The Wealth Secrets No One Teaches You | Morgan Housel

It's not necessarily how much you have. It's just a contrast to what you had before. Would you rather have a net worth of a million dollars when you used to have two million, or would you rather have a net worth of 500,000 when you used to have 200,000? And psychologically, most people would rather have 500,000. The speed at which a luxury becomes a necessity is two seconds.

I always say two things. One is that the second is affordable housing. I think is the single biggest social problem because so many other social problems that might seem bigger than that are downstream of housing. A lot of the drug problem, the fertility crisis, the degradation of politics, because if you don't feel like you're invested in your community or you're invested in your country, it's much easier to be like, burn the place down. And so much I wrote this in Psychology of Money. If you have to sort of like sum up doing well financially in one word, I think it's survival.

Well, you've been incredibly successful, too, Shane. I've looked up to you for years as well. But I bring that up. I think that's an important thing to bring up because what has driven me are people like you and others, James Clear, Michael Lewis, people who I've really looked up to and not been so crazy to say I want to be that person one day. Both because they're, it's, that's, that's not, you know, everyone should just do it in their own way. But I've, I've always been, I think there's a difference between envy and aspiration. You can be really inspired by somebody's success without envying them.

And the, you know, if I can name half a dozen people that I've really looked up to and say like, man, they've, they're a good role model. But the important thing is I don't envy them. I can also name half a dozen people I won't, who I, who I've envied. And when I, when I try to get introspective about that, why do I envy that person? It's usually, it's because they achieved a level of success, but I didn't like how they did it. And that's a subjective thing. Maybe they're all, they're all good people in their own right. I won't be too judgmental, which I won't name them. But I, I think, I think it's an important distinction, people in your life who inspire you versus you envy them. And I think everyone, if they're honest, probably has a, you know, some of both.

But I really, I like looking up to people where it's like, not only do I appreciate what you did professionally and think you did it with a high level of integrity and you look like you're having fun doing it, but at least from my appearance, I like the whole package of the life that you're living. And that's really important because there's also a lot of people, particularly in finance, who I can say, man, career-wise, you did amazing, but as I get to know you, I realize that your home life isn't that great and your health isn't that great, or maybe you don't actually enjoy your life. And so, do I actually want to chase what you've achieved? Like, no, maybe not. And so, you ask what inspires me. I think it's, I think it's, I think it's that having people in your life that you look up to and you can use as a north star is important.

The other that I think is really important, I think this was a Buffett line. He said, 'It is really good to have people in your life who you don't want to disappoint. Nothing is a bigger motivator in life than having a couple people, rarely more than that, that you really don't want to disappoint.' I really desperately do not want to disappoint my wife and kids. I really don't want to disappoint my parents. That's, that's fundamental. I think most people will have, they'll have their own version of that, but something like that. And nothing is more of a motivator than that to want to leave, to live a good life.

I think in a healthy way, I can have a very split personality of on one hand, I can say, man, I'm really good at what I do and I'm achieving a lot and this is amazing. And then I can very quickly flip a switch and say, 'I'm a nobody and I've done some really bad work lately.' And I think on balance, that's a, that's a pretty healthy personality because if you only have the ego side, you're going to run yourself off a cliff. And if you only have the humble/depressed side, you're never going to get anywhere. And so I've been pretty good at being able to toggle back and forth sometimes, you know, within the same hour, certainly within the same day.

And so what keeps you going? A, I really enjoy what I do. Writing has never felt like work to me. And I think that's, I think it's the same for you. It's just an extension of kind of who you are. It's never felt like work. And so I enjoy doing it. But also what keeps me going is like the healthy side of me. Part of me says like I can keep doing this and do good work. And then a minute later the other bird on the shoulder being like, you suck. You suck at this. And again, on net, I think it's a very healthy personality even if it's just the two extreme sides.

It can do a list of positive things for everybody. What I think is true is that on average, people who have more money tend to have fewer bad days, but I don't know if they have more better days. I think it is more likely that when you have more money, you are less likely to wake up and be like, man, things are not going well. But that doesn't necessarily mean that you're going to wake up grinning ear to ear. Now, that's a lifestyle improvement. If you have fewer bad days, that's like great. Your life, your life is better. That's obviously better than the alternative, but it's not happiness. It's a very different thing.

And I think it can throw some people off when they are, when they aspire to happiness or they think that what they're achieving in the money they're making should make them happy. Sometimes it does. Very often it doesn't. And they wake up and they're like, 'What happened?' Like I thought this was going to make me happy, but I'm not. So, I think there's a level of expectation setting where it's like I think, I think money can be more like a vaccine where like it can prevent a lot of misery, which is great. Vaccines are wonderful. Like we don't have polio. It's a great thing, but maybe that's a good analogy because you and I don't wake up in the morning being like, 'Oh, I'm so glad I don't have polio. So grateful for the fact we don't do that. We don't, we don't think about it.' And I think that's a lot of what money can do. It is a lifestyle improvement, but don't think it's going to make you waking up ear to ear, grinning ear to ear.

But we want to think of it like it's a performance-enhancing drug. We want to think of it as like we're going to take it and just be like, 'Oh, I'm on fire now. This is great.' And I think for short periods of time, it can do this. Happiness is always a fleeting emotion. Like most people are rarely happy for more than a couple minutes at a time. And I think it's very similar to humor where if I tell you a very funny joke, you don't laugh for 10 years. You laugh for a couple minutes. Humor is a fleeting emotion. And happiness is the same. Most people, you have moments of it. And you can situate your life. So maybe you have more moments of it than others and more than you used to, but it's momentary.

