The Wealthy Barber Podcast - #34 — Morgan Housel: Timeless Lessons From “The Psychology of Money” & “The Art of Spending”

Episode Date: December 2, 2025

Our guest this episode is Morgan Housel, international bestselling author of “The Psychology of Money,” “Same as Ever” and his newest book, “The Art of Spending Money.” In this conversation, Dave and Morgan explore the timeless principles that shape how we think about money, happiness and decision-making. Morgan shares the story behind writing “The Psychology of Money,” why earning more didn’t change his life as much as he expected and why he believes money is “the greatest show on Earth.” They dig into core ideas like why firsthand experiences are more persuasive than data, why “no one’s crazy” and how comfort (not speed) is often the real goal in personal finance. The discussion also covers the emotional side of money — from spending mistakes and regrets to what Morgan actually enjoys spending on — along with big-picture themes like luck, independence, volatility and how to think in terms of what’s reasonable rather than purely rational. If you’re fascinated by human behaviour, personal finance or simply want to make better decisions with your money, this episode is packed with thoughtful insights and memorable lessons from one of today’s most influential financial thinkers.    Show Notes (00:00) Intro & Disclaimer (00:55) Intro to Morgan Housel (03:01) The Story of Writing “The Psychology of Money” (07:37) How Making More Money Changed Morgan’s Life (Spoiler: Not Much) (09:56) Why Morgan Calls Money "The Greatest Show on Earth" (11:25) Nothing is More Persuasive Than What You’ve Experienced Firsthand (13:42) “No One’s Crazy” (17:16) You Can Either Make the Train Twice as Fast or Twice as Comfortable (19:33) Was There Pressure Writing a Follow-Up Book? (21:26) Nobody is Paying as Much Attention to You as You Are (23:32) Volatility is the Price of Admission in Investing (26:05) Buying Independence vs. Buying Expensive Things (29:12) Spending Mistakes vs. Regrets (32:17) What Does Morgan Like to Spend Money On?  (35:08) The Role of Luck in Our Lives (40:33) Reasonable vs. Rational in Personal Finance (43:21) The Most Overrated Financial Advice  (44:48) Conclusion

Hey, it's Dave Chilton, The Wealthy Barber and former Dragon on Dragonstant. Welcome to the Wealthy Barber podcast. Well, we'll be hosting some of the top minds in the world of personal finance. Yes, that's to balance me out. The podcast is about making the subject not just easy to understand, but dare I say, even fun, honest. Whether you're trying to fund your retirement, figure out how to build a down payment, save for your kids' education, manage debts, whatever. we'll be here to help you do it. Before we jump in, a quick but important note,

nothing we discuss here should be taken as investment advice. We don't know you and your personal financial situation, so we're not here to tell you we're specifically to put your investment dollars. We're here to educate, get you thinking, and we hope entertain. But please do your own research and or consult with your financial advisor before taking any action. Hey, it's Dave Chiltern, the Wealthy Barber with the Wealthy Barber podcast. Okay, to say I'm excited today would be a gross understatement. We have, with no exaggeration, one of the great thinkers

and one of the great communicators in the financial industry from across the world. Morgan Housel held in just such high regard by everybody. He and I have a lot of mutual friends. And I want to lead with not the normal lead about his book success. We'll get to that in a moment. But I want to make sure everybody understands this is a really nice person. Anytime Morgan's name comes up in conversation with our mutual friends, it's about his character, the way he handles himself, how kind he is, how generous he is.

So it's a thrill to have him on. That's the kind of person we're drawn to, obviously. When I said he was a good communicator, I didn't do him justice. He weaves stories together with facts, with opinions in a way that nobody else does and drives home points that can make a big difference for all of us. A lot of you know him from the Motley Fool Days. He wrote for them, the Wall Street Journal. He's a partner at the Collaborative Fund now.

But, of course, the big reason most of you know the name is the psychology of money. It must be the top selling financial book ever. Is it? You're probably too humble to say, but it's at $8 million-ish now, isn't it? You know, there's a couple ahead of it. One is Think and Grow Rich by Napoleon Hill, which was published in the 1920s. The other is Rich Dad, Poor Dad, by Robert Kiyosaki. That was published in the 1990s.

But, Dave, you are very generous for that introduction. I really appreciate it. No, I mean, it's, and it was an outstanding book. And it's interesting that you. you kind of came at a lot of those subjects just a little bit differently. You didn't go back and just rehash what some of the other books had said at all. And I think that's why it jumped up. Great word of mouth book.

I mean, it did well out of the gate, but it just kept going and going and going because everybody who read it told four friends about it, told their company about it. They bought for employees and so on and so forth. And you should be very, very proud. You've come out with other books since then, same as ever. Excellent. Loved it too. I love always your work.

I'm one of your biggest fans. And now you've come out with the art of spending that we're going to talk a little about as the interview goes on. So it's just fantastic stuff. Go back to why did you write the first book, the psychology of money. What drew you to that subject matter? Yeah, Dave, thank you again for having me. And thank you for that glorious introduction. I really appreciate it.

