposed to do? And some of them have said sarcastically, am I just supposed to work till I die?

And the answer for a lot of those people is, yeah, that's kind of it. And that is a major, major, I would imagine life regret of looking back at like, man, I really, I screwed my opportunity, my one opportunity during my younger years when I could have saved up something that would have given me a life that I now really desire that I can't have anymore because I had spent all my time goofing off when I could have saved up something that would have given me a life that I now

really desire that I can't have anymore because I had spent all my time goofing off when I was young. That's a tough thing. It's such a generic answer, but I just don't think there's any other way around this solution to this other than balance. And if you look at the two sides of like Yolo on one end, you only live once, and then fire on the other like financial independence of, you know, people who save 90% their income and want to retire when they're 30 years old. Those are the two ends of the spectrum. Both ends of those spectrums, I think, have a high chance of leading to regret. The people who spend all their money and their youth because they're like, oh, I'm young, I want to hang out and have the best night life and travel the world and hang out

my friends. Like, how can you argue against that? Like, have fun in your youth. That seems great. But a lot of those people will eventually be 50, 60, 70 years old and not have any money for retirement. And they're like, oh, that's, that was actually a mistake. And then on the other hand, you have people who save all of their money and want to retire when they're 30 or 35.

And that too can lead to a sense of regret if all of a sudden you look back and you're like, I have no more purpose in life. I retired when I was 32 and I've just been like sitting on the couch playing golf for like a, I regret that as well. The extreme ends of financial planning have the highest degree of potential regret. That sounds right to me. Let me go back to happiness and contempt because I don't think I gave you enough of an opportunity to expound upon that. If I heard you correctly, you were saying that wealthy people may not be in a perpetual state of,

you know, what you described as the kind of happiness that is inherently fleeting, but they have a baseline of contentment. And then you went on, though, to talk about how the super, super rich are often oddballs in a way that actually makes them and the people around them miserable. So talk a little bit more about the kind of content that you think exists south of the super, super rich. I think if you were to break out like a generic character across income groups, the super rich we've been talking about, the decabillionaires, Elon Musk, Bill Gates, those people, they're

in a category of their own. Let's call like the merely rich, like a dentist or a doctor or tech executive, something like that. People who make a very good income have saved up enough money to retire on their own terms when they want to, but they were not working seven days a week

for a quarter century like Bill Gates did per se. Those people I think are who would the studies would show have contentment. And when you ask them, how did your career go? They'd say, my career went great. It was great. I don't have any regrets. Maybe like I look back and I say, I wish I would have done this differently.

I wish I would have pursued this opportunity differently. But when I look back, I'm pretty proud of what I've accomplished. And I'm willing to say, my gut tells me the majority of doctors, dentists, executives, maybe even lawyers would fall into that category of saying, look, when I look back on content, but then if you said, are you happy with your career? Did your career make you happy? Is your life happy? Then it's like, it's a big gray zone of, are you actually happier than the other people

who did not have as much career success as you did? One little quirk here that's easy to overlook is that it's not necessarily that money or wealth makes you happier, but it can make you less miserable. And it's easy to conflate those two. So I think if you were to say, you know, the dentist compared to the average typical median wage earner, does the dentist have more good days than the wage earner? No. Does he have fewer bad days than the wage earner?

Probably. And maybe it's not that many fewer, but the level of stress and anxiety that having not enough money can bring to you of not knowing, are you going to be able to make your mortgage payment for the next year? Or the extreme ends of like, do you have enough money to feed your children properly? The stress that that brings is enormous. If you can just take that off the table, it's not that you're, again, you're not going to wake up grinning ear to ear, but you could wake up with less stress than you otherwise would. Now that is a major benefit of quality of life to aspire to. To say, I'm not going to be any happier, but I want to remove as many bad days as possible.

That's amazing. If you can achieve that, that's great. But people get disappointed when they realize that their money did not make them happier per se, because it is so easy to imagine yourself, if you say, oh, if only I had X dollars, I would wake up smiling every day. And it's never true. It has never been true. And I think it will never be true. I think you're pointing at this human capacity for insatiability that was very much on the mind of people like the Buddha who observed that we could get into a story where we say,

you know, I will be happy when I get this next promotion. When I finally, you know, get to the front of the line at Starbucks and get my caffeine fix when I get this next vacation. And yet, we're never done. There's always another thing to want. And as I often say, and I stole this from somebody I can't remember who, in this way, the pursuit of happiness that's enshrined in the founding documents in the United States can become the source of our unhappiness. What in your travels and study and personal experience, what practices or outlook can help us work around this very human tendency toward insatiability? There's two things I want to bring up here. One, just a little anecdote of how I thought was can help us work around this very human tendency toward in satiability.

