The whole point of wealth at the end of the day is somebody has to spend it on something, whether it's you, your kids, you give it away to like a philanthropic organization to spend.
And having like a scarcity mindset where you're constantly worried about not having enough even when you objectively have enough is just depriving yourself of things you could spend money on to enjoy. Again, whether it's material things, experiences, relationships, and like the things that you can spend that money on that you will enjoy are just going to change a lot. Like the thing you'll enjoy at 25 is different from 35 or 45 or whatever.
Today, we discuss how to think about money, from knowing when you have enough to saving for a home in an expensive city to whether financial advice survives AI. We're joined by Jack Raines, writer of the Young Money newsletter and author of the forthcoming book Young Money: A Field Guide to Wealth and Purpose in Your 20s. Let's bust right into it. Question one, our first question comes from Natanya Crownford on Instagram. Is there such a thing as enough wealth? I still fly economy, but I can fly anywhere I want. Jack, is there such a thing as enough wealth?
So, I mean, I think the answer is yes, there is. The issue is humans are kind of status-chasing monkeys where like once you get to what you thought was enough, there's always another level. So, like it's a question of like I'm from South Georgia, right? So, my version of enough wealth growing up is a lot different than having lived in New York or San Francisco for the last four years. Um, so, I mean, my answer to that is like yes, there is. The question is like can you resist the like chasing people who are one level ahead of you because is there an upper limit to wealth? No. Is there enough wealth? Yes, depending on like where you set your standards for what enough means, you know? For some people it's like several hundred thousand, a few million, tens of millions. Um, but it's much more can you resist just like chasing after other people that you view to be a little bit ahead of you.
Yeah, I think about this a lot. I mean, on a very practical level, if you take your annual burn times 20, that's when you sort of financially are probably set, right? And can start to enjoy life. And also, I think a lot of people make a mistake. I had some questions from some people who are retired about how much money they don't mind. I asked about their life. I'm like, you should be spending more money. You know, you're not unless you really do something stupid, you're fine. And my sense is you guys don't travel. You know, spend some money. Order the good wine. And I think about this a lot. Um, I think hoarding wealth is a virus that infects America. I just don't think there's any reason to have over a certain amount of wealth. I don't think you're going to get much happiness, if any, incremental happiness. I don't think you'll be less happy. I think this notion that billionaires are less happy than millionaires is also a myth. But what you said, what is it? Humans are mimetic in that we don't think about satisfaction from what we have, we compare ourselves to others. And I have more money than most citizens, but I would like and I stopped aggregating wealth or purposely trying to aggregate wealth after about 10 years ago. I either spend it or I give it away and now, but I still occasionally regret not going more in on AI and trying to become a billionaire because I would like to fund NPR. I would like to have more political influence in candidates. You can always find reasons. I still feel insecure and I would love to have You live in a capitalist society. No matter how wealthy you are, they're always going to create incentives to want more to keep you working, right? And keep you productive. But I do think there's an art to saying at some point, I at a minimum want to focus on my relationships and get off this hamster wheel. And it's not easy. And by the way, that's a story of privilege because I think the vast majority of people are just trying to figure out a way to save enough to send their kids to college and not have medical debt. But yeah, that word enough is so powerful and it's consciously deciding yourself when is enough and what would happen if I were fortunate enough to get to enough. Any closing thoughts on this?
Yeah, I mean, I have two things to add. One, do you know Nick Maggiulli? Uh, anyway, he had in a blog post like four or five years ago had a really interesting stat talking about how like, you know, most people are worried about not having enough money in retirement, but most Americans actually are spending less than like they're earning more each year than what they're actually spending down in retirement. So, to your point of like hoarding wealth being a virus, I think it's actually an inefficient use of money if you have like several million saved up and there's just no chance like even accounting for what you want to leave for your kids or grandkids, if you're rapidly accumulating more and more money just from compounding in your 70s and 80s that you can't spend down, you probably should have spent some sooner. And the other point I have on that is like the whole point of wealth at the end of the day is somebody has to spend it on something, whether it's you, your kids, you give it away to like a philanthropic organization to spend. And having like a scarcity mindset where you're constantly worried about not having enough even when you objectively have enough is just depriving yourself of things you could spend money on to enjoy. Again, whether it's material things, experiences, relationships. And like the things that you can spend that money on that you will enjoy are just going to change a lot like the thing you'll enjoy at 25 is different from 35 or 45 or whatever. So, I actually think one of the hardest things is like being willing to spend some money in your 20s when you probably don't have as much knowing that like you'll keep compounding over time, right? Uh, but it's tough. It's like it's a very tough thing to spend money when everybody else is still making money and thinking through like our idea of what we're going to need later is always so much higher than what it actually is, I think.