So let me take you back to 2017. At that point, I had been a financial writer for a decade. I started in 2007. It's been writing for 10 years. I had kind of evolved over the years from, I'm going to write about it. about stocks, to I'm going to write about the stock market, to I'm going to write about the macro economy, and then I finally landed kind of where I still am. I'm going to talk about behavioral finance and how people think about money. It's kind of where I landed. So

2017, I kind of just then realized that that's who I want to be. I want to be a behavioral finance writer. That's what I want to do. And I remember vividly walking on the streets of Manhattan. I lived in Washington, D.C. at the time, but I was in New York about once a week. And I was walking in Manhattan is a beautiful day, and I remember just kind of hit me out of the blue, and I said, I want to write a blog post called The Psychology of Money. And what it's going to be is a collection of all the ideas that I have come across over the last several years that I've been writing about this topic. Hit me like that. And then it wasn't until about a year later. It was June 1st, 2018 that I published the blog post called the Psychology

of Money. It was a 9,000 word blog post by far the longest I remember it well. Yeah, I remember it well. And more than anything I'd ever written, it took off. It exploded. And by an order of magnitude, more than any other blog posts I had written. And so that was this idea of like, okay, I think, I think this works. I think if I can tell short stories about how people think about money, without giving them any advice, that's actually a great format that I should run with. Now, at the same time, right around that time, I had had quite a bit of pressure from various people in my life to write a book. Morian, you've been a financial writer for 10 years. You're just writing blog after blog after blog. When are you going to slap it between

two pieces of cardboarding and get it done? And to be honest, I didn't see much point in doing so. I was like, look, I write all the time. Who cares if it's in a book? What people had told me, which was the truth and good advice, was nobody makes any money from books. So if you're going to do it, make sure you want to write this book because it's going to be a labor of love. That was the right advice. Around the same time, James Clear, it just published Atomic Habits. Yeah, proving that wrong. You know, I had known James just a little bit before the book came out. So when it came out and sold 800 zillion copies, there was a part of my brain that was like, oh, maybe you, maybe actually like a good book can sell well. And I knew that was, that was and

is a one in a million book. You can't just expect that to happen. But that increased very meaningfully my desire to go out and want to write this book. And so I had the blog post that did well, the psychology of money. I have this desire to write a book. Let's go do it. And then so, yeah, I wrote it in 2019 and the book came out in 2020. But you couldn't have imagined this, obviously. I mean, even your publisher would have been thinking, hey, if we could ever sell a half million, it would be a miracle. No way anybody was thinking eight million copies. It's such a crazy number all over the world. It took off. I mean, you ended up challenging your friend James Clear. I mean, It's just amazing the numbers you've put up.

I mean, the extent to which that is in exaggeration is hard to see because let me tell you the backstory from this. I've talked about this a little bit. Every American publisher, every single one rejected the psychology of money. When we sent it the proposal, every single one, no, no, no, no, no. I think we sent it to 22 publishers, everyone rejected it. It was finally picked up by a tiny little publisher in England called Harriman House. Yeah, know them well. Yeah, I had had a little bit of relationship with them just over email over the years.

And so when every American publisher rejected it, I went back to them and said, hey, do you guys want this? And they said, yeah, we think that's a great idea. Let's do it. But even then, the first print run of Psychology of Money was 5,000 copies. Oh, my gosh. And look, you, Dave, you know the book industry. If you can convince 5,000 people to pull out their credit card and pay for your words, that's heroic. This is not an easy industry.

And so the idea that we could sell 5,000 copies seemed fanciful at the time. But that's, you know, part of the book that I write about is that, A, it's very difficult to predict what's going to happen in the economy. And B, tails drive everything. Like in most endeavors in life, very few of the actions that you take are going to drive the majority of your results. And so that was one of the messages in the book, but I think that also became what the book was as well. now what does your wife think about all this incredible success i mean she's sitting there obviously very supportive she knows you well and now you're famous and you're selling millions of books you're on every show what what is she thought about all of this i think like every good wife uh she

she does not understand why anyone would pay that much attention to me and and and like every like every good family member if i add my kids in this too they don't they they they they don't understand why anyone would want to pay attention to their dad or or whatnot And that's actually a great thing to pay attention to. What has been the most interesting to me is my wife and I, before the book came out, we're very comfortable where we were financially lifestyle. And we were, you know, we had two kids and we had been married for many years. And it's like we were totally comfortable with that.

What's been interesting to me from just a personal point of view and dealing with my own psychology of money is what making a little bit of money has done for us and has not done for us. And I would say the latter is actually the most interesting because when I look at it, does my daughter love me more now that we make a little bit more money? No. Do I have a better marriage with my wife? No. Does my son want to play football with me more or less? No. The things that actually matter in my life have not changed one iota since all of this happened. I think that's been a very interesting and I think positive takeaway for me. It's too tempting when you are at one point of your career to say if only I had more money, all my my problems would go away. If only I had more money, I would be a perfect happy person. Very easy and convincing to tell yourself that. And it's not until you experience it firsthand that you're like, oh, there are some things around the edges that became a little bit better. But the things that actually give me meaning in life, like how many hours I sleep at night, whether I'm healthy, whether my parents and my siblings and my wife and kids are healthy and happy, those things don't really change whatsoever. Now, just to correct you, your daughter told us off air that