There's two things I want to bring up here. One, just a little anecdote of us that was fascinating is the richest person in human history is John DeRoccafeller. Adjusted for inflation, he was worth nearly half a trillion dollars at his peak. And something that's astounding about Rockefeller is that for his entire life, he never had Advil, he never had sunscreen, he never had penicillin, he never had for most of his adult life, sunglasses did not exist. All these just bare bone basic necessities that even lower income people today completely

take for granted. The guy who was worth half a trillion dollars a hundred years ago didn't have those luxuries. And there are many areas, particularly something like medicine, where a low-income American today lives so much better and grander than John D. Rockefeller or Cornelius Vanderbilt or JP Morgan could ever dream of. Now, that is not to say that the average low-income American should be happier or feel richer than John D. Rockefeller. That's not how it works, because people just measure their well-being

relative to those around them. And since everyone by and large has access to Advil and Penicillin in the Western world today, it becomes a complete baseline necessity. It is so easy to move the goalpost of what is valuable in life. And since you are always measuring yourself relative to other people, then a lot of times

when you have progress in society, and we've had so much over the last 100, 200 years in the Western world, if progress is rising by 5%, and people's expectations are also rising by 5%, you never feel like you are better off. And it will be like that in the future too. You can totally imagine a future 50 years from now, when our children are living lives that are

astoundingly better than what you and I live right now. Their access to medical technology, regular technology, the size of their homes, the quality of their homes, maybe global peace, things like that, are so much better than we have right now. And you can also imagine that in that world, they are no happier at all than you and I are. Or you can even imagine a world where they're less happy than you and I are because their expectations rise by so much more. Social media, I think, just puts like kerosene and a flame on this problem because it used

to be that when you are comparing yourself to other people in society, the quote unquote other people were your neighbors and your coworkers. That was your world. And now the quote unquote other people in your life is an Instagram feed of curated of the most beautiful, wealthiest, happiest, seemingly happiest people in the world that you are constantly comparing yourself to. So the ability to gauge where you are in society, where you exist on the ladder of society is so skewed today.

That makes it in a way that you can imagine a world where we are growing more prosperous, but becoming less happier because our expectations are rising faster than our income. So that's the first point to make. The second point I would make is, and this is a little bit more technical, but it has to do with getting the goalposts to stop moving.

When I was in college, I was a valet at a five-star hotel in Los Angeles. And that was my first experience with wealthy people. People would come in driving their ferraries and their Lamborghini's and the Rolls Royces. Like I had just never seen that before. And whenever someone would drive in one of those cars, I would Google at them. And I got to drive them as the valet. But whenever they would come in, I was just like, wow, this is amazing.

But I realized one day I had this realization that never once when a car came in and I was googling at the car, never once did I look at the driver and say, wow, that guy is cool. Never. What I would do is I would imagine myself as the driver. And I would say, if I was the driver, people would think I was cool. There's this irony that like everyone wants to be the driver because they want the admiration, but no one is admiring the driver. They're imagining themselves as the driver. It was like this paradox that was, to me, it was just a revelation of what the game was that everyone thinks that people are thinking about them, but they're not. They're thinking about themselves. And nobody is thinking about your

stuff as much as you are. If you have a nice house, a nice car, a nice clothes, to the extent that people do admire that stuff, they imagine themselves having it and imagine the admiration that they themselves would get. So once you realize that is so easy to overestimate the social benefit that you get from having nice stuff, I think it decreases your desire of having that stuff to a pretty considerable degree. And I like nice homes and nice cars as much as anyone else, but I think my desire for them is way suppressed than it was when I was the 19 year old valet, just thinking that that was the peak of life, because I realized that you get so little social benefit from that.

That to me is just one of the only techniques that I've used to actually get the goal post to stop moving, but it's a very difficult thing because as your career progresses and as society progresses with new technologies and new toys and whatnot, it's so easy to keep that goalpost from stop moving. One topic here that I think is important to wrap this up

is it's really important to have some sense of what is enough money. If you never have some sense of what is enough, then it's never gonna feel like it's adequate. And when you say having enough money, I don't mean you have no aspiration for more. I aspire to have more money. I aspire to have a higher net worth and a higher income.

That's true. I do. All that's important is that you get your expectations to grow slower than your income. So I'm making this up. I hope my income grows 10%, just make it up that number. If I can achieve that, while my expectations grow, let's say 5% per year, then the gap between

those two is going to accrue to my well-being versus just those lines moving in parallel over time. It's such an interesting thing you just said, at least to me, because I've had the question posed to me before what is enough. And I've struggled with it for years. What is enough? I don't know, what's enough? I've got a podcast. I'd like to keep growing. I've got a startup company I co-founded. I've got books and, you know, like I like seeing the sales numbers on those and as I'm sure you do.

And so what is enough? And I've never really been able to arrive at an answer. But I guess what I'm hearing from you is you can actually come up with an answer that like yes, X would be enough. I would be content at that level. You know, I would have everything I need. I think the reason why I've resisted getting there is because I've assumed that that would

entail a non trivial amount of resignation. Oh, I'm done as my friend Sam Harris, who you recently talked to on Sam's podcast. As my friend Sam Harris has once said, I'll just sit here and eat ice cream in front of you forever. That's not part and parcel of enoughness. It's just the sweatiness and the striving can go down by a measurable amount. Am I hearing you correctly? Yeah, I think that's right. When people think of enough and they think of a number, let's say, making this up, they say, once I have $5 million, that's enough and I will quit and I will eat ice cream as Sam might say.

That's dangerous and that's never true. There are so few, if any people who can actually do that, achieve their quote unquote number and then just quit and walk away. It just, it robles never happens. To me, in this kind of sounds like a BS answer, but I think it's as close as you can get. Having enough is not a number, it's a mindset.

The mindset, again, is my expectations are growing slower than my income aspirations. Your expectations grow slower than your aspirations. That's really what it comes down to. Again, I want more money. I don't feel like I have enough today, per se, because I don't think of it as a net worth or an income figure. It's just keeping your expectations low. And there are so much emphasis in the financial industry on growing your income, growing your

net worth. It's all on the more money aspect. And there's almost a complete ignorance on the controlling your expectations side of it. But that part of the equation is maybe the most important part. If you actually want to use your wealth to live a better life, I'm not going to say a happier life, but just a better life. I had this friend growing up, he grew up in Malawi, Africa, very, very poor part of the world.