And so I think what people actually want to get to, what they aspire to whether they know it or not, is contentment, which is not happiness. It's a different emotion. You'd want to get to a point where you're just like, I'm, I'm good. Like I'm very grateful for everything that I have and I have everything that I need and most of what I want and I'm totally cool with that. And if there's more to come above this, that's the cherry on top. But I'm really cool here. I'm great right here. And I think most people can realize that with a lot of work and constant upkeep, you can get to that, you can get to that level at a lower income than you think.

Yeah.

Yeah. And satisfaction was more based on the story that you can tell about your life. So it actually had to do with how much money you had, how much status you had, how much you, how many promotions you had. You were able to tell yourself the story that I did, I sacrificed all these things, maybe my relationship with my partner in order to achieve them.

Yeah. And I think it's when you daydream about having more success or more money or more stuff. When you day, when you do that daydream and it feels good and you're like, 'Oh, if only I had that house. If only I had that car. If only I had this income.' By and large, what you are doing is imagining yourself having those things and being totally content with them. And that's what feels good. That's why the daydream is fun to do. But by and large, when you imagine that good feeling, it's not happiness. You imagine yourself in the house being like, 'This is it. This is all I need. I don't need, this is, this is, this is the peak of what I need.'

More often what happens is if you are in that house, you're like, ah man, look at my neighbor, like their yard's a little nicer, isn't it? Or like, ah, like I got this kitchen, but like I saw this picture on Instagram. What if we, what if we remodeled it? Like what actually happens is you don't have a level of contentment. And I don't think contentment is a dirty word. It's not a bad thing particularly overall in the economy. I want to live in a world where most people, particularly smart people, wake up every day and they're like, this isn't enough. We need more innovation. We got to start more successful businesses. That is the root of all progress is that the majority of people wake up every morning and says this is not enough.

And the people who are monstrously successful, that Elon Musk and Jeff Bezos, they wake up still, you know, I guarantee you Elon Musk wakes up every day worth $400 billion saying this isn't enough. Not even necessarily financially, although there might be that element, but like the technology is not good enough. The products aren't good enough. We need more, more, more. And so the lack of contentment is the seed of progress. So it's not a bad thing. But you can see in the individual life where if you feel like there's a hole in your soul and you're, you're just not, you just feel like you haven't done enough, you just want more. That the idea of like, oh well, if I just keep shoveling money in that hole, then I'll get to a place where I'm good. It's actually very difficult to do that. That makes sense sort of evolutionarily because you think about it, evolution cares about survival of the species, not the happiness of the individual.

And the other thing about with evolution is like it doesn't matter how much money I have. What matters is that I have more than you.

And so in a world where we are like lucky enough to live in relative prosperity and abundance relative to previous eras, I'm going to measure my success relative to you and the size of my house relative to yours. So even if the size of my house by historical standards is enormous, if my neighbor's is bigger, then suddenly it feels tiny. And there's like, there's no end to that. You like, you can easily imagine a world where our kids and our grandkids have technology and abundance that you and I cannot fathom.

I mean the most, what I think is like the highest odds is that our kids, maybe our grandkids will live in an era which being diagnosed with cancer is not, not that big a deal. Maybe that's still a pipe dream, but like it's, it's not inconceivable to imagine that. And the other thing about that world is you can imagine that they won't feel any better for it. That the, the speed at which a luxury becomes a necessity is, is, is two seconds. And I think that was true for a lot of the infectious diseases of the 20th century. Scarlet fever, yellow fever, polio, all those. If you had told them, if you had told a parent in 1952 that there was a vaccine coming that would just effectively eradicate polio and your, and your grandkids would never have to worry about that, they would have said like, I can't imagine how happy you're going to be that you don't have to deal with this. And we're not. Of course, it's not. It's just not how people's heads just instantly calibrate to the standards of what everybody else has.

And that is the seed of saying it's not enough. We're very like almost never going to get to a point where we're like no matter how good the technology is, no matter how good the medicine is, no matter how big the houses are, never get to a point where at a broad scale in society, everyone wakes up and says, 'Oh, good. This is enough.'

Yeah.

I think what you described is a level of independence, but it's, independence is always a spectrum. So there is a high level of independence in which you don't need to work anymore, and but I would call that, you know, making this up, that's like level 13 independence. And below that are several different levels of like even if you have $100 in the bank, that is, that is a higher level of independence than if you had zero and certainly if you had negative, if you were in debt. And so you realize that literally every dollar that you save is a little claim check on your future that you control that somebody else doesn't. I think it's an important mindset like redefining independence like that, that it's on a spectrum and every single dollar is an independence claim check.

For me, I've always viewed it like I've always been a big saver my whole career and I've always viewed it as not saving money for delayed gratification. I viewed it as purchasing independence for which I get value out of right now today. There's nothing delayed about saving this money because I like waking up tomorrow morning and being like, I, I, I, there, there's a big cushion here. And so not if but when something bad happens in my life, whatever it is, whether it's in my personal life or the macro economy or, you know, your pandemics, whatever it might be, like there's, there, there's a big gap, there's a wide channel of outcomes that I can endure.

And the less independent, the less savings, the more debt you have, the narrower that channel of endurance becomes. And so within that channel is like all the ups and downs of life, individual and macro. And the wider the channel is, the more that you can endure. And so much about compound interest, not just with money, but with relationships and careers and friendships, comes down to what can you endure? How much, how many unknowns and the depths of those unknowns can you endure and survive? And so much I wrote this in Psychology of Money. If you have to sum up doing well financially in one word, I think it's survival. That's true in your career. That's true for savings. That's true for investing. Absolutely. It's just survive. It's just what can you endure? What can you put up with? And when you view it like that, you realize that like every dollar that you save is a claim check of independence that will serve you not just in the future but today.

