Jay Papasan:
I’m so excited about this week’s guest, Morgan Housel. He’s one of my favorite authors in the world. He’s written some books that have sold over 10 million copies. You’ve probably heard of them: the Psychology of Money, Same as Ever. These books have gone around the world in multiple languages and changed lives.
This week, we’re talking about his brand new book, which comes out next week on October 7th, The Art of Spending Money. So many books are written about how to make money, how to build your wealth. Very few tell us how to use it once we have it. And Morgan has done a deep dive for us and gone deep into the drives that we have around spending money.
How do we balance the external pressures to spend it with our own internal values? How do we raise our kids to have a healthy appreciation for what money can and can’t do for our lives? And also, take that advice ourselves so we can role model it for them. We go through lots of ground very quickly ’cause if you know Morgan, you ask him a question and he’s got a very great story and usually lots of research to back it up. I hope you’ll come out of this smarter about how you can better spend the money that you make. Here we go.
I’m Jay Papasan and this is The ONE Thing, your weekly guide to the simple steps that lead to extraordinary results.
Morgan, welcome to the show.
Morgan Housel:
Nice to see you again, Jay. Thanks for having me.
Jay Papasan:
It’s great to see you. I have loved reading your new book. I was a huge fan of your first, The Psychology of Money. I devoured your second and this one felt like a continuation. Like my first question is, like, are you gonna write a trilogy about money or is this it?
Morgan Housel:
To answer your question, yes. I’ve barely even begun what will be the third book on money. That’s years out there, but that’s kind of my idea is to have a three-part series of everything that I’ve learned about money in the last 20 years of doing this. And I’m very confident that after that, I’ll have nothing else to say but I still have more to say. Yes.
Jay Papasan:
I doubt that. But yeah, I grew up in a franchise company, so I love that you’re building a franchise around how we think around money. I want to ask about how you think about money now. You wrote the first book, the Psychology of Money, which we devoured, we shared with our audience and they devoured it and love learning from you. Writing this book and in between, what’s maybe the biggest thing that you’ve changed how you think? Like, have you changed how you think about money between the two books?
Morgan Housel:
I don’t know if that much has changed but there has been a realization. And I knew this five years ago before my first book came out. There’s a lot that money can do for you. There’s a lot that it cannot do for you. And I think if you go through a period of life where your income rises, your net worth rises a little bit, you can very starkly realize the latter of what it cannot do for you.
So, if I compare myself today to five years ago, does my wife love me more because I’ve sold a couple books? No. Do my kids admire me more? No. Is my health any better? No. Do I sleep any better? No. Like going down the list of things that actually make a good life, and they haven’t changed at all.
Now, I do think you can use money to accentuate some of those good parts in your life. If you are using money to spend more time with your kids as you age, to have better healthcare, et cetera, those are wonderful uses of money that will make you happier. And so, I think everybody can use money, spend money to give themself a better life, but there is a longer list of things that it cannot do for you, and you become very aware of those if you’re fortunate enough to make a little bit of money,
Jay Papasan:
I love that. And congrats on your success. But I’m always interested ’cause you even talk about the mental agility. I can’t remember, maybe it’s intellectual fluidity. You say the words in the book.
Morgan Housel:
Mental liquidity.
Jay Papasan:
Thank you, mental liquidity. I think it’s really important for people to understand that your views can change over a time. You don’t need to be anchored to something or some belief. And that was why I was really, I was like, “I wonder what he thought of.” And one of my executive coaching clients, Meg, said, “I wanna know if his thoughts on anything has radically changed between the books.” So, thank you for sharing your answer.
Morgan Housel:
This is not a change in beliefs but I think five years ago, I didn’t really have many beliefs on this topic, which is the traditional idea of leaving money to your kids when you die is a very crazy thing if you think about it, because when do your kids probably need your money and will largely benefit from your money? It’s in their twenties, thirties and forties. When they’re starting a family of their own, they need to buy a house of their own. The idea that I’m gonna wait until I die, hopefully when I’m 95 or a hundred years old, and my kids are 70 or whatever, and then give them money, it’s like that’s always seemed backwards to me.