He came from a relatively prosperous family in Malawi, but still food security was not always there. There were times when there was not enough food. Then he immigrated to America, and he said to this day, he's over 50 years old now, but to this day, whenever he has a hot meal in front of him, three times a day now, he's like an astonishment. And he has a sense of, wow, because I think his expectations of life are so low,

given his upbringing, that even something like a cheeseburger today just gives him the sense of astonishment. I honestly envy that, That you can gain joy out of something so simple. And the reason he's done that is because his expectations are so much lower than his circumstances are today. I think that's an extreme example of what us other people can strive for in life is, yes, I want to grow my income, but I want to spend as much effort keeping my expectations low so that I remain astonished with whatever income I earn, no matter how high it grows. So what strategies have you seen that would help people manage their

expectation? I think your savings rate is for most people is the gap between your ego and your income. And if you can suppress the ego of your desire to show people how much money you have and your desire to like flaunt your peacock feathers and say, look at my car, look at my jewelry, look how much, if you can suppress that, then that is suppressing your ego, and the gap between your ego and your income is what you save.

And so that, to me, is one of the only ways that I've really gotten around this. I think the other is, this is maybe less powerful, but for me, a deep appreciation for history and how most people today among, around the rest of the world live, and historically how everyone else lived in the United States and other places. If you have a deep appreciation for history, you realize how astonishing this moment of time is, and how good the huge majority of us live. I don't think it's an exaggeration to say

the poorest 10% of Americans live a better life than the richest 10% of Americans did. I don't know what year that would be. It laid 1800 something like that. If I thought deeper, I might come up with a different year, but it's probably something like that. And that's astonishing. That to me is amazing.

And that to me is falls in the category of keeping your expectations in check in a way that keeps you Continuously amazed with your circumstances regardless of what they might be What is the difference between wealthy and rich? This is something you talk about in your book. Can you explain that? And I write in the book that I made these definitions up So if you want to quibble if you want to quibble with these definitions, I'm fine with that But to me it was rich is it means you have enough money to pay your monthly bills with the lifestyle that you want to live. You can make your car payments, you can make your mortgage payments.

You have enough money to buy nice stuff on a monthly or an annual basis. That's what rich is. Wealthy is almost the opposite. Wealth is the money that you have not spent. It's the money that you did not spend on clothes or cars or vacations or homes. It's money that is saved up and invested and unspent that you're just setting aside. It's your money in the bank, the money in the brokerage account, whatever it might be. Money you did not spend by definition. And this is really important because by and large,

I can see your richness. I can see the car you drive, I can see the home you live in, I can see the clothes that you wear. I cannot see your bank account. I have no idea what's in your brokerage account. No clue. It might be $0.00. It might be $100 million. I have no idea. We're completely blind to it. And this is important because it gives a false sense of how rich or wealthy people are. And it gives a false sense of role models. This is another observation from when I was a valet. Of these people who had come in in a Ferrari or whatnot, I would immediately think,

ah, this guy is so successful. Look at this guy, he's driving a $300,000 car and I get to know them. And a lot of them were actually not that successful. They were like mediocre career successes who spent two thirds of their income on a Ferrari lease payment. And I think that fake it to you make it sense

is so pervasive among society. And it's because you can see your richness, you cannot see your wealth. And so then the question is, what is the purpose of wealth, unspent money? What's the purpose of it if you're not gonna spend it? And that seems like a gotcha question for a lot of people. Like why would I want money if I'm not gonna spend it?

And to me it gets back to what I think is the highest dividend that money pays, which is just giving you control and autonomy over your time and independence in your life. The ability to live where you want, work where you want, work for whom you want, retire when you want. That is going to go so much farther in your quality of life than your nice things will. So that to me is a difference between rich and wealthy. Up next, Morgan discusses how our lived experiences shape our perspective on money,

why reasonable is better than rational and the crucial importance of having room for error. A theme that's been coursing through this whole conversation is that money is such a complex issue for human beings. And in your book, as you're talking about or exploring why we're like this, you make the point that nobody's crazy. What is that about? I make this point that people do crazy things with their money and in other repairs of life,

but every decision that people make with their money checks the boxes that they need to check in that moment of time. And all of us in our view of the world, how we think the world works, we anchor to the experiences that we have had in life. And since all of those experiences are not only mostly out of our control,

but they vary wildly from person to person. There are decisions that you or someone else might make with your money that looks crazy to me, but it makes perfect sense to you. I use this example of in the book where in the United States, the majority of lottery tickets, like scratcher tickets, are purchased by the poorest death style of Americans. The poorest Americans, many of whom have a hard time feeding themselves, spend the most money by far on lottery tickets. And it's so easy for someone like me or you to look at that and say those people are crazy. Those people are idiots. The more ones, you can't even feed your children, you're buying scratcher tickets. What are you doing? But there's a friend of mine who kind of explained this to me a couple of years ago. He grew up in abject poverty,