Yeah.

Yeah.

Yeah.

Yeah. I mean in terms of the dollars accumulated that's true. So I wrote about this in Psychology of Money. 99% of Warren Buffett's net worth was accumulated after his 65th birthday. That's just how compounding works. Like the numbers get nuts at the end.

I think what can be true psychologically though, it's just like the psychology of doubling your net worth. You know, I think the truth is I felt the richest I ever have when I had like $1,000 in the bank when I was a teen. I remember just being like that's like I can't even fathom that much because the gap between, you know, a year earlier I'd probably never had more than $20 in my bank and I have a thousand, like what, I can't even fathom that much money. And so like psychologically it's just the gap between, this is true for a lot of things, you get pleasure out of contrast. It's just how much, what do you have now and what are you doing now relative to what you were doing before.

And so I write about in The Art of Spending Money, I know a guy who has a, has a private chef and he's basically getting Michelin star meals three meals a day. And it's easy for me and you to look at that and being like, that is amazing. What a life. Like that is nuts. Guarantee you he does not feel that much from it because he has no contrast. He, he's not eating tacos. He's not eating stale bread for breakfast the day before. And so when everything is great, nothing feels great. It's all what you want is contrast, contrast, contrast. And so I, I think about that a lot in terms of like it's not necessarily how much you have, it's just the contrast to what you had before.

Related to that is that people are very psychologically triggered by downgrades because you're still contrasting it to what you used, what you used to have. And everyone has probably heard the studies of like what would you rather have? Would you rather have a net worth of a million dollars when you used to have two million, or would you rather have a net worth of 500,000 when you used to have 200,000? And psychologically most people would rather have the former.

Part of this is like the reason that there's opportunity in the economy is because the market, the world, the free market is going to make you pay a price to, to, to get something good. It's not just going to hand you wealth for free. You have to do something for it. And by and large, what you have to do in capitalism is put up with a never-ending chain of uncertainty and volatility and things you didn't see coming. And so, it's never fun to deal with that. A recession, a job loss, or your stock market go down 30%. It's never, it's not fun, but that's the cost of admission for doing it.

And I think once you view it as the cost of admission and not a punishment for what you're doing, it doesn't necessarily make it more palatable, but it, it makes it a little bit more easier to contextualize of like, yes, the market, you know, goes down 20%. You're like, 'Ah, this hurts. It sucks.' And it does, but you're like, 'This is why I'm going to do well over time is because I'm willing to put up with and endure the, the appetite for pain. The, the, the capacity to endure pain is everything.'

Now, I think it was Nassim Taleb talks about everyone has their uncle points where at some point you're going to cry uncle. At some point, you're going to say, 'It's too much. I can't, I can't handle it anymore.' Everybody has that level somewhere. And, um, but I think it's actually difficult to know where that is looking ahead, looking forward. I think very few people know their tolerance for pain looking, just trying to be like prospective about it. I think you have to experience it in the trenches so to speak before you actually know how you're going to feel.

I, I went through this with COVID of like I'm someone who wrote about the frequency of volatility, how to think about the psychology of volatility and COVID, March 2020, a lot of it because it was not just a stock market crisis. It was not even an economic crisis. It was a health emergency and like my kids' schools are shut down and whatnot. Like I, and, and of, you know, billions of other people at that point, I had like sleepless nights of just waking up to being like, man, what's, what's going to happen here? And so it's one thing to say I will be greedy when others are fearful. It's way different to actually do it.

And most people, if you ask them the question, how would you feel psychologically right now if the stock market fell 50%? In that exercise, what they do is they imagine a world where everything is exactly the same as it is today except stocks are half the price.

But the reason that there is volatility is because there is something going on in the world for which nobody knows what's going to happen next. That probably nobody saw coming. That probably is a legitimate threat to you and your family's well-being, if not your, your health well-being and whatnot. And in that context, it's much more difficult to be like, 'Oh, take the long term and buy.' You can do it. The good people do it. The good investors do it. But it's much easier said than done.

Yeah.

10% of them were able to, to accomplish it. But that's why it should be that way. It should not be the case where everyone who reads The Intelligent Investor can go out and exploit the, exploit the deepest opportunities. Of course, it's hard. And I use this analogy a lot of like what percentage of college athletes make it to the NBA, let's say. I, I don't know the number, but I bet it's like, I bet it's like 1%. Maybe 3%, something like that. And people are like, 'Yeah, it's how it should work.' Yeah, like there's no world in which everyone who wants to be a pro basketball player can do it. It's supposed to be the tippity top of, of the, of the best.

And it's the same in investing. Like there should not be a world in which every ambitious stock picker can beat the market. Of, of course whenever you hear the statistics about 95% of mutual funds underperform their benchmark, I'm like, yeah, what would you expect? Do you expect it to be 100%? Like everyone who tries just prints money? Of course it's hard. And so, so a lot of that, but of course in that situation, everybody thinks they're part of the 1% who can do it. But it shouldn't surprise anyone that very few people can.

It makes sense if it's the right neighborhood for you and your family, where you want to live for a long period of time, and with, is within reason of your household budget. Now, that's a completely different topic of what percentage it should be, that's, that's a different thing. But you should not do it because you have, even if you don't define it like this in your head, because you have some level of FOMO of, man, housing prices have gone up a lot and like, ah, that house looks so nice and things would be, and we can't really afford it or it's going to be a huge stretch, but oh, life will be so much better in there. That's the worst reason to own a house.