she does love you more since you made the big money. In fact, she said much more, to be honest. So I just want to correct you. You know what's interesting is we were delayed on the podcast a little bit because you were taking your kids to the bus. And I thought, now there is a guy who's already lost his priorities and he's choosing family over money. I'm quite concerned that this is all distorted the way you work and you're moving in the

wrong direction. All right, let's go back to that book. It had so many fantastic ideas. But one of the ones that really jumped at most readers right out of the gate was that finances the greatest show on earth. And tell me what you meant by that. I think it's I think I said money was the greatest show on earth because it is such a clear and fascinating window into both other aspects of society and into you individually. And so if I look at how society, what society values and how much society is chasing status and how much society is investing in its future,

you can glean a lot from that. And so if you just, if you pay attention, to markets and finances, you can really understand a lot about what society wants and doesn't want. And so, for example, during the housing bubble, when there was just so much societal push towards borrowing from the future in order to gain from today, that's a window into society. It's a window in people's psyches. But also, if I look at you individually or anybody individually and see what do they aspire to, how do they spend their money, what do they value, what do they not value, you can really glean a lot from that as well. And so I think, it is one of the clearest windows into understanding the world. It's not the only window.

You can also understand a lot from the world by looking at politics and religion and all these other aspects of life. But money is a very clear window into understanding what's going on in the world. Is money everything in the world? Of course not. But is it the clearest window to understand the world? I think that's what it is. So that's why I call it the greatest show on earth. And when you look at people and what they're doing with their money, what they're doing right, what they're doing wrong, you've spoken at length about how they have a lot of biases our minds play tricks on us, and that was a big part of the book. Give us a couple examples of the things we all fall victim to. Well, here's one that's very interesting.

One of the biggest pieces of criticism of my book was from people from different countries who would say, Morgan, what you wrote might be true for a college-educated white American male. But for me, in Djibouti or in South Africa or in China, you are leaving out all of these other differences that make what you said not applicable to us. And my response to that was guilty as charged. Like we all kind of view the world through our own lens. And one of the points I made in the book is that nothing is more persuasive to you than what you've experienced firsthand. You can try to be empathetic to other people's situations in different countries, different family situations, different income groups and whatnot, but nothing makes more sense to you than the life that you are living

and the shoes that you are walking in. And so I think we all kind of, become trapped and prisoners to our own past and what we've experienced in our own position in life. And, you know, I think it's whenever you see someone behaving differently than you, this is true in money, but it's also true in politics and all kinds of things, rather than saying, why do you believe that? I think a much better question is, what have you experienced in life that caused you to believe that? And then a better question is, if I experienced the same thing, if I lived in your shoes, would I do the same thing? Even the same thing. Even the same. thing that I disagree. I disagree with how you are thinking and what you're doing, but if I lived

into your shoes, I'd probably believe the exact same thing. I think that explains a lot of disagreements in the world, money of which is certainly one of them. You know, that's very well said. And, you know, you think back to my parents' generation. I'm a lot older than you. I'm 64. My father's 93, but they very much tied into the Great Depression. He was born during the Great Depression, and that whole generation, it really impacted their feelings towards debt. They were much less likely to take it on beyond a standard mortgage, etc. Now, of course, that's a distant memory and people embraced it. It's ubiquitously available and people will take it on. So you're right, our own personal experience is very much customized what we're looking at. You had the line in the

book, no one's crazy. And I think that line, would you say that was one of the most memorable lines in terms of being quoted and being asked about in the entire book? I think, I think it is memorable because it's a clear line. It's also a point that I think a lot of people intuitively understood, but not articulated yet. The idea that money is not just formulas, and because with a formula, there's one right answer for me and you and everybody. It's just what is the right answer?

When you understand that nobody is crazy, you realize that there is no right answer, that we're all different, and therefore we should come to our own conclusions, even if mine is different than yours. I kind of came to that, because I've always been a little bit of a quirky investor for somebody of my age.

I've always been a little conservative. I've always had more cash than most financial advisors and most models would recommend. And I always had, it always made sense to me. It's just like, look, I just want to sleep well at night. I don't care if I'm outperforming my peers, et cetera. That doesn't mean anything to me. But I always had a lot of friends who were in the industry who thought I was crazy,

who thought I was stupid, who thought I didn't understand. And I think that was always just fascinating to me that I could look at them and say, guys, I understand what I'm doing, and I am pretty financially sophisticated. I do understand the models that you're telling me about, but this works for me. And do you give me any credit for that? Is there any value in the fact that I like this? And I heard this story many years ago from Daniel Kahneman, the late economist. Yeah, of course.