and now he's a financial advisor doing quite well. But he said he remembers times when he was a kid where his refrigerator was empty, and his single mother had $3 to her name. And he said, look, $3 is not going to fill the refrigerator in any meaningful way. But $3 will buy you three scratchers tickets that have the potential of filling the refrigerator. And in that mindset, it actually made sense for these people to be like, look, this lottery ticket is my only shot at life of stepping up in the world, of getting displaced. When you don't feel like you have the opportunity to progress in your career, to earn a higher income, and you are stuck in this abject poverty kind of cycle, the lottery ticket is like

your only sense of hope in life. And in that mindset, you can still quibble with whether it's a rational thing to do. But for those people, it made perfect sense, even if for me and you, we look at and say, you people are crazy. And there are so many other things like that you and I might do, things that I do with my money that are just a product of where and when I was born and what I happened to experience in my youth and my early adult years that set my path of how I think about money for the rest of my life. Years ago, I interviewed Dr. Daniel Coniman,

who is a psychologist who won the Nobel Prize in economics, and he mentioned at one point in the interview that he's the biggest pessimist he's ever met in life. He said, like, no one is more pessimistic on the outlook of humanity than he is. And I said, wow, that's really fascinating. Is that because you have all this insight into like how we think and how our thinking goes astray? And he said, no. And he started talking about how he grew up as a child in Nazi occupied France and

how he saw from an early age how evil people can be and how that experience impacted how he thought about risk and humanity for the rest of his life. And the important thing is like, I can try to empathize with that and I can try to learn about what it might be like to be a Jewish family and not to occupy France, but I don't have the emotional scar tissue that he did, or that my friend who grew up in abject poverty did with his mom buying the lottery tickets. Nothing is more persuasive than what you've experienced firsthand. And because everyone's firsthand experiences are so different, we have all these different views over what's the right thing to do with money that seems crazy to one person but makes perfect sense to another. And I think most financial debates in terms

of how much money should you save, how should you spend your money, how should you invest your money. Most of those debates and disagreements are not actually arguments. It's people with different risk tolerances and different time horizons and a different view of the world talking over one another. And there aren't many other areas in life where that's the case because other areas like maybe health and nutrition, things like that are more objective of this is good for you and this is not, I mean, it's not quite that black and white, but it's more than with money, someone who says you should do X, Y and Z might be good advice for one person and disastrous advice for another, even if the other person is same age, income, et cetera.

You alluded to this at the beginning of the question, there's no black and white with money. Everything is just some various shade of gray. And we want to think of money, and money is taught, like it's math or physics. And in math, there's one right answer for everybody. Doesn't matter who you are, or where you're from, or where you're born, two's one right answer for everybody. It doesn't matter who you are or where you're from or where you're born, two plus two equals four for everybody.

And money is not like that at all. It's people are always going to come to different conclusions about what is the best thing to do for them. And it leads it so it's a very difficult topic to teach because there is not one answer to teach. You just have to kind of figure it out for yourself. So you say there's no right answer. I believe that to be true. And yet you do have some thoughts on best practices generally.

And so I'd like to kind of move into that zone, a little bit more of a prescriptive zone. One of your big recommendations when it comes to managing our money as it pertains to our psychology is to save money. Can you say more about that? It's such an obvious piece of advice. How could anyone disagree with that or think that that is something that's interesting? What I think is that most people, when they're saving money, only save for risks and expenses that they can envision.

When they save money, they're like, oh, in one year, I'm going to need a new car. I want to buy a house in the next three years. My kids are going to college in 10 years, whatever it might be. And they say for those, that's all, that's great. And that's fine. The thing is that it's always true for the economy and for individuals that the biggest risk you're going to face in life is something that you don't see coming. The biggest risk is always what no one is talking about and no one sees coming.

And there's a great financial advisor named Carl Richards, who says, risk is what is left over when you think you've thought of everything. That's what risk is. The actionable takeaway to that is that if you are only saving money for risks and expenses that you can envision, you are going to miss the surprise 10 times out of 10. It's always the case at the economy level. Every single year, the biggest economic risk is something that no one was talking about

or could even contemplate before it happened. COVID was obviously one of those. Russia, Ukraine fits in that category. Lehman Brothers going bankrupt as started the financial crisis in 2008, 9-11, Pearl Harbor. All of the major economic risks were unforeseeable until the moment they arrived. It will always be like that.

So the only way that you can kind of navigate that world is to have a level of savings that feels like it's a little bit too much. Whenever you have a level of savings where you said like, where you say, oh, I have all those money set aside, I don't know what I'm gonna do for it. It's not for the car, it's not for the house,

it's not for education. I have this money sitting aside that it's not your mark for anything. That's when you know you at least have a fighting chance at surviving the surprise that you cannot even envision. And at the personal level, the surprises are often getting laid off, divorce, medical emergency. Those three things that I just mentioned, the odds that people will go through their entire life without experiencing at least one of those things around to zero. And virtually no one expects those things to occur, or plans on those things occurring preemptively.

But they happen to virtually everyone, one of those three things, if not all of those three things. And so that's why I think just the idea of saving for saving sake rather than saving for a specific event is so vital. I can imagine there be some people listening who would say, yeah, that sounds right. And yet I'm living paycheck to paycheck because my parents, unlike you two guys, we're not doctors. Yeah, that's right. It's always a different spectrum for everyone. Of course, and people with higher incomes will be able to save more.