Part of this that I have a lot of empathy for and I think actually explains a lot of the fertility crisis in the Western world is that most parents, even if they don't actually vocalize this, want to check a couple boxes before they have a child, their first child. One of the biggest ones is own a house. And as housing becomes more unaffordable all over the Western world, it's like this in the UK, it's like this in Canada, it's like this in Australia, the more unaffordable it gets, the more you're going to have good people with good jobs and solid marriages and they're 28, 29 years old and in any other era would start building a, start having a family and today they say, no, I, you know, I really want the stability and the feeling of having made it into adulthood of owning a house before I do that. And in the absence of that, it causes like tremendous problems.

Housing, affordable housing, I think, is the single biggest social problem, certainly in America, probably in Canada right now, because so many other social problems that might seem bigger than that are downstream of housing. A lot of the drug problem, the drug crisis is downstream from unaffordable housing. The fertility crisis is downstream from unaffordable housing. The, the degradation of politics is downstream from affordable housing. Because if you don't feel like you're invested in your community or you're invested in your country, it's much easier to be like, burn the place down. Who cares if politics is melting down? You're not invested in it. You're kind of transient in the system. You can move to another city.

But as a homeowner myself, I know that like I care deeply about local politics. I care deeply about the local parks and the schools. Like I am very invested in this community, but if you're not, you don't really care. And so I think a lot of what's going on in politics can be tied to unaffordable housing. Tucker Carlson, who I don't often agree with, said something I thought was very profound and true recently. He said like a good, I'm paraphrasing him, but he said a good proxy for the health of a country is whether or not a 28-year-old can purchase a house. And I was like, that's great. That's a very good rule of thumb for how well things are going. And of course, people know in US and Canada and UK, like by and large, you can't right now.

What, what should be so aggravating about this and why this should be like a pitchforks and torches issue is that I don't think it's an oversimplification to say the problem is a, very easy to solve and b, is literally just a choice.

That virtually all of the reason that housing is so unaffordable was because we don't build enough. And the reason we don't build enough is zoning. I don't think that's an oversimplification. We, there is plenty of land. There's plenty of capital. There's plenty of demand to get this done. And there are examples of cities that do build that are very large, dense cities that have very affordable housing. Tokyo, gigantic city, bigger than the city you and I are in right now in New York, very affordable housing relatively because they build, they build and build and build and build.

And the fact that we don't, especially relative to previous generations, if you went back to the 1950s and 60s in America, you would have seen construction everywhere. Everywhere you look, there would have been a new community. And because of that, we added supply and housing was relatively affordable. And we don't anymore. And it's a choice. It's, it's cynical to say that people want the cho-, that people want unaffordable housing. It is a choice to not build as much as we need.

But I think that is flawed thinking too. I'll tell you why. Let's say just keep the number simple. You buy a house for 100,000. Let's say 1 million. Make it more, more reason. You buy a house for a million bucks and the price doubles. Great. In your mind, you're like, I just made a million dollars.

But no, because if you sell that house for 2 million, you need to buy another house to live in. And the next house you're going to buy, the price also doubled in the last two years. And so it's this Phnom kind of thing where it's like the equity that you build isn't really wealth because you, when you sell that house, you probably have to buy another one that went up in value just as much. And unless you are moving to a cheaper city, which of course that happens, you're not, you're not getting any benefit out of that.

I, my, my wife and I have experienced this in, in where we live in the last year. The house that we lived in previously doubled in four years, which is not like, shouldn't happen, but it did. House doubled. We lived in and then we sold it about a year ago, bought a new house and the new house that we bought was also, we bought it for twice as much as it would have sold for four years before. So, did we actually make money on that? Like we, we, we could have, it, it didn't really help us that much.

And if we lived in a world where home prices never went up, you would of course have a lot of crowing from homeowners who'd be like, I used to build equity and now I don't. But the truth is is that like they're actually just as well off because the homes that they could buy if they sold now cost less as well.

I believe it.

Well, it's, it's not going to be a long conversation because it's easy. I dollar-cost average into index funds. I hope to own them for 50 years and that's it. My entire net worth is a house, cash, Vanguard index funds, and shares of Marqeta where I'm on the board of directors and that's it. And I don't, I don't think it needs necessarily to be more complicated than that.

I think it is very intuitive in finance to be like, I will do the best if it's, if my net worth looks like a Rube Goldberg machine and it's just so complicated and there's so many levers and strategies and this and it's not. I don't discount that smart people can do well financially with complicated transactions. I just don't think it's necessary at all. And maybe there's an analogy to health in this. There are the well-known biohackers out there who are just trying, they view their body as a Rube Goldberg machine and they're like, I got to maximize this and do this and take these pills and this diet whatnot. I don't think that's necessarily bad, but without being any, any bit of a health expert at all myself, I'm like, look, if you just eat a balanced diet and sleep eight hours and exercise a couple times a week, that's, that's probably good enough. That's probably getting you 90 or 95% of the way or maybe even 100% of the way to the results that the biohacker is going to get. I think, I think that's by and large true.

And I view finances very similarly where my just painfully simple finances, I bet over the course of a lifetime, not in any given year, but over a lifetime, if you compared it to someone whose finances were very complicated and had all kinds of transactions, not only would I be likely to match those, but probably exceed them. And I did it with virtually zero effort. And that's why I do it. I don't recommend other people do it. It fits my personality and it allows me to focus on the variable that I want to, which is endurance. The simpler it is, the easier it is, I think the higher the odds that I'll just, I can just stay with it. Whereas, if it was very complicated, I might get to a point in the economy or my career or my cognitive capacity where like I can't keep it going. And so, I think the higher the odds that I can just leave it alone for 50 years, the higher the odds that you will actually maximize wealth doing it.