In the Nobel Prize, after he won the Nobel Prize, he was a, he was pretty old and he was wealthy. And he went to his financial advisor and he said, I have no desire to grow my net worth at all for the rest of my life. He said, I have no desire to take any risk. I just want to live off of this pot that I have. And as financial advisor looked at him and said, I can't work with you. Because to the financial advisor, it was so antithetical that something would not want more money. It was blasphemy that you would not want to maximize your returns. And Conneman brought it up. He was like, I think that's fascinating. The idea that there should be one goal for everybody, even though there is such a huge

spectrum of personalities out there was always interesting. So that was interesting to me as well. No, he was a super sharp man, for sure. I gave my dad thinking fast. thinking slow. My dad truly is brilliant. He read the entire book and then summarized it by David, I've known all that for 50 years. I said, okay, dad. Look, I think that's true for a lot of, you know, there is nothing in, in my books that hasn't been said 400 times before. Yeah, wait, I'm going to cut you off there. I don't agree. Okay. I agree of 99% of the books that come out on the psychology of money and covering this, but you were able to say things differently. Well, see, that's the point. That was your strength. Sometimes you were succinct. You can say it different.

But it's not something that has been said. You're right. It's been said, but you came out of from a slightly different angle. Sometimes you went out of quite succinctly. Other times with an expanded story, you have great instincts about how do I wrap this up so it'll stick. So it's not just said, but people actually think, yeah, that makes sense or they'll compare it to their own situation.

There's something about your writing style that pulls people in and makes them engaged. It's a very active form of reading when you read any of your books. So again, you can tell I'm a huge fan. I think you're just better at this than the vast majority of people. So you've been able to take, you're right, some content that's been out there, but you're having a big impact with it. By using a different approach to communicating it, people are actually going, yeah, I better watch out for that.

And recency bias is real. Here's some examples of it that I've got to be careful of, et cetera. So good for you. You deserve all your success. Thank you. Thank you. One kind of analogy to that. I heard this from Rory Sutherland, who's a great marketing.

I love him. Awesome. I phone him up one day. Yeah. And he just answered his phone and we talked for it. half an hour. And so then we met for a drink at the Royal York. I love it. But I loved his book because same thing. It was such a different approach to communicating. But go ahead. I cut you off there. Well, he's fantastic. And I'm paraphrasing him. I'm hopefully I don't butcher this. But he made the point that there are two kinds of innovation. One is to make a product different. And the other is to make a product better. So his example I think he used was if you're talking about a train, you can try to make the train twice as fast. That's an improvement. Or you can try to make the train twice as comfortable. by adding air conditioning and free Wi-Fi and a snack bar and whatnot. And that's, so you're not changing it.

You're just making it a little bit better. And I've kind of thought about that with my writing of I'm not coming up with any new ideas. There's nothing. I am not making the train twice as fast here. I'm not telling you how you can improve your investing returns. I just want to take what you already know and try to say it a little bit better in a way that's memorable and you can contextualize within your own life. And I think for a lot of finance in the finance community, both advisors and media folks,

they're trying to make the train twice as fast by saying, hey, I have all this insight into how you can double your market returns and earn higher returns in your peers. And that is close to impossible, I think. No, it's not impossible. It's unbelievable. It's effectively impossible.

But I think you can add a lot of value as a financial advisor or as a media person like you and I in just trying to make the product twice as comfortable. Not twice as fast, twice as comfortable, so to speak. In terms of like, let me explain this to you in a way that's memorable. And one of the things, I was a columnist at the Wall Street Journal for a year or two, a short period of time, but an editor told me something

that really stuck with me. He said, the column that you write at the journal, it has to be something that will, a hedge fund manager will learn something from, and a complete novice will understand. It has to be both at the same time. Yeah, tough balance, but you do it well. But I think, I think you can do it by stating things that people already know, but stating in a way that helps him understand it in a deeper way. I agree. And I think for a lot of people, they want to know the why is behind the whats because that helps them to stick more.

And again, you did that very effective. I'm going to jump all over here for a second, but I meant to ask you this earlier. There must have been a lot of pressure writing the follow-up book, books in your case, because you've done too. I mean, you're coming out on the heels of one of the biggest selling financial books in history. That's a tough one. Yeah, no, I would be lying if I said, oh, that was no big deal. there was no pressure. It didn't bother me at all. That was a real thing. Now, a lot of what I

write about are the power of expectations and how if your expectations are too high, even a fantastic result is going to feel flat. And so I knew going into that, that was a tremendous headwin. But what's always been true, whether it's the blogs or the books, is that I'm writing for myself. I'm writing books that I need to figure out for my own life. I'm writing stories that I think are interesting. And look, I'm appreciative of the readers. And, If they like it, that's great. But honestly, I mean this in a, and I know this sounds weird, but like, I don't, they're, they're not the most important part of this.

They're not the most important audience. That's always how I felt. And so even if I knew going into it, like, hey, people's expectations are very high. Because a lot of people's expectations were, hey, the psychology money was here. So your next book better be way up here. That's it. And I knew that was just, that was going to be an impossible thing to meet. But same as ever was a book that I needed for myself.

And the art of spending money was a book that I needed for myself. And if there are other people along for the ride with it, awesome, amazing, glad it helped. Great to hear that it helped. But if not, that doesn't crush me in the way that people might think. Yeah. That's well said. I love your talk on expectations. You remember Warren Buffett talking about what's the number one quality you should look for in a spouse, especially if you're a man.

Low expectations. Yeah, exactly. And he's not wrong. I mean, that leads to a very good marriage. So that's interesting. I love the follow-up books. I think they're both exceptionally well done, enjoyed them immensely. All right, let's keep going.