Obvious will always be the case, has always been the case. I think if you just view it as every dollar of savings that you have is a piece of your future that you own. And on the contrary, every dollar of debt that you have is a piece of your future that somebody else owns. When you view it as it is simple term like that, then any amount that you own. And on the contrary, every dollar of debt that you have is a piece of your future that somebody else owns. When you view it as a simple term like that, then any amount that you can save is gonna make a difference to you in the future. And for a lot of people, not everyone,

I don't wanna paint a broad brush here at all because there are a lot of people in society who work as hard as they can, grind to the bone, and are always gonna be paycheck to paycheck, even if they're living a very, very modest, humble lifestyle. There is another group in society, though, we had talked about this earlier. They are living paycheck to paycheck because their aspirations exceed their income. And then the solution for those people is not how can I raise my income?

It's how can I suppress my ambitions and my ego. Again, that is not everyone. I don't want to say that that's everyone's society, but there's a group of whom for that's definitely the case. That their financial problem is that their aspirations are growing 8% and their incomes growing 5% or whatever it might be. And that's the solution for those people.

That's not an easy solution. Nobody wants to hear that. Everyone's just like when most people go to the doctor, the right answer that the doctor is going to give you a lot of the time is you need to eat better, exercise more, and sleep more. But nobody wants to hear that answer. What they want is the pill. They just say, give me the pill that's

going to solve all my problems. And it's very similar in finance, where the solution to almost every financial problem is save more money and be more patient. That's the solution to everything. But nobody wants to hear that. Nobody wants to hear that. They want the magic pill.

And the magic pill is like, what penny stock should I buy that are going to make me rich in the next month? It just doesn't work that way. It's always going to be that the solutions require some form of sacrifice, just like medicine and just like finance as well. Staying on the prescriptive tip here, you say reasonable is better than rational.

It's just this idea that people are not machines. They're not spreadsheets. They're not just calculators. But finances often taught like they are. It's taught in this way, particularly at the academic level, that people are rational decision makers who rationally weigh costs and benefits and come to the best conclusion.

And that's just in the real world, it's just not how it works at all. People do not make financial decisions on a spreadsheet. They make them at the dinner table, or in their office at work where they're surrounded by all these other emotions and conflicting signals and different goals that other people have that fall into this equation. And so we should not pretend like we can always make rational financial decisions. It's just not how people work. I think if we can aim to

just be reasonable with our financial decisions, that's the best that we can do. And there are things that I do with my money, that other people do with their money, that you can either not explain or you can actively point out the flaw when you measure it on a spreadsheet, but it might be the absolute best thing to do for them if it's helping them sleep at night or making them a little bit happier

than it's the right thing to do. In investing, there's a very well-known thing called the home bias in investing where by and large Americans only own American stocks and Germans only own German stocks, Japanese only own Japanese stocks, et cetera. By and large, this is true all over the world. And it is viewed in academic finance as a bias, a flaw. It's not rational to think the best stocks you should own are the ones that are located

closest to your house. That doesn't make any sense that's not rational at all. But it's very reasonable to do. If taking the leap of faith of investing your life savings in these companies is a little bit more palatable If you are familiar with the companies that's very reasonable even if it's not rational Paying off your mortgage a couple years ago when people could get a mortgage for two and a half or three percent It's like the least rational financial decision you could have ever made But it's a very reasonable decision for those who did it if it helped you sleep better at night

If it gave you a little bit sense of independence and autonomy a very reasonable thing to do even if you can't explain it's a very reasonable decision for those who did it if it helped you sleep better at night, if it gave you a little bit sense of independence and autonomy. A very reasonable thing to do, even if you can't explain it on a spreadsheet. There are a lot of those things in life, and I think everyone has this. Everyone hides their financial skeletons, but everyone has a little quirk to do with their money. They're probably a little bit ashamed of. And if you just give yourself permission to say, I'm not a rational person. I'm an emotional hormonal human who has all these dynamics in life that I'm trying to navigate at once. And if I can just be kind of reasonable, it's the best I can hope for.

I like that. We talk a lot on the show about good enough and this seems to rhyme quite nicely. Another thing you talk about is worshiping room for error. It's this idea that I think the most important part of every financial plan is planning on that plan not going according to plan. It gets back to what we talked about earlier where risk is what is left over when you think you thought of everything and how that will always be the case.

I can guarantee you that the biggest economic risk over the next year and next five years is something that none of us are talking about today. And I can say that because it's always been the case. The only way to get around that is to have room for error in your budgets, in your forecasts, in your mindsets, where the gap between what might happen and what you need to have happened to do okay is as wide as it can possibly be. Never in a million years did I, as someone who follows the economy very closely, never did I expect a virus to shut down the global economy for 12 or 18 months and still be lingering two and a half years later. Virtually no one did. someone who follows the economy very closely. Never did I expect a virus to shut down the global economy for 12 or 18 months

and still be lingering two and a half years later. Virtually no one did. And I mean, there was a stat from early in the days of COVID where the average American restaurant had enough cash on hand to survive for 12 days. And then the economy shut down for six months or whatever. That's where room for error is going to save your life. Now, in those situations,

there are so many government bailouts that it forstalled a lot of that. But for a lot of people, we saw this in the early days of COVID where you realize that individuals and businesses live on the razor's edge of insolvency. And the tiniest little bump in the world to say nothing of a major bump like a pandemic

throws them over the edge. So they're just having a gap between your potential outcomes in life. Personally, in your career is so valuable in finance, but we overlook it because people don't want room for error. They want efficiency. They want to ring out as much opportunity as they possibly can and have as little fat to cut as they can. A lot of businesses were like this, where there was such a push to be efficient, efficient, efficient, and then COVID hit and supply chains broke and they were screwed. They had no room for error, no ability to absorb risk and damage.