Support for the show comes from Superhuman. The pace of modern work can be relentless. You're getting a constant influx of messages from a ton of different apps. You haven't closed all your browser tabs in a year. Everything seems urgent and staying on top of it all feels like an impossible task. Superhuman Go is an AI chat that's always there when you need it. Already aware of what you're doing and doesn't ask you to start from zero. Superhuman Go from the makers of Grammarly help you be the best version of yourself at work. It handles the repetitive stuff so you can focus on the work that only you can do. Whether you need to summarize an endless email thread or prep for a meeting that's happening in 5 minutes, Superhuman Go works inside the tools and sites you already use, your browser, inbox, docs, and your project tools. And its AI chat is available on the side of your browser and it's always ready. No new tabs, no switching apps, no losing your place. This is AI that works with you, not on top of you, so that you have the time and brain space to solve the problems that matter. Check it out, find out more at superhuman.com.
Support for the show comes from Vanta. Every new tool your team signs up for, every vendor that turns on AI features, every new integration has a chance for something to go wrong. And most security programs weren't built for AI's pace of growth. Enter Vanta. Vanta is the number one agentic trust platform used by over 16,000 fast-moving companies including Ramp, Cursor, and Harvey to ensure they're always audit-ready. And now Vanta is helping companies including yours watch for the risks that show between audits across your vendors, your AI tools, and your whole environment. How? The Vanta agent works like a 24/7 GRC engineer in the background, finding issues, drafting fixes for you, and cutting vendor assessment time by up to 50%. Whether you're a fast-growing startup or a global enterprise, Vanta is here to help you automate your security and compliance and earn improved trust, helping your business scale quickly and with confidence, opening doors to next-level growth opportunities and freeing up valuable time. Get started today at vanta.com/profg. That's vanta.com/profg.
All right, let's head on to question number two. It also comes from Instagram. j.kim asks, "How should young people go about saving for a house in a high cost of living city?" Jack?
So, I think the first question is, do you even want to? Because there's a lot of people who will move to New York or especially San Francisco now with the AI boom, where I lived in SF last year and the going rate for like a decent studio apartment is around probably $4,000 now. Like that's for a, you know, 500 square foot shoebox. So, the question is, okay, you can make the math work on that, but then you get married and you want to have kids and all of a sudden you probably need at least a three bedroom home, which is going to cost like if you're actually in San Francisco proper, probably $3 million. I was looking at some three bed, two baths in New York. Um, so like prep for this, same thing, call it $3 million minimum in a decent neighborhood. And then if you're doing that, okay, are you going to pay for private school? And what's that going to cost? Are you going to have a car? What's the parking going to cost? Like you end up in this thing where you're going to be spending so much money per year to keep up. Like the first question I ask is, should you even buy a home in like New York or San Francisco? Or should you live there to make money, meet your spouse, like save cash and rent, and then once you're at the point that you're having kids or thinking about school, you move to the suburbs or you move to New Jersey or Long Island or pick your version of that.
Yeah, look, I think you're right. I think it's important to do the math that you never lose money in real estate. The American dream is brought to you by the National Association of Realtors who always find a reason for you to keep just buying and give them their 5% commission. There are a lot of instances where it doesn't make any sense to unless you just have a lot of money to buy versus rent. New York and San Francisco almost always it makes more sense to rent. And there is a certain, you know, elegance to renting and slamming your keys down and being economically mobile because what you don't want is to end up underwater on your mortgage or to be house poor and just so focused on making your mortgage you can't enjoy life. I do think at some point I mean I'm torn on this because while as an asset class homes have done the same or even maybe slightly underperformed the broader market, it is a great way to build wealth because people have a tendency to make that mortgage payment as opposed to maybe spending two or three thousand dollars saving and buying stocks. They have a tendency to make that payment. Also, I think there are some real psychic benefits specifically moving towards a family or mating or having kids and procreating which I think are rewarding and that is I really was fascinated by the study that said that housing prices are a form of birth control and that is for every 10% housing prices go up the birth rate has declined by 1% because I mean you're a kid Jack, but generally what you find is when you buy a house, you start fixing it up and you start fixing up a second bedroom and decide well maybe we should find someone to live in the second bedroom. I know let's pull the goalie and have a kid, right? So Yeah, so and I think generally speaking that's good for you, good for your wealth, good for your marriage. Well, I don't want to tell people let me be clear. You can't save a marriage having kids. That's probably not the thing to do, but I do think there is psychological return, psychic return in home