Let's go back to the original teachings. Share with us a couple of the biases. We talked about that earlier that you see people still making these mistakes over and over and over again. And more importantly, how do we help them to get out of that rut? Yeah, I think one, here's one from investing and one from kind of personal finance. In personal finance, the idea that nobody is paying as much attention to you as you are. And I heard this summarized very well a couple of weeks ago by the great comedian Jimmy Carr. He said, in your 20s, people worry about what other people think of them.

In your 30s, you say, I don't care what anybody thinks of me. And in your 40s, you finally realize the truth, which is that nobody was thinking about you the whole time. And I think there is, like most comedy, it's funny because it's true. And I think it is just so much of modern consumption society is performative. It is, I'm going to have this car, these clothes, this house, this jewelry, go on this vacation, because other people will then look at me and give me a level of credibility and respect that I didn't have before. That's the implicit assumption. And I just think there's so much evidence that we overestimate how much attention we get from other people. And the reason we do it is because everyone else, like you, is thinking about themselves.

They're not thinking about you. And to the extent that they do look at your car and say, wow, that's a nice car. What they do is they imagine themselves in the car. they don't care that you own it they just say hey if i had that everyone would look at me and say i'm so great i do this myself all the time almost daily i love cars i'm a i'm a and whenever i see a car that i really like instantly intuitively it's the caveman instinct in me thinks if i had that car then my life would be great i don't i couldn't care less about who's driving it but i want to be the driver because i think people will care about me i think that is a very big thing in modern

society. It's always been the case. But in today's world where we have material abundance and social media at the same time, that idea just goes supernova. That is huge. So that's a big bias in personal finance. One from investing that is really detrimental to people. And this has always been the case. I think this is like the holy grail of understanding investing is the idea that volatility is the price of admission. And it is so common that when the stock market falls 10% or 20% that people want to say something's broken. Somebody made a mistake. The president made a mistake.

My financial advisor made a mistake. Who's to blame for this catastrophe? When the reality is nothing, that is just, that's par for the course. And dealing with that uncertainty, dealing with that volatility is why you can do well over time. That's the cost of admission that you have to be willing to play in order to do well over time. And if you don't want to put up with uncertainty and volatility, there are bank accounts and money market funds that will give you the meagre return that you deserve.

But if you can put up with the nonsense and endure it over time, the rewards for those who stick around can be extraordinary. So it's just this idea that volatility is a fee. It's a cost of emission. It's not a fine. A fine means you did something wrong and you screwed up and you're being punished. A fee is just you're paying something in order to get something of greater value on the other side. And that's what dealing with uncertainty is in the stock market.

And without the volatility, of course, we wouldn't have these returns, these outsized returns relative to other investments. So you're bang on. By the way, there is a way to gain access to those returns, even if you don't want to deal with the volatility. The Bob Chilton way, my father, pay no attention. He is oblivious at all times. Yes. Has no idea where the market's going. You remember that old rumor?

I don't think it was true about the fidelity study saying that they're debt accounts. Well, that's my debt. He is the debt account. The guy never looks at his money, has no idea what the markets are doing. But because of that, he stayed in. ups and downs, never drove him out, and he's done spectacularly well using index funds. So I couldn't agree with you more. That is the price of admission.

And I love the way you phrase that about the fee, not the fine. Yeah, that's the way to do it. My parents are very similar. They have no financial education, no financial training. But they've been dollar cost averaging into index funds since 1990, have never sold anything. And they would literally be in the top 5%, maybe even top 2%, of top 2% of head fund managers. And they did nothing. They did nothing.

But they did the one thing that you needed to do, which was just to accept the uncertainty and the volatility rather than trying to view it as a punishment that you need to avoid in the future. That's so true. Now, my advice to you is do not let them spend any of that money. That's okay. They won't. Hold on.

They won't. Let's go back to cars. I mean, that's my big pet peeve. I help a lot of younger people, look at their spending summaries, even people who often are quite diligent in most areas. is can't get past the temptation to define themselves to some extent by a car, spend too much of their income on car expenses over and over and over again. It goes back to what you said, status seeking, defining themselves by that.

Look at me, I'm worthy. How do we get past this car problem and what it's doing to so many young people? It's a very tough thing, but I would phrase it like this. And again, I'm staying this with someone who has a lot of empathy for that, who has always been a car person. And even though I have purchased, I've always purchased cars that I could easily afford, the temptation and the desire has always been at me. It's always been there. But I would answer, I would phrase it like this. Would you rather spend your life trying to impress strangers who are not even paying attention to you or wake up every morning with a level of independence and control over your own life, control over your own time? Because that's really what the tradeoff is. You can buy a fancy and expensive and flashy car with a the idea, the false idea, the false promise that other people are going to turn their heads and say, wow, look at you. You're so amazing. Or you can use that money as savings and cushion

and independence. And so when you deal with a job loss, a divorce, a medical emergency, whatever it is, you have a level of cushion in independence to control your time. And that's very well said again. When you phrase it like that, do you want to impress people or do you want independence? I think it's easier. The only thing I've ever wanted out of money is independence. I just want to wake up every day and say I can do whatever I want today because I have saved over time. And I don't even view it as savings. I don't view it as saving money. I view it as purchasing independence. That's what I feel like I'm doing. Like every $100 that I save is a $100 independence token that I have. And I don't view that as delayed

gratification. I view that as I get benefit out of that. You get joy now. I get enjoy it right now. I wake up every morning with a sense of independence because I've been saving my whole life. I've been accumulating these independence tokens my whole life. And so that's always how I've viewed it. And I think even to the extent that if you buy the fancy car, you love it and it feeds your soul, of course, you know that fueling is going to last about eight days. That's so true. Abituation sets in faster with cars than with anything. So fast. But I'll tell you, you know what is enduring that you will never become accustomed to of how amazing it is, independence. You will wake up every morning for the rest of your life going, this is cool. This feels great. This is awesome.