And maybe that's really what it is. Most people want to avoid risk in life, but it's just not possible. I think if you can just absorb manageable damage and be able to absorb risk rather than assume that you can avoid it, that's the best that we can do in life. I had an experience recently where my wife and I had been talking about some financial priorities and we had some appealing goals. I could feel myself a little bit slipping back into it. We get these next things, there were some

a little bit of spending we're going to do. I get these next couple of things, then we'll be good. And then actually we had a big surprise, negative surprise, financially something that needs fixing at our house. That's gonna be, it's probably gonna be very expensive. And at first, both of us were kind of freaking out and then we had two responses that I think kind of are germane to this discussion.

One was we know a couple of people close to us who are having really serious health crises right now. And that really just put things in perspective as my father used to say there are problems. And then there are things money can solve. And so that's become a little mantra for us. And then the other thing is in this throws me back into the territory of enoughness. I realize what we should be obvious to me all along, it would be obvious to any outside observer. I'm totally fine right now. It doesn't matter whether I get these other things. And so I bring this up in light of your discussion about room for error. Does any of that land for you? Yeah, my wife and I have dealt with similar things too. I've had two distinct experiences

in my life where windfalls that I thought were coming did not come. And in all of the situations before the windfall actually hit my bank account, I adjusted to it being there. So it's like if I got it, it would not have given me any pleasure. I already adjusted and assumed it was coming. And then it did not come. And it was like falling off a cliff. And that's a tough thing. Now, not gaining a windfall is very different than having a medical crisis, let's say. But there's all these situations where you assume when you look out at your life, you assume that your life is going to be X, Y, and Z. And then when you realize that you have to adjust to a different outcome, it's exhausting. Michael Lewis, one of the great authors of our time, this is well known, this is public.

He had a horrific family tragedy last year. His teenage daughter was killed in Macar accident and he's done a couple of podcasts since that. And I'm paraphrasing here, I don't want to put words in his mouth, but he said, you know, the recovery that he and his wife and his family went through after that was exhausting, mentally, just physically exhausting. And he said, one of the reasons he thinks that is

is because he had, and everyone has, in their brain, this movie, in their brain of what their life is gonna be like for the next five, 10, 20 years. You have this vision of what it's gonna look like. And when you experience something like he did, the most terrific thing you can imagine, his brain had to rewrite the movie.

And it took so much energy to rewrite what his life was going to be like in the future without his daughter. I thought that was a really profound observation. And I think at a much lower, less meaningful level, when we have a financial crisis, again, so much different than losing a child, night and day. But it's a very similar thing where you have to rewrite the movie in your head of what you thought life was going to be like. And maybe that was true for your wife and yourself when movie in your head of what you thought life was going to be like. Maybe that was true for your wife and yourself when you had this idea of what your net worth was and then something happened to your house.

Now, you have to rewrite the movie of what your net worth is going to be going forward. Whenever you have to adjust to different circumstances, it's just this exhausting process of trying to rewrite what the rest of your life is going to look like. I think it's a powerful observation. And I think it was very comforting to go through this process and land back on this idea of enoughness. Like we're totally fine. We're totally fine. We're better than totally fine. And just to wake up, to wake back up to the obvious was comforting. Let me ask you though, since we're back on Enoughness, I was having dinner with a friend recently and this came up and we're talking about if you're not motivated or if you're not as motivated by accumulation, acquisition,

achievement, if you're, and I know we established earlier that Enoughness does not mean you have no more ambition. But if you're not as motivated by that, what are you motivated by? What is the fuel? I guess there's a study that I love and I've cited often. It's from a gerontologist named Carl Pillamer who wrote a book a decade or more ago called 30 Lessons for Living. What he did is he interviewed a thousand elderly Americans, most of whom were in their 90s or early hundreds, the oldest sliver of society. And he just said, what can you teach me about life?

You have the most experience. You are black belts in life. Tell me what you've experienced. And there's a chapter in his book on money. And he says, of the thousand people that he interviewed, not a single person, not one person looking back at their life said, I wish I had more money, I wish I worked harder, I wish I had accumulated more than my neighbors, not a single person, but almost every single one of them. Almost every one of the thousand people said, I wish I spent more time with my family, I wish I had added more value to my community,

I wish I had spent more time with my friends, I wish I had just called up my friends and just asked how they're doing, that was universal. Among them, that to me is like, if that's not a profound observation for you in just terms of what you are going to look back at your life on and regret or not regret, it's obviously that. So I wonder, maybe the answer's no, but I wonder if someone like Elon Musk or Warren Buffett or Bill Gates will have that on their deathbed. When they look back and say, I accumulated zillions of dollars, but I wish I had spent more time with my friends.

I wish I had called this person. That would actually gave me pleasure in life. I think about that a lot. I've worked from home my entire career, well before COVID, my entire career since college, I've worked from home. There are pluses and minuses of that, but one of the pluses is I'm constantly around my kids now.

Now they're in school, it's a little bit different, but I really value that time that I get to spend with them. And I think that will be something looking back that I value so much more, exponentially more than whatever money I was able to accumulate through this time. So I think, again, maybe that's a generic answer, but for me, that's all of what it is. I think if I were on my deathbed tomorrow, I know this is like a flaw in my life that I should address. If I were on my deathbed tomorrow, I would look back and say, I wish I had spent more time with this person. I wish I called this person.