So, I do love the idea of my kids are young now, but to the extent that we are gonna help them financially, I think it’ll be in their twenties, thirties and forties, rather than waiting until my wife and I die, hopefully many decades in the future.
Jay Papasan:
I think you even quoted him here. My wife and I read Bill Perkin’s excellent book as well, and that was a big change for us. Like, I think he said most people inherit their money on average when they’re 65, when they’ve probably already done the work. They probably aren’t unhappy to have it, but that’s not when they needed it.
So, I’m gonna go into kids and money a little bit deeper, but I want to start off in this little vein. When I was reading your book, we’re in the business of helping people invest their time, and you have a lot of high producers, people that are building businesses, they’re leading huge corporations, and they’re chasing things. And I’ve seen a pattern, and it’s something that we coach and train to. Because they’re unclear about what they want and need versus what they think they should want and need, your internal/external, they make really bad decisions with their time.
And I just kept seeing it again and again throughout the book, investing or spending money is the same. If you’re not clear about who you are and who you want to be versus what you think you should be, you tend to make really poor decisions. Can you unpack that a little bit from your research?
Morgan Housel:
I think there’s two things. One is that it’s actually very difficult to know what you want in life, and that sounds like, kind of, a crazy statement. But I think the truth is we’re all very different. So, what I want might be different from what you want, which is different from what anybody else listening to this wants. There’s no universal right way but we are so accustomed to looking for signals from other people. Well, what is Jay driving? What kind of clothes are you wearing? Well, how big is your house? I’m gonna try to take my cues from you. And especially, you’re gonna take your cues from people who you think are happier than you.
So, if you’re gonna look on TV, on Instagram, from movies, those people look pretty happy. Well, what kinda lifestyle are they living? What kind of car are they driving? And then like, trying to form your mental model of what a good life is from that. And I think that is a very imperfect way to do it because we’re, we’re also so, so different and not knowing what we want.
So, I think everybody needs to try different forms of spending. Spending more on clothes, on food, on houses, on travel, whatever it might be, because everyone is completely different. And if you’re taking your signals from people whose happiness might be a facade, particularly if it’s on social media that has just exploded in the last 20 years where it’s a faux performance of happiness, if that’s your signal for happiness, then it’s a very difficult thing.
The other thing I would say is money is so tangible and counting it is so easy that we overestimate its importance. And I always use this example. If I said, I would like to become a 10% better dad, that’s a very noble goal. It’s a wonderful goal. How do I track that? How do I-
Jay Papasan:
Yeah, how do you measure that?
Morgan Housel:
You have no idea. But if I said I want to increase my salary by 10%, very easy to wrap my head around that, very easy to contextualize that, to track my progress, to compare myself against you or which one of us is a better father, me or you? There’s no way to track that. There’s no metric, even though those are very important things.
And so, because money is so tangible, we put it to the top of the pile of importance of what we’re trying to chase. And if you don’t have a good sense of what you want out of life, one with more money is very easy to attach to. And so, we overestimate its importance. Not to say that it’s not important, but because it’s so tangible, it’s something that is so easy and obvious to track and chase in your life even if there are so many other things, relationships, health, time, whatever it might be that should be of higher importance.
Jay Papasan:
That’s really huge. I mean, in our coaching conversations, like people will tell me a goal, and one of my questions will be, “Well, how will I know when you’ve succeeded? Help me understand, what’s the metric?” I’m trying to get to, what’s the KPI? What’s the metric? However you want to say it. And there are things that are inherently murky like happiness or being a good father. So, if I’m choosing between things to chase, to keep my personal scorecard, it does kind of make intuitive sense that we’re gonna track the things and maybe keep score around the things that are the most black and white.
Morgan Housel:
Right. There’s things in health, you can track – weight, and blood pressure, whatever it might be. And so, people do put a lot of emphasis on that. There’s a lot of other things though that should be of the highest importance. Relationships with your spouse, with your, uh, with your children, with your career, with yourself, like your own, that are just almost impossible to track. But almost nothing is more tangible than money.