Even when you're on the road to independence, you're not there yet. But being on that road makes people so much happier and feels so much better about where they're going. And, you know, for all of our listeners right now, we've had 30 something episodes. I think what was just said maybe the single most important point that's been made. So everybody lock in on that. I mean, I've said that for years in the wealthy barber returns. We said it. Where you meet people who've made the switch, started handling their money better, they haven't regretted having to miss out in a few things. They've been much happier because they know they're on the path to independence. They're doing the right thing. So you said all that extremely well. Now listen,

you make some mistakes with your money or we would perceive to be mistakes. You've done some foolish things in your life. Share a couple with us. Well, look, there's plenty of mistakes. I don't have a lot of regrets is how I would, how I'd phrase that. When I started investing, I think I bought my first stock when I was 18 or 19. And of course, like every moron, I started day trading bankrupt penny stocks. And then and then that didn't work. work. So I said, oh, you know what I need to do? I need to hold these bankrupt penny stocks for two days because I'm a long-term investor. And of course, that didn't work. I went through the whole gauntlet of huge mistakes. I invested on margin for a period. I did all of that. And so those were

horrendous mistakes. But I am so glad and appreciative that I learned those mistakes when I was 19, not when I was 41 and trying to raise a family. I think if there's any, like, I feel like Everybody has to burn their fingers in finance, particularly in investing. And if you're going to do it, do it when the stakes are very low, when you're 19 and your net worth is $700. That's the time to make those mistakes. And so there's been quite a bit of that. I have had moments when I have thought, am I spending enough?

Am I too addicted to the idea of independence and savings? And there are all these things of living a better life that I am putting off. because I'm so addicted to this identity of I'm a saver. I've had those moments. And I think that might be true around the edges. My wife and I spend quite a bit of more money now than we did five or ten years ago. And are we happier? And I don't know if we're happier now, but I think we know things that like, hey, actually,

if we spend money on this, that's actually a pretty great thing that can give us a better life. And maybe in the past we were too frugal about it. But here's also how I've thought about this. I was very frugal and cheap and a high saver when I was in my 20s. And it might be tempting for me to look back and say, I should have gone out to dinner more often. I should have gone on more road trips. I should take more vacations.

I actually don't think that is the right way to think about it because it's impossible, I think, to have a YOLO mentality when you're young and then assume that when you're 40 and making a lot of money, you can flip the switch and start saving. And so what that, that, that, savings identity did to me in my teens and my 20s was it created these behaviors. Then now that I'm in my 40s, I'm able to save a lot of money because it's like, it's like drinking water to me. I've always been a big saver. It doesn't take any effort whatsoever. And so I'm appreciative and grateful of the savings

habits that I formed when I was younger, even if once in a while I will have thoughts of maybe I should have taken my friends out to dinner more often. Maybe I should have done more crazy road trips when I was single of course I have those moments but those might be mistakes but they're not regrets now when your wife took your kids three years ago and moved to Hawaii was that a sign that maybe you need to spend a little bit more step up do a few more things it was it was it was passive aggressive but I read into it yes yeah no that's aggressive aggressive I don't even think that was passive aggressive what what do you spend on by the way that gives you some joy so if you are going to blow some money what is it that gets you going a little bit that makes it worthwhile people people ask me that question

and I don't know I have a great answer for it other than some things around the edges. I think we kind of overinvested on our house, but everybody's happy, and it's great, and we love it. And I work from home. My wife is at home, so we're here all the time anyways. Might as well be a cool place that we can do. I travel like a Middle Eastern prince. I travel very well, and I have some people think flying first class is a total waste of money. I don't. I travel a lot, so I think doing that for me is always.

has always been great. And I just, it's less about, you know, luxury and status that it is just comfort and ease of just not having to think about where I'm, I sit in the same seat every single flight. And so it's just like, and so I fly every week. And so I might as well make it easy for me. There's some things around the edges that are like that. But I think what's been true, whether it's today or 10 years ago, my wife, we've never had a budget for anything. We always buy anything that we want. But for most of our life, we haven't wanted that much. And we find so much pleasure taking our dog for a walk and hanging out with our kids and doing things that by and large don't cost that much money. What is true, a realization we've had just in the last

year that I think was interesting is we admitted to ourselves one day. And once we admitted to ourselves, it was so obvious that it was true that of the last five vacations that we've taken, the best part of the trip was coming home. And we got to a point where like, can we just admit that maybe we shouldn't be traveling as much? And that's hard to do because society tells you travel, travel, travel, travel. That's the right thing to do. And we're like, it seems like actually just kind of a pain in the butt, honestly. And so maybe we should, so we came home after that, after the realization,

we canceled the next two trips that we had on the books. Interesting stuff. Feel great about it. And I do think to some extent, A, I travel a lot for work. So I've seen the world. I don't have a desire to get out there. But I do think there is some extent that your addiction to travel is because you're uncomfortable at home. I agree with that. You're escaping. You're escaping. You're running away from home.