ownership and that I think a decent policy I met with a Democratic Senator this morning that a lot of people think is running for president and I can say to drill baby drill it should be build baby build and we should have tax incentives that unleash the private home builder sector and YIMBY laws such that we go back to where I was. I was living in San Francisco out of business school. I bought a two bedroom house in Potrero Hill for $285,000. The average graduate of the Haas School of Business in 1992 was making a hundred grand so it was 2.8 times my salary. Now the average Haas grad is making 200 grand which is a great income but the average home I think in the Bay Area as of last year was 2.2 million. It's probably closer to three now because you've seen this acceleration. So, what is that? 15? It's gone from 2.8 to 15 times. And like so many things in our society, housing has been a transfer of wealth from the entrance to the incumbents where they create artificial scarcity through sequestering housing permits by putting housing permits or authority in the house of current homeowners. This is an instance where it should go back to bureaucrats. You need growth. You need more housing. And people like you are having a tough time finding a house because people like me get very concerned with traffic and making more difficult to build more housing such that the price of my house goes up in value. I think this is a big issue for America. You need a kitchen cabinet of people who can sit down with you and say, "All right, give me the math. Give me the numbers. Should you buy a house? Should you not?" And even if it doesn't make economic sense, if you got rich parents and you got, you know, a dude you want to marry, buy a house. You know, it's just there's a lot of nuance here and I think people this is one of those things where people will spend so much time deciding which iPhone they're going to buy and they don't spend enough time for 1,500 bucks. They don't spend enough time thinking about what is arguably the largest purchase of their life. I also think, and I'm sorry for the word salad here, that the IRL movement where Live Nation is booming and Taylor Swift tickets are going for, you know, $6,000 is that a lot of people of your generation have just given up on saving for a home. When I was your age, every dollar I had was going towards a little fund where I could save $60,000 for the down payment on a home. And now I think a lot of kids or young people are saying, "There's no way I can buy a home. I'm just I'm going to go to Coachella."
I mean, well, something else that's funny that you hit on there was and I totally agree on the like YIMBY versus NIMBYism. At the end of the day, we should build more homes and then people could like afford to move into a home, but a lot of the voters don't want their home prices to drop because of what we were saying earlier about it's a lot of people treat it like an investment asset. You don't want your $4 million home to be worth $2.5 million even if a lot of 26-year-olds can then buy homes. But, this is especially true in New York. So much of the housing is like subsidized by people who do have rich parents. Like, you know, you like I didn't really pick up on this until like I also went to business school. I was at Columbia and like you have people who are taking out couple hundred thousand dollars in student loans. You have people who are like fine, but not like trust fund kid. And then you have people whose lifestyle subsidized where their parents will like buy them an apartment or townhouse. And everybody's competing for the same housing supply. So, like for the I guess for the people who are like making their own down payment for a home right now in a high cost of living city, so much of the already scarce supply is also subsidized by like family income, which I'm like all for. Like, if your parents can like support and help with like big life costs, awesome. But, it makes that really tight supply even tighter. Um, so it's just tough. You have like a really tough supply-demand market. You have a lot of factors against you. And yeah, there's a little bit of financial nihilism where people are like, "I'll never afford a home, at least not in one of these two cities. So, why not blow it on, you know, material goods, consumerism, experiences?" And it's just a pretty vicious cycle. Okay, so we'll be right back after a quick break.
Support for the show comes from Bilt. Are you getting rewards for paying your rent or mortgage? I mean, aside from having a roof over your head? If the answer is no, then check out Bilt. Bilt members earn points on every housing payment, no matter where they live. You can redeem Bilt points for flights, hotels, Lyft rides, amazon.com purchases, future housing payments, and more. Bilt also gives every member access to its agentic neighborhood concierge in the Bilt app. It's basically an assistant that's connected to both your home and over 50,000 merchant partners. So, you can ask it to pay your rent, make a dinner reservation, book a fitness class, schedule a Lyft, and more. It can help you out while automatically applying your member benefits along the way. Benefits aside, if you've been curious about what agentic AI actually looks like in practice, this is an example of just that. It's not just for renters, Bilt works for mortgages, too. When your housing payment is one of your biggest monthly expenses, you might as well earn points on it. You can download the Bilt app and join the membership for where you live at joinbilt.com/propg. That's j o i n b i l t dot com slash propg. Use our link so they know we sent you.
Welcome back. We're here with Jack Raines. Question number three comes from Cordova, Texas. Will there be a need for wealth advisors as AI tools develop over time?