I wish I was nicer to this person. I was a jerk to that guy. I shouldn't have been. I know that's what it would be. Those would be all of my regrets. I wish I called my parents more often. I wish I wasn't dismissive of my parents' views. So I would say, that would be everything.

Not a single thought would go through my head about money. Plus one on all of that. But let me just get a little bit more granular. Let me just go back to motivation. So if you've achieved this unicorn mindset of enoughness, realizing, okay, have enough. And again, we've established that doesn't mean you're not going to be ambitious anymore. But as you then look at your professional career going forward, and maybe this is a question for you specifically,

if you've told yourself the story that you have enough money, but of course you still want more, how do you motivate yourself to keep writing, to keep speaking, to keep producing professionally if money is not as much of a motivator as it used to be? I think if I'm honest with myself, I would say my personal career motivations are probably half money and half, I just enjoy it. That's probably about what it is.

If I thought deeper about it, I might come up with different figures, but that's about what it is. Now, when I was 22, if you ask me, I would say my motivations are 98% money, and 2% I enjoy this. And maybe I'll get to a point in my career where it's 20% money, and 80% I enjoy it. It's never gonna be zero and a hundred.

It's never gonna be, oh, I don't do it for the money. I'm just doing it because I like this. I don't think it'll ever be that. I'm, again, like, and you mentioned this, I have aspirations for more money, but I think the balance between what I get out of my career just shifts down over time, between it's less about money and more about I enjoy doing it.

So much of independence and autonomy that money can give you is doing the work that you want, working for the company that you want, being able to say no when you want, being able to take on projects that you want, so that feels less like work and more just like an art. Writing, I think, is actually an art you want, so that feels less like work and more just like an art. Now writing, I think, is actually an art in the same way that like painting and sculpting, I think writing falls in that same bucket. If you are a manager at a tech company, that to me seems less like an art. But there's a person like that might say, I enjoy the people I work with.

I enjoy my colleagues. I enjoy the relationships. I get to interact with interesting people. And that is a motivation that is more than money. But it's always going to be there. And I have money goals and money ambitions, and I want to situate my career so that I can earn more money. That's true, but it's less than it used to be.

And that I value because the more the money side the equation drops, the more that I can focus my career in saying, I only want to do the projects that I like and write the books that I'm really interested in rather than the book that you might get paid the most for. I only want to do the speaking events at like and write the books that I'm really interested in rather than the book that you might get paid the most for. I only want to do the speaking events at cool events in cool cities that I also have a friend at that I kind of dinner with the night before. I think that's about as good as you can get. Jeff Bezos said this about a year ago. He said, if you can get your work life balance to where you enjoy half of your work, that's

amazing. He said, very few people get to the point where they can enjoy half of their job. And so that's a big expectation reset for people. I think he's right. That's about as good as you can get is to really enjoy half of it. I think that this all of this really lands for me. Let me throw something else into the discussion though. This was said to me once by a guy named Jerry Colona, who has been on the show before. He's sometimes called the Yoda of Silicon Valley. He's a former venture capitalist who became sort of Buddhist

inflected executive coach. And he whispers in the ears of a lot of Silicon Valley or tech type entrepreneurs. And I've been lucky enough to have him as even though I'm not a tech titan by any stretch, but I've been working with to have him as even though I'm not a tech titan by any stretch, but I've been working with him as a coach for many years. And we were in a one session really, I was wrestling with a lot of these issues and trying to figure out like, what would motivate me if it wasn't for money and the other thing

that I that I think really motivates me is sort of attention. And he was a big word. It's a loaded word because it has a lot of cultural baggage, but he meant it in a very down to earth way. And I will unpack it a little bit, but he used the word love. Now love in the broadest sense of it can be even self love, a healthy self love of wanting to have a few nice things for yourself. Love of your family, wanting to support your family and making sure that your kid has lots of opportunities, love of your customers, love of your employees, love of your colleagues. And I feel like that actually as cheesy as it might sound at first blush is quite down

to earth. And it goes right at what you said about your motivation being half money and half enjoying what you do. There's a quote from Buffett where he says, it's good to have people in your life who you don't want to disappoint. That's like a really important part in life is that there are other people who probably rely on you that you don't want to disappoint. And that's true for my career too. Like I don't want to disappoint my wife, my kids, my parents, my coworkers.

There are people for whom it's like, this career is not just about me. And disappointment goes beyond finance. I don't want my kids when they become adults to look back and say, dad quit. Dad gave up and he sat on the couch and eat an ice cream for the last 20 years. That would be letting them down. I want my kids to look back and say,

my dad worked really hard and he had this career and my dad motivated me, my kids, to do X, Y, and Z and whatever they want to become. That's really important. So that motivates me to want to have a good, happy, enjoyable career. I can motivate. I don't want to let them down. So that's another motivator for me that is not, it's not money and it's not even enjoying what I'm doing day to day. It's just not wanting to let other people down. Yes, I would say both the enjoyment and the responsibility you feel to other people would fall under the broad understanding of love that Jerry was putting forth.

Let me ask a few questions. This has been a great conversation. Let me ask a few questions here as we get toward the end of our time together. One is to state the obvious we're too wealthy white men having this discussion. And now that is not too self-denigrated, but I'm not wearing a hair shirt here. We can't control the wounds we came out of. And yet we do have certain blinders on as a consequence.