I do a lot of mental accounting by which I mean of like money is fungible. $1 is, is the same as any other dollar. But I have a lot of mental accounting where in my own life, you know, I, I sell books, I speak at conferences, I do some, some other stuff like that. And it's very much like in my head I'm like, okay, the book money goes here, the speaking money goes here, I spend this and that. I have a lot of like mental accounting that is not really rational, but it's just how I, how I tend to think about it.

And so I've, I've saved all my book money. I've not, I haven't spent a single penny of the money that I made from books. And again, I, I don't view that as delayed gratification. It's made me financially independent in a way that I gave value from today. And so that's, that's really helpful. My wife and I, this would have been true 10 years ago and it's true today, that my wife and I buy anything we want, but particularly 10 years ago, we didn't want that much. We've loosened up a little bit now that we have kids and like, you know, a little more, more experience with life. But, um, there's, there's really no budget.

There's no, but I've been like that since I was a teenager. I never found it hard to save money. It was always just seemed like the, the, the obvious thing to do, I guess.

Probably our house. We have a, we have a cool house we bought a year ago and it's, what's great is that I work from home. My wife is, is at home and so we're there 99% of the time. That is the core of our life. Like you might as well enjoy it. And also what I think is great about the house is that by and large other people don't see it. It's not a car that I'm showing off around town. It's not clothes that I want people to notice when I'm at the airport. It's like this is just for us. This is internal benchmark. Like I enjoy this and I, I love the feeling of like I'm an early, I wake up three hours before my wife and kids, which I really value that in my life too, and I love coming downstairs alone by myself in the dark and sitting on the couch with a cup of coffee and just looking around and being like, yeah, this is cool, I like this. But what's important is that like no one else sees me do that. I'm not, I'm not trying, I'm not putting on a show for strangers.

It's not a status thing. It is total internal benchmark. And so even if we have, you know, I don't want to say overinvested in that, but I feel like that, that's the one thing where we're like, oh, this is worth it for us. Totally worth it to spend a lot of money here.

Yeah. Because the outside you want stranger, you want people to drive back by and be like, 'Oh, look at that person.' And I think that's true that, you know, how many people have, have gardeners, landscapers, relative to how many people have like interior designers or whatnot. And I, I, I would venture, we're talking first world problems here, of course, but I would venture that many more people have landscapers. Part of which is they don't want to get dirty, but part of which is like I think, I think whether you know it or not consciously, you want people, including strangers, to drive by and be like, 'Oh, that's a nice house. Wonder who lives there.' But the inside of your house might be a dump at least in relative terms because the internal stuff like you can't, like you, you're, you are more external benchmark focused than others. I think that, that's probably right.

Yeah. Yeah. I remember this once is a very specific example. P. Diddy, who has his own host of legal issues and, and, and moral issues. Of course, everyone knows him. As part of his criminal process a couple years ago, the police released pictures of the inside of his house. I think it was his house in LA. It may have been Miami, though. And this is P. Diddy's house. On the outside, it is a freaking mansion as you would expect. The inside of the house where the pictures were released, these crime scene photos, place is a dump. Place is a dump.

And that was so interesting. I was like, I think from the outside, particularly a celebrity like that is like the people who drive by are going to see a mansion. But inside when it's just me and the kids and just like, who cares? It's a dump. And I was, I, I thought that was very interesting.

I think it's so different for everybody because a lot of people find their way when they're 14 and other people find it when they're 40, if ever. So I, I hesitate to give like a formula for it, but I, I think it tends to broadly be true in a gray way, not in a black and white way that like probably age birth to 20, you're forming an identity. You're just trying to figure out who you are and you're trying to make sense of how you're wired and whatnot. You're just figuring out your identity.

20 to 30, I think by and large, you are learning a skill. Hopefully that, that again, this is gray. This is, this is, this is a shade of gray here. You're learning a skill. In your 30s, you can put that skill to work. And in your 40s and 50s, hopefully, you can really exploit that skill and, and make some money doing it. I think as a very broad, broad stroke formula for life, that can be great. Now, I, I, I can think of a million examples of people who did not follow that path and ended up great and ended up happy. And so that's not, but I think in general, that tends to be true. I think it's, it's hard to meet someone who is very successful, didn't have something like that.

Once in a while you'll see find someone who again found their way when they were a teenager and were making a fortune when they were 23 and could basically retire at 28. Like those people exist, but I think it's, it's very difficult to know who you are before you are, you know, I hesitate to say 25, 30, 35.

Someone was asking me about this the other day about what do I think of Gen Z because there is so much written about Gen Z as adrift and wayward and lacks the work ethic and whatnot. Those articles and commentaries exist everywhere. And it reminded me, I was like, it, it seems like it was yesterday that our gener-, my generation, the millennials, everyone was saying that about us 15 years ago. The millennials are adrift. They don't have the work ethic. They don't have the values that the baby boomers and they did before them. And if you go back to the 1970s, they said the exact same thing about the baby boomers. They're adrift. They don't have the work ethic. They don't have the values. Go back to the 30s and they said the exact same about what we now know as the greatest generation. They don't have the morals. They don't have the work ethic. They're adrift.

I think the truth is, no matter the generation, no generation handles their 20s with a lot of grace and dignity. It's a very difficult period because you're still trying to figure out who you are. You are technically an adult. You are technically on your own and kind of, you know, out of the cradle and trying to figure yourself out, but very few people do. And I think that's true at a generational level, which is why it is so easy and almost inevitable that the older generation criticizes whoever the current crop of 20-year-olds are.

Yeah.