And not only is it more tangible, but very similar to health, not only can I track it myself, I compare it to you. I can say, “What is my salary? What is your salary? What is my net worth? What is your net worth?” And I think there is a truth too that a lot of life has always been a competition among other people for resources, for attention, for mates, for jobs, whatever. It doesn’t necessarily matter how well I’m doing. What really matters is how well I’m doing relative to you. That’s the truth to it. That can be kind of unfortunate, but there is a lot of truth to that.
And that’s always been true. That’s been true for tens of thousands of years. It’s more true than ever today, as I said earlier, because of social media. Because now our comparison set, we used to compare ourselves to our neighbors and our coworkers and maybe some people on TV and magazines, and that was your comparison group. When you were trying to sum up, how well am I doing in life, that’s who you compared yourself to. Now, it is an endless performance of an algorithmically curated feed of how supposedly beautiful, happy, and successful everybody else is.
And so, I think we live in an era where it is easier than ever to feel like you’re falling behind ’cause no matter how well you’re doing, you open up Instagram and immediately, it’s gonna show you 700 people who appear to be doing better than you. It happened so fast. Again, that’s 10 years.
Jay Papasan:
There’s no way we could have adapted. We can’t have adapted to that. Yes.
Morgan Housel:
The only thing that I had close to this when I was a teenager was MTV Cribs. But the difference was I knew those were celebrities. When I was watching a home tour with 50 Cent or whatever, I knew he was a celebrity. On Instagram, though, these are our supposed peers who are doing so much better. And so, we know it’s so easy to feel like we’re falling behind.
And because of that, I think you can so easily imagine a world in which our kids and our grandkids are richer and living better than us, but they don’t feel any better off for it because the power of social comparison is just exponentially stronger than it’s ever been.
Jay Papasan:
That’s a tough thing as a parent or as a person to fight. I’ve found that the people who seem to be the most mentally healthy are ones that are comparing themselves to their past self. You say it’s a cliche, “Oh, just compete with yourself,” but it’s not that easy to do. Did you find any insights? ‘Cause you do anchor multiple times in the book about, can you look for internal metrics for your happiness or for how you should spend money versus external? Have you found any hacks or tricks to helping people actually do that ’cause it’s not intuitive or easy, I don’t believe?
Morgan Housel:
It’s not. And some people are much better than others. I heard this from the comedian, Jimmy Carr, a couple weeks ago. This is not in the book. I just heard this. He said, “In your twenties you worry about what everyone else is thinking of you. In your thirties, you say, ‘I don’t care what anyone’s thinking of me.’ And in your forties, you finally realize that nobody was thinking about you to begin with.”
And I think there’s a lot of truth to that, that if there is a trick, a hack to this, it’s slowly getting to the point where your desire to show off materially, especially, and compete with other people is based off of the assumption that they are watching, that they are paying attention to you, that when you get a nice car, everyone in your town’s gonna say, “Ooh, look at Jay’s car. Ooh, he must be doing well.” And the truth is they’re not. They’re busy worrying about themselves. They’re busy thinking about themselves in their own comparison group.
And when you realize that the people who are paying attention to you are a very close knit group of people who don’t care about your car, don’t care about your shoes, don’t care about your watch, your spouse, your children, your parents, a couple of your friends, a couple of your coworkers, a small group of people who are probably at least not attracted to your material possessions.
And I think once I became to closer terms with the game that is played there, then it pushes you towards thinking about spending your money in a way that is less about status and more about utility. What is not about climbing the social ladder and trying to impress people who aren’t paying attention? And what is more about utility for giving myself a better life and for helping the people who are paying attention to me? The small half dozen people who are close to me in my life and do care and I care desperately about spending quality time with them and whatnot. If I can use money for that rather than playing the silly game that no one’s even watching me to begin with, that’s a much more productive use of money.
Jay Papasan:
I love that. I actually have quoted you several times. I’ve written about the spotlight effect. And that’s this idea that we all think we’re walking around with this spotlight on us and everybody’s watching us, which is why we get in our heads and are self-conscious and why we think everybody’s looking at me driving this car. It’s good or bad. But I think in your quote, ’cause it is maybe when you were a valet, nobody’s looking at you in the car. They’re looking at the car and wondering how they would look in the car, right? You’ve been removed from the picture entirely and they’re just imposing their own reality on yours.