And so I'm just wondering, do you have any thoughts about what we might have missed given the perspectives we quite naturally have? I think, you know, I mentioned my friend earlier whose mother was purchasing the lottery tickets. He grew up in abject poverty as an African-American. And when he told me that story, which was not that, it was two, three years ago, my jaw hit the floor.

It would never cross my mind in a million years that that existed. My other friend who grew up in Malawi who talked about his sense of awe when he gets a hot meal in front of him. That too was just such a profound like, gosh, there's almost a sense of guilt when you hear that of like, there's a part of the world that I cannot even fathom, that millions, if not billions of other people are experiencing today. That's pretty profound. I think it's true for everyone. And again, it's not a sense of,

you and I should not feel guilty of who we are, but it's just a sense of realizing that what you and I have experienced is a fraction of 1% of what has happened in the world. When my son was born, I wrote him a letter of things of that it was geared around finance, financial advice from my new son. And one of the things I talked about is like,

you are born a white American male to college educated parents. And I want you to understand that 99.9% of the world is not that. And again, I didn't write this, but don't feel getting, it's not a sense of guilt. It's just understanding that there is a way that the world works and a way that other people think

that is completely foreign to you. And the way that you think is gonna be completely foreign to them. And having a level of empathy and open-mindedness to those other views is so incredibly critical. Yeah, guilt is, and this is not an original observation, but guilt is often self-referential. So you still have your head up your own ass.

You're still in your own story about you if you're stuck in guilt, gratitude and perspective actually makes you more other oriented. I think helps you see things as they are. Yeah. And this is not original either, but there's nothing, nothing more eye-opening than world travel, particularly to poor nations, to open your eyes, to how the other 7 billion people in the world that you are not familiar with on a day-to-day basis live. It's astounding. Is there anything I should have asked but failed to ask or there areas you would have liked to explore that I didn't bring us to?

This has been a fun conversation. I've admired your work and your book for years. It was, I mentioned earlier, it is one of the very few books that I read cover to cover and I read it in one or two sittings. And I think what's great about your book was two things. earlier, it is one of the very few books that I read cover to cover and I read it in one or two sittings. And I think what's great about your book was two things. One is you are very open with your flaws and pains in life. And people love that because every single person has skeletons and problems in their life and 99% of people hide them and don't talk about them. And when someone can come out and say, here is a very hard period in my life, here are

my flaws, here are my flaws. Here's where my mistakes. I'm just gonna open it up. I think most people including myself say thank you because I have flaws myself. Everyone's flaws are different, but I have them too that I don't talk about. And thank you for making me feel like I'm not alone.

That was great. The other thing that it was such a brilliant title of your book, 10% Happier, was about setting expectations. That it's not gonna change your life. It's not gonna turn you into this walking, grinning ear to ear person. If you can, 10% happier, was about setting expectations. That it's not going to change your life. It's not going to turn you into this walking, grinning ear to ear person. If you can be 10% happier, that's the best that you can do. Those two things, I think, of being open with your flaws and setting expectations

about how you can actually improve upon those flaws. I thought was very well done. I really appreciate that, especially since I have a lot of respect for you and your work. And I think on that ladder point, the 10 percent point, you know, I think that's a theme that you've hit in one way or another throughout this conversation of it goes right back to what you said before about expecting to be reasonable, not rational. It's so important. And an area of life that is easy to overlook when people have massive expectations. In investing, I'll tell you the equivalent of this. Almost every new investor who's investing for the first time,

particularly young men, have this expectation that, like, oh, I'm going to double my money every six weeks or whatever it might be. And you have to be like, no, no, no. If you can earn 8% to 10% per year, you're doing amazing. You just have to, it's a complete, the gap between expectations and reality is a mile wide.

And I thought you did a good job of setting the expectations of what meditation can do for you. Thank you. Before I let you go, can I push you since you just plugged my book? Can I get you to plug your book and anything else that you've put out into the universe that you'd like to let this audience know about? My book, The Psychology of Money, was published just about two years ago. It's at about 2.2 million copies sold worldwide now. It's in 51, 51 languages. And it's a book that just has very short, kind of bite-sized chapters that explain, I hope, a flaw in how people think about money and how you can think about your own life and your own money in a way that helps you contextualize your own goals and aspirations and how to manage your money in a little bit better way.

I hope if you get to the end of the book, it's not necessarily that you will have learned actionable takeaways, but you will become more introspective about what you want in life and how to live a better life. So that's the book, anything else that we should be looking for from you? I spend most of my time for better or worse on Twitter. My handle is Morgan Howell. My first and last name. That's most of my online life.

If you want to see what I'm thinking, writing, doing next, that's where you can find it. Great. I like Twitter too for all of its flaws. Such a pleasure to meet and chat with you. Thank you for your time. Really appreciate it. Thanks, Dan. This has been fun.

Thanks again to Morgan Howesl. Pleasure to meet that guy. Thank you as well to everybody who works so hard on this show. 10% happier is produced by Justin Davy, Gabrielle Zuckerman, DJ Kashmir and Lauren Smith. Our supervising producer is Marissa Schneiderman. Kimi Regler is our managing producer and our executive producer is Jen Poient.

We get our scoring and mixing from Peter Bonaventure over at UltravioletAudio. We'll see you all Wednesday for part two in our Money Series. We'll be talking to the Buddhist teacher, Spencer Sherman. The Buddha actually had a lot to say about money and how we make our money, et cetera. So we'll dive into that in just two days. [♪ OUTRO MUSIC PLAYING [♪

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