And there might be a lot of reasons for that, but I think that can be a lot of the impetus for people who want to be vagabonds and get on the road. They just don't like home. I love home. I love my house. I love my community. I love my neighbors. I don't have this urgent desire to get on a plane and go somewhere else. So I think just admitting that in the last year was it was an interesting realization for us. And you mentioned you have a dog that put you up even higher. That's right. In my regard. Gold retriever. They're very expensive, but they are worth it.

Nothing. There's nothing better. And the only tragedy of dogs is that if you can get 10 or 12 years out of them, that's a good run because they are the most incredible things ever. No, I couldn't agree more. I thought you did a phenomenal job in the book in talking about the role that luck plays in our lives, but as importantly, how we often deny that or don't see it. Interestingly, I'm not wired that way.

I recognize I've been one of the luckiest people in world history. I had great parents for heaven's sakes. How lucky is that? You don't control that. You don't do anything to deserve that. Even the wealthy barber. I got the idea watching cheers one night while I was working in another book. If I hadn't been watching cheers that night, it probably wouldn't have come to me.

I've only had one good idea. Thank God I was watching cheers. But luck does play a role. But I loved, absolutely loved the first example you used to prove it when you talked about Bill Gates. Just share that with our audience. Yeah. So Bill Gates went to one of the only high schools in America that had a computer. And now, what is he a genius, hardworking, visionary risk taker?

Yes, yes, yes, yes, yes, all of it. Maybe more than anyone else of his generation. He also had this literally one in a million stroke of good luck of having to go to this expensive private school in Seattle that back in the 1970s had a computer, which was unbelievably rare. This was like having a nuclear reactor in your school in the 1970s. You have a computer. And then he also had this incredible stroke of luck of meeting Paul Allen. And when he was in college, who also was just his computer visionary, he had all these things. And so, again, it's not to say, oh, well, Bill Gates just got lucky because a lot of people went to lakeside school in Seattle and did not become centa billionaires themselves.

And so it's so it's not that. But it's just an acknowledgement that there are things in the world completely outside of your control that can have a bigger impact on outcomes than anything you can do intentionally. That is the definition of luck. It's also the definition of risk. there are the same things in the opposite direction. There are things that can happen in the world that you have no control over, have a huge impact on what happens in your life.

And I think it's true that in finance, we are very cognizant of risk. We talk about risk all day long. And on Wall Street, there are risk managers and risk-adjusted returns. And like risk-risk-risk risk is everywhere. We never talk about luck. And I think the reason why is because

if I look at you, Dave, and say, you just got lucky, even if you admit it, that makes me look jealous and bitter. and if I look in the mirror and I say, I just got lucky, I don't want to admit that to myself. I want to think that I built this. And so we are very good at discounting the role of luck. Part of that is because luck just seems like, again,

kind of a nasty word to use. A better way to phrase it is just, what is repeatable? What could I, what element of my life could I repeat this year and next year and the year after that? And of course, I cannot repeat the era in which I was. was born in. The parents that were assigned to me. There's those things, there's often a phrase that I, that I absolutely disagree with, which is when people say something along the lines of the harder I work, the luckier I get. Like, no, no, no, that's not luck. Luck is where you were

born. Luck is who your parents were. Luck is the country that you were born into. You have no control over that. If you are able to work hard to foster something better in your life, it's just hard work. It's not luck. And so I think we massively over- underestimate, we not say underestimate, I should say, that role. If Warren Buffett were born 10 years earlier or 10 years later, he would not have had a fraction of the success that he had. If Bill Gates were born in Zimbabwe, he would not have had any of the success that he had. You can play that game all day long, these things that we have no control over. And it makes it, it's not a cynical view. It's not a, it's not a negative view. But it makes it so that when you are trying to learn from

other people, make sure you are learning skills from them that are repeatable. And so, So Warren Buffett, you can learn from his time horizon, his patience, his mentality. You cannot learn from the fact that in the 1950s, during the heyday of his investing career, you could buy blue chip companies for two times earnings. That's not something that you and I can repeat. That was his world. It's not our world. And so I think it's just important when you're trying to learn lessons from the world

to ask yourself what is repeatable. Yeah, I had a very interesting experience along that line about two years ago. I was talking to a guy who was quite old now, but he'd made a ton of money in the roll-up business. And you're saying, what can I learn? And he was humble. He did notice. He said, well, Dave, I was rolling a business of 1.5 times earnings.