So, that’s a fact. And it can be hard to kind of indoctrinate in our heads, but I love the word utility you used there. There’s a metaphor that I don’t know who you credited. It’s better to own a high-end Toyota than like a low-end BMW. And just because like the utility, like the creature comforts, they would pack into like a high-end Camry probably are a lot nicer than the low-end BMW or whatever because you’re paying so much for the medallion on the hood.
Morgan Housel:
An entry level BMW is just about signaling. It’s just to show other people, “Hey, look, I bought A BMW.” But a high-end Toyota gives you nice cushy leather seats and a moonroof and a great sound system, and like all those luxuries that are actually good for you. That’s utility versus status.
And so, what I think about sometimes is if I were on an abandoned island somewhere with just my family, how would I live. If nobody else could watch, how would I live? If nobody else could see it, what kind of house would I live in and what kind of car would I drive? How would I dress if it was just utility?
And I think in that situation, like, no, I wouldn’t want a BMW. I’d want a pickup truck. Like that has utility and things like that. I would not want a gigantic house. I would want a house that was functional and had a nice view. You start asking those questions in, like, a very in a very appropriately selfish way. That’s how you start.
The word I came up with was a humble bubble. Like, you wanna get to a point where you’re living in a humble bubble, where you’re in a bubble because I’m just living in my own little world and hopefully nobody’s watching ’cause nobody is watching. Just like, how can I do this with myself and my family? But you’re doing it in a humble way of just, you know, I just wanna use money as a tool to live a better life, not as a yardstick of status to compare myself against others by.
And so, I try to do that a lot. It’s not that nobody is watching. It’s not to say live like a bum ’cause nobody’s watching. I want to dress appropriately and drive a decent car and whatnot. So, this is not completely black and white, but I think we overestimate the extent to which other people are watching.
Jay Papasan:
And you make the point again and again in the book, which I think is healthy, your taste and what makes you happy with how you spend money is unique to you. And figuring out through, like you started there, like you experiment a little bit, is clothes the thing, or is collecting books the thing, or the things that if you’re going to spend money actually bring utility and happiness to you versus what the world tells you you should be doing with it.
And experimenting a little bit, like people aren’t gonna go experiment with cars, but we can experiment with smaller things in the beginning, and then kind of figure it out. Like, I know this for my wife. We look at it, we track our money assiduously, the things that we spend money on are, usually, food and travel. And we also give a lot of money away. Those are the things that give us the most joy. And we just figured it out.
And she also knows I have a thing for jackets and she gets onto me. It’s like, you do not need another jacket from REI or Patagonia but like I’m kind of a gear hound a little bit, and I imagine that I will use them a lot more. I don’t live in Seattle like you. I could happily own 15 raincoats for no reason at all living in Austin, Texas that has a fraction of the rainfall, But for whatever reason, that makes me happy and it is a “luxury” that I can afford.
I remember my mentor, Gary, saying, “Look, if you’re gonna collect something, just start with something you can afford.” So, if you like socks, then buy all the socks you want, and have fun with it and let them bring joy, and show them off. And he literally is a billionaire that loves to collect goofy socks, and he’ll show you his socks on stage sometimes. But that’s just a quirk. He’s found something that he can infinitely afford that also brings him joy, but it took time. Like that happened in the 20 years that I’ve been working with him. I don’t know what he did before then.
So, we kind of need to take a break. So, we’ve kind of hit a couple of those notes. On the other side, I want to dive in a little bit to a little bit more of the parallels between investing time and money, but in particular around kits. So, let’s take a quick break and we’ll see you on the other side.
Alright, welcome back. So, we were talking about if you’re going to be caring about people and what they think of you, it’s a really small group that matters – your kids, maybe your spouse, your immediate family, your close friends. And they don’t care so much what kind of car you drive, what labels on your jacket or you know, how expensive your watch is.
And so, like, what matters when we think about them is maybe what lessons we’re relieving them with. And you devoted an entire chapter just to money and kids. Will you unpack some of the lessons you’ve learned ‘ cause, still, I’ve got college-age kids. I’m not quite out of this but I know a lot of people that are a part of this and they’re struggling with raising kids while they’re also building their dreams or building their business and how we model money matters. Can you walk us through a few of those lessons?