Like, 'Oh, they're living paycheck to paycheck.' And we don't have nearly as nice of a life as they do. But like, if we can maintain this for a decade, then all of a sudden our 30s become a little bit easier. Our 40s become easier, and then as you sort of age, you start thinking about money differently, right? In your 40s and 50s, you're like, 'Oh, I need to retire. Like, how do I take care of my parents financially?' And you know, 'How do I pay off the house? How do I take care of my parents?'

I told the story once before, but I hadn't really thought about it very much. I grew up with a guy. I worked with a guy. I was probably 18 or 19, and he was probably 28, let's say. So he's a little bit older than me. And I worked with him at a ski resort. And we worked in the ski rental shop together. His name was Kip. Really cool guy. And Kip, at the time I knew when we worked together, he had $25,000 in credit card debt from ski trips that he had taken. He skied in Europe and he skied all South America and whatnot. And at the time I was like, '25 grand in credit card debt? You are a maniac.'

'You're not a maniac. You're an idiot.' And I gave him so much grief about it. And I just thought it was almost on like a daily basis. I'm like, 'You are insane. I can't fathom it.' And the very sad punchline here is Kip died in a ski accident when he was 30, 32, something like that. And it was amazing the speed at which in my head I was like, 'I'm so glad you took those trips, man. I'm so glad you lived the life you did before you tragically left us so young.' And I thought about that a lot. And like, no one should live their life thinking they're going to die at 32 or whatever it might be. It's not an appropriate way to live. But I think a lot about like the question you should ask is if you were on your deathbed or facing down the barrel of death — this is a terrible thing to talk about, but it's a fine thing to talk about — what would you regret? What would you look back on? Kip died in a ski accident. It was like a mountaineering accident. He was hiking up the trail. He was hit by a massive avalanche. And I wonder in that moment if he had a couple seconds of realizing he was about to die and his life flashes before his eyes. And I imagine, just knowing him, the life he lived, if his life flashed before his eyes, he was probably like, 'Fuck yeah, I did it.' Like, 'I did some cool things.' And so like, so what are you gonna regret? And I've been a big saver my whole life, my whole adult life.

And if I were in that situation tomorrow, heaven forbid, I would not have the regrets for the trips I didn't take and whatnot because I would take so much pleasure knowing that because I saved, my wife and kids are going to be okay. Nothing would matter more to me than that. And I would massively regret it if I was staring down that barrel, so to speak, knowing that not only am I gone, but my wife and kids are in trouble now because I'm gone. That would leave me just overwhelmed with regrets. So it is never as simple as being like, 'Live for today' or 'Save for tomorrow.' It's always just, what are you likely to regret at some point in the future? It could be a year from now. It can be on your deathbed 70 years from now. Whatever it is, always thinking about your capacity for regret, what you are likely to regret. And my regret's probably different than yours, very different from mine was from Kip's. And so I think that's how I think about it. You have to think constantly about what you're likely to regret in the future.

Someone asked me about this recently, and I thought it was interesting. Let's go back to when I was 19, and I think we were all, you know, at that age. I was a saver, but at 19 it meant like saving a hundred bucks was like a feat. That was a hero. A hundred bucks, or if I saved a thousand bucks, like wow, that's crazy. And let's say I don't know what the numbers are, but let's say because I invested that, that $100 is now worth 500. It's probably something like that with what the market's done. $500 today does not mean that much to me. It's not that big a deal. So was it worth it? Or if I had a time machine, should 19-year-old Morgan have taken his friends out to dinner with that $100 versus invested it into an amount of money that means nothing to me today? And my response was, I don't think that's the right way to think about it. Because I think it's impossible to have a YOLO, paycheck-to-paycheck mentality in your young years and then assume that you're going to flip a switch when you're 35 and become a saver. And so I think the reason that I've had good financial habits in my mind, at least, through today is because I started them at 19. Like it's not that the $100 turned into 500. It's that the habits I formed in that era brought me through today. And I could not have changed the habits when I turned 35. It just doesn't work like that. And so that's part of why I don't have a lot of regret for saving money that was a huge amount to me back then that has grown to a completely insignificant amount to me today. It was the habits I formed back then that made all the difference.

I'll do it. It's okay. I think you paid last time, so I probably owe you.

I had this conversation with someone last week, and he has first-generation immigrant parents. His parents moved here from America — moved to America — and worked their tails off to support their children, including this guy. And now he has a daughter, and he said, 'Morgan, I worry that she's spoiled,' certainly relative to the life that he had when he was a kid. You know, she has this and she has that, and she can buy these toys and whatnot, and she's spoiled. And he said, 'What do I do about that?' And I said, 'I bet you if we were talking to your parents right now, they would say that was the goal. The goal, the reason that they moved to America and worked their tails off is so that their grandchild would look spoiled by comparison.' And so there's part of me — and I completely understand, and I feel it as well — the urge to not spoil my kids. I want them to be hardworking, independent, understand the value of a dollar. Of course I want that. You want that. We all do. I think there's also something to be said that the goal, the purpose of all of this, is so that myself in the future and my kids and my grandkids and my grandkids will live in a world that by today's standards appears spoiled. That's the goal, isn't it? Like, wouldn't it be a failure if our great-grandkids lived the exact same life that we do today and have to work just as hard and work the same hours? That sucks. And that's always been true. If you look at a middle-class ordinary American today, not someone who's super affluent, a middle-class American by the standards of 1900, let's say, they are spoiled rotten. They are absolutely spoiled rotten. And if the person in the 1900s had a time machine to come today, they wouldn't stop laughing at how spoiled this person was and how trivial their problems were. But again, like, that's the point. The point is that we have innovation and technology over time so that life becomes a little bit easier. It's always the case that to the previous generation that had it harder, it looks — the phrase you use is 'spoiled.' But I think what's actually happening is progress. And so, but now I understand that you want your kids to be grateful. You want them to be hard, you know, hardworking and whatnot. But compare how people react when they get the flu today to how, to the standards of 150 years ago, where it's like you had eight kids and seven of them died of infectious disease before their fifth birthday or whatever it was. Like, 'Oh, boohoo, you got the flu, you got a headache for a day.' But that's not how we think about it. It hurts. So it's always the case that the progress of a generation appears spoiled to one, even if it's true progress that we have. Now, I want my kids, I think, as a broad formula: I want to use the money that I have to protect, within limitations, my children's downsides. I don't ever want them to just collapse on their face and they can't work their way out in life. I want to be there as somewhat of a safety net, but I don't want to be a fuel. I don't just want to give them money and be like, 'Oh, lucky you. Your parents made a little bit of money. We're just going to give it to you now.' I think that's by and large not the right way to do it. And I think inadvertently my parents did this — it was unspoken. But I think I intuitively knew when I was 18 that if I fell on my face, they would be there to catch me, even if it was unspoken. But I also knew clear as day that they were not just going to write me a check. Like, that was completely out of the question. But because of that, I think I was able to enter adulthood with a little bit more confidence, knowing that like, hey, I'm going to take a risk and move to this new city and do this new thing, but like, if it doesn't work out, I'm not going to be homeless. That was a good way to do it. And so teaching your kids to be self-sufficient. Even if their lifestyle appears spoiled by today's standards, they become self-sufficient. They can keep it going on their own.