Yeah. Because you can't screw that up. Nobody else was doing it back in the 60s, 70s and 80s. And so, of course, I did well. You know, now those same businesses will go for five and six times, et cetera. So you're right. A lot of that can be ascribed to skill, but it was really right place at the right time. And again, that doesn't mean people didn't optimize or work hard or bring a lot of value at,

but there's a lot of luck. Did you enjoy fooled by randomness back in the day? Of course. I mean, I've always been a huge talent fan. I think he's an incredibly good thinker and writer. And yeah, there's a tremendous amount of that in Wall Street. There's always a thing where people have said, I've never seen a back test that didn't work.

So when people go in and they back test history, oh, what if you bought stocks using this formula historically? Look at this. You would have been a genius at all. Look, every back test works. But then when you bring it into the real world, a completely different thing. And so I think that's one of the problems with the big data era that we live in where you can prove anything that you want. There is enough data out there that

if you have a will to twist the data into anything you want, you can prove anything. But nine times out of ten, it's fooled by randomness. We have a great educator in Canada named Prit Banerjee, and one of the things he really focuses on is here's the basics of how to run your money, how to get involved in personal finance. Don't panic about optimizing. on every front that'll actually hurt you more than help you get it basically right and i think he brings a certain peace of mind to people when he communicates that way you did a wonderful job of that too and talking about if you're trying to optimize on every front that can be self-sabotaging to some extent give me a little bit there the the analogy i used was reasonable versus rational

and right people should actually it sounds crazy but you should not aim to be rational with your money you should aim to be merely reasonable you don't want to be unreasonable but the The idea that your financial decisions should all make perfect sense on an Excel spreadsheet down to the fifth decimal point, I think does a lot of damage in finance. And so if you could just be merely good enough, I think it's similar with diet. I'm not a dietitian. I'm speaking way out of my lane here. But there are some people who want to maximize every single carb and gram of sugar and gram of fat

down to the most optimal amount in their diet. There's other people who are like, look, they're eating like an index fund. And they're like, I ate some fruits, I ate some vegetables, I eat some candy. It all balances out. We're all good here. And I think that's just a much more reasonable way to go about life. And the truth is that the reason why this is is because we all have our own quirks and our own personalities and our own different family situations that don't allow pure rationality.

And so I mentioned earlier, I've always been a little bit more conservative in my investments than I should be. And I say should with air quotes of like, that's what the models tell me I should do. But I'm like, look, for whatever reason that is, we could put me on the therapist. this couch and try to figure out why that is. But I don't, I don't have a desire to take a huge enormous sums of risk. I just want to use money as a tool to have a better life. And if that is a fault of mine, so be it. It's who I am. And so I could try to be rational and invest way more in the stock market. And I probably wouldn't sleep as well at night. And that's, that kind of

sucks, doesn't it? The other example I used in the, in the book was 2017, my wife and I paid off our mortgage. We had a 3.2, I think, percent interest rate. Financially, it was the worst decision we've ever made financially. It was the best money decision we have ever made by far. It gave us more pleasure and happiness and sleeping well at night. Even if on a spreadsheet, it was the dumbest thing we've ever done. So it was not rational. It was incredibly reasonable for us to do it.

And I think everyone has our own little version of that. Well, it's interesting to bring up that example because, of course, a 3.2% deductible interest in the States, it probably didn't make much mathematical sense. But you know you never meet anybody. who says, oh, man, I wish I wouldn't have paid off my mortgage. Exactly. You never cross-bazel people who say that. So that speaks volumes to what you were just saying.

Okay, we're going to wrap up, but I want to ask you a couple of quick ones. What's the most overrated financial advice? And if you say pay yourself first, by the way, you'll never be invited back to the Wealthy Barber podcast. So that's not it. What is the most overrated financial advice out there in your mind? Probably buy low, sell high because it inherently brings up this idea that you should be selling, that investing is a transaction.

I think buy often and hold as long as you can is much more practical advice for people. So we set people up for a mistake when from day one before you've even purchased your stocks, you're already planning on when you're going to sell them. No, that makes a lot of sense. Okay, do you have any major belief from the first book that has changed in the five, six years that it's been in the marketplace? Not that much. You know, the subtitle of psychology money is timeless lessons.

I really wanted to write about things that have all. always been obviously true, so they're not susceptible to the winds of the world. But what is true is that I wrote a lot about in that book about the biggest risk is what you don't see coming. And the biggest risk for the next year is something nobody's talking about. What's interesting is I finished writing that book in January 2020. And I and virtually nobody else knew that a couple weeks in the future, the world was going to fundamentally break with COVID. And so it's not a difference of belief, but there's something that I kind of wrote in passing that I, I didn't realize when I was writing how profound that was going to change everybody's lives.

Listen, great having you on the show. One of the things that fascinates me about you is you never lose your energy. So when you're talking about the subject matter and the interviews I've seen you give, you are very passionate still. You get extremely excited in delivering the material. Good for you. It still brings the best out in you. You want to help people.

That's great to see. It's the greatest show on Earth. I love it. Yeah, that's good. Well, listen, thank you very much. I'm a huge fan. all of our listeners, anything Morgan writes, read. Get out and buy his books.

The psychology of money is great, but as are the follow-up, too. They are fantastic books. Anything he puts out, get your hands on. Thanks again for coming on. Thanks so much, Dave. Huge fan of years over the years as well. So it's an honor to be here.