Morgan Housel:
One quick story here that got me set on this topic was a friend of mine whose family are billionaires and have been for many decades. And he told me a story. He’s now in his fifties or sixties but he told me the story that when he was a child, his grandfather, who was the billionaire, was so dead set on not raising spoiled kids and spoiled grandkids.
And so, he would go through this exercise to make sure the kids were not spoiled, one of which was when they went skiing, the grandfather would say, “If you want me to buy you a lift ticket, you have to hike up the hill once, and then ski down. And then, I’ll buy you a lift ticket. Like, first, prove to me that you have the grit and the integrity to hike up the mountain.” And my friend told me the lesson that they learned as children was not integrity or grit or the value of money. The lesson that they learned was grandpa is an asshole. And that’s what they took away from it.
And he told this story with a very good lesson, which was, I think there are a lot of parents who are like, “I don’t want to raise spoiled children, so I’m gonna make them work their butts off, and I’m gonna withhold money from them, and I’m gonna make them learn,” and it’s done very well intentioned. But in the eyes of a child, the lesson that you’re trying to get across almost never gets across. And the lesson that they hear from the parents is, “I, the parent, am superior to you. I am up here. You are down there. I’m better than you.” And rather than giving your child grit and integrity, you give them a sense of inferiority. It’s always well intentioned, but that’s almost always how it comes across.
And the lesson that he told me was like, you have to teach your kids through example. You have to lead by example, not by humiliation. And so, there’s kind of two takeaways here. One, if you are a family of higher means, higher income, you have to live the same lifestyle as your kids. It’s almost impossible to say, “Mom and dad are up here and you’re down here.” It does not work.
Jay Papasan:
Yeah. We’re flying first class and you’re in coach, right? No.
Morgan Housel:
It doesn’t work. It does not work. So, choose your lifestyle carefully. I think tied to that is the idea that the kids are always watching. You don’t have to sit down with your children and say, “Let me teach you about money. Let me teach you about budgeting and investing and saving and spending.” You don’t have to do that. They’re already paying attention.
There’s a good analogy here, I think, between parents and politics. There’s so much evidence that people inherit their political beliefs, particularly from their father. Extremely high correlation between your father’s political views and your own. But most of the time, parents do not sit down with their children and say, “Let me give you a lecture on politics. Let me tell you why I believe this.” The kids just pick it up through osmosis, through overhearing little comments here and little comments there. And you know, “Dad, what are you watching on tv? What are you reading in the newspaper?” They pick it up over time.
And I think money’s exactly the same that you don’t have to sit down with your kids and say, “Let me teach you about money.” They are watching. From the time they’re three years old or whatever, every time you say, “We can’t afford this,” every time you go to the store and say, “I value this, I don’t value that,” every time that you’re criticizing somebody else, every time you make a sly comment about the stock market or interest rates, whatever, or mortgages, whatever it might be, they’re making a mental model of it.
And so, this too gets to the point of leading by example. You don’t have to sit your kids down and teach them. They’re already getting it. Just make sure you’re being very careful and cautious and thoughtful about your own financial behaviors. ’cause they’re watching.
Jay Papasan:
Wendy and I, just as a source of accountability, have a little wealth building group we’ve done for about eight years trying to help people along the journey. And I always ask people, “Why do you wanna be wealthy?” And I’ve seen two buckets that they all fall into. Like they want freedom, more freedom to choose, that they want more choices in their life or they want security. And when you kind of unpack the ladder, their parents fought about money, right? They might have been through – like a lot of people who grew up with a Great Recession saw their parents lose their homes. And so, they saw the story of money play out in their families and it has informed their lifelong view of either I have enough or I don’t have enough. Like am I abundant thinking or not? So, how we talk about money in healthy ways and live that in front of our kids is a huge part of the journey.
You also told the story of another rich friend who didn’t seem to be spoiled, but I think I’m gonna misquote you here, Morgan, but like he was saying, “We just didn’t make that the focus of our family. Our identity wasn’t around how much money we had. It was around these other things.”
Morgan Housel:
That’s right. It’s a friend of mine who’s roughly my age, and his parents are multi-billionaires, have