Right. Exactly. I, you know, my wife and I had this experience like a year or two ago where we were thinking about buying a new car. One of the options that we could buy was a pretty nice car. And I had this thing of like, let's say that our two kids 20 years from now want to be kindergarten teachers. And because of that, the car that they might be able to afford is a Honda Civic or whatever, you know, a much more modest car. Have I ruined their adulthood to some degree? Because I set their expectations that in childhood, mom and dad drove this, but now as an adult, we got to drive this. And I think there's just such an inherent natural thing of like, parents — I want to raise kids who are going to do better than we did. Not just financially, but in many aspects of life. And I think the children want to have a generational growth pattern as well. They want to look back and be like, 'Man, I grew up here, but now as an adult, I'm here.' Like, amazing. Feels great to surpass your parents.

I think they're probably wrong about that in general. Of course, there's going to be lots of examples where that was the case, but I think they tend to — I would bet that they would be wrong about that. Now, I think it is true that even if statistically and analytically my kids will be living a better life than we are, particularly for things like medicine, I think by comparison they won't appreciate it in greater degrees than we didn't appreciate our progress because of social media.

It's yeah, there's so many negative byproducts to that. I mean, I think, you know, it used to be our reference point was our street, our little community, and maybe Joe got a new car or a new bike or something. Jane got a swimming pool kind of thing, and now you pop open Instagram and Joe's got a Gulfstream and Jane's got a Bugatti kind of thing. Or Jane has a beautiful smiling family of cute kids in their photo session without seeing the screams and the tantrums that took place before it kind of thing. It's just everyone has a very inflated sense of other people. And I do this too. I post cute pictures of my kids online. I don't post tantrums. I don't post fights. And so it's like everyone is putting on an act, so to speak, in an innocent way but in a very real way.

Absolutely. Like once in a while, some people — I do follow a couple people who are like, I think they want to post their warts, so to speak. They want to post the downside. It's very refreshing. People love — like the saying, 'Misery loves company.' People love hearing that you're not the only one suffering, that other people are going through the fights, the stresses, the anxieties, the doubts that you are as well. Like it's a very comforting thing to hear.

Yeah. Brave of you.

I remember when you posted that. I remember being like, 'Good for you, man.' Like the response that I had as an outsider watching that was not like, 'Oh, look at Shane, this clown. He's stumbled on stage.' That was the opposite. The response I had is like, 'Man, good for you.' Because I've had a lot of failures, and good to know that I'm not alone in that. Of all the — I wrote 4,000 blog posts over my career, and the one that meant the most to me by far was a post I wrote in 2017. It's called 'Overcoming Your Demons,' where I wrote about — I grew up with a very severe stutter. I really struggled to speak until my, honestly, early 30s. Really had a hard time. And if you go back to my childhood, I could barely speak. It was very difficult for me to get a sentence out. It was a severe stutter. And I wrote about that process and in part how I overcame it and whatnot. And I was really hesitant to post it because it felt like a 'look at me' post, and it felt like — even though this wasn't the intention — it felt like a fishing-for-sympathy post. But I think one of the points that I made in the post was like, everyone's got their demons, and you usually don't know about it. Actually, a lot of people stutter, but you usually don't know about it because most stutterers just don't speak that much. So I guarantee you, you have a friend or a coworker who you think is just quiet, and they're not quiet. They just don't want to speak because they struggle to speak. And so that's an example of like a lot of people have demons that you just don't know about. And everyone has their own version of that. And people love it when you expose your own because it makes them feel less alone.

I mean, one of the most common feelings is everyone else is crushing it in life and I'm struggling, because all you can see is their outside. You can see basically the act that they want you to see, but you are aware of nothing more than the thoughts that are running through your head — the doubts, the anxieties, the worries, the things that didn't get exposed. I think if you could see inside of everyone's head and see their thoughts, you would see that people are a hundred times more anxious than you assumed. They're a hundred times funnier than you assumed. They're a hundred times more doubtful and depressed than you assumed. Like I think in either direction, positive and negative, you would realize that the range of emotions is a hundred times greater than you think. Because most of the time what people are showing you is what they want you to see. It's the performance.

I like the idea — not first proposed, but I think clarified in recent times by Bill Perkins, who wrote the book 'Die With Zero,' who was like, if you are going to give your kids money — and I know this might a little bit contradict what we just previously talked about — if you are going to give your kids money, give it to them when they need it, which is probably their 30s and 40s when they're starting to build a family of their own. The idea of 'I'm going to wait, I'm going to make you wait until I die, at which time you might be 70 and then you can have all of it' is a weird philosophy. It's the most common philosophy, but it's kind of a weird philosophy. And I will acknowledge again that this can — and I still don't know what my wife and I are going to do with our kids — but if you can help them buy a house when they're 30, that is going to give them a much greater boost in life than if they get a million dollars when they're 75 after you die. And so I think that's a lot of it. There's a Charlie Munger quote where one of his very wealthy friends comes and says, 'Charlie, if I leave all of my money to my kids, is that going to ruin their ambition?' And Charlie says, 'Yes, of course it will, but you have to do it anyways.' And the friend says, 'Why? Why do I have to do it?' Charlie says, 'Because if you don't, they will hate you.' And I think there's some truth to that. Not just for the billionaire families, but I think there's some truth to that, too. That I think there can be a lot of animosity, and I understand the animosity of a 40-year-old working their butt off and struggling, living paycheck to paycheck, while their parents are, just to make up an example, you know, retired in Florida playing golf every day. I understand why that creates a little bit of ill feelings, and the parents basically being like, 'Oh, well, one day this is going to be yours,' and the kid being like, 'I don't — like, I would appreciate if that day were now.' It's a very complicated topic. I don't think there's any formula for doing it right. But that's — and I think in general, I like that philosophy.

So the Vanderbilts, of all the robber baron families who lived not far from where you and I are recording right now, I think the Carnegies and the Rockefellers did a very good job at using their wealth to both give themselves a good life and to benefit society. Not perfect, but they did a pretty good job given the sums of money that they had. And the Rockefellers still have a lot of wealth today, have billions of wealth today. And every library, every city in America has a Carnegie library and Carnegie Hall. And well, not like that still exists. The Vanderbilts, I think, did the worst by far. And it is hard to imagine another family who had so much money, who had the equivalent of hundreds of billions of dollars, who squandered it — I think is the right word — so quickly. And part of it, I do have some empathy for them because I don't think they meant to do this. I think when Cornelius Vanderbilt died in the 1800s, he wanted no one else in his family to have to suffer ever again. He just said, 'You're going to have tons of money, and you could just live like an absolute king for the rest of your days, for generation after generation after generation.' And what I think it inadvertently did, even though some people foresaw this when it first happened, was it created a family who valued nothing but money, and the money was their dictator. The money told them who they could be. It told them where they could live. It told them what their personality could be. It told them what they could value, told them who they can marry, told them who they can socialize with, a lot of which was not who they actually were. And so you had these people who would inherit the equivalent of $10 billion when they were 18, who were basically puppets in their own life. They were like character actors in their own life because they wanted to be somebody completely different. Maybe they wanted to live on a farm and have a very humble life. And the family structure said, 'No, you're going to live on Fifth Avenue in a 50,000-square-foot house and host balls and live on your yacht and show off to other people. That's what you have to be. You are a Vanderbilt. You have to be that.' And the vast majority of them, I think, were miserable for it. And it wasn't until the money was mostly exhausted that a lot of them — that the subsequent heirs were mercilessly let go, like with a sense of like they were lucky to be let go and be able to be themselves. And this is now well known, but one of the first Vanderbilt heirs to get to do that was Anderson Cooper of CNN, the journalist, who was, you know, I think one of the first people in his family — which is a little bit of an exaggeration — but one of the first people in his family to get to have the privilege to be himself and live his own life and not have to live up to the title of Vanderbilt heir, even if it didn't fit his personality at all.

Oh, I think not at all. I don't — I mean, it's a great question because I don't think I've thought about that whatsoever. But you know, when my wife and I met when we were young, we were 19, 20 years old when we met and had nothing and no money. We're college students, and of course nothing. And are we happier today? We have a different sense of life because now we've been together for 20 years and we have two lovely kids together and whatnot. So there's a very different view on life and a sense of accomplishment for that. But are we happier? And I think that's no. But that's not uncommon. Not everybody, but a lot of people, if you ask them when was the happiest time in your life, when you had the most laughs, the greatest times, a lot of people, not everybody, will tell you high school, college. High school, college. This is a man hanging out with my buddies and parties, and we did this crazy thing and we did that crazy thing. And one of the common denominators of that era, of that age, is you have no money, but you're still very capable of having a great time with your friends and laughing and going out and going to parties and going on road trips, whatever it might be. And so the things that make my wife and I happy — we like walking our dog, and we liked that 10 years ago as much as we do today. And even before we had a dog, we liked going for walks and doing this. We like laughing and talking about things and whatnot. It's things that don't cost any money whatsoever. And I think that is a perfect example of the list of things that money cannot do for you. And so if I look at my own life relative to who I was 10 years ago, does my wife love me more? No. Do my kids love me more? No. Like that's — now the psychology of downgrades can play back in here because what would happen if my career imploded and it was my fault? Would my wife might love me less? Like maybe, because the psychology of downgrades and taking care of your family, that plays a role in there. Would my kids think less of me if we had to sell our house and move into a roach-filled apartment? Like maybe. So there is some element, particularly on the way down, but definitely on the way up. The psychology of it is not necessarily what you think. What my wife values — and of course this is not unique to me — is that I'm a good husband. I pay attention. I listen. I'm helpful. I'm grateful. Like not how big is our house or how fast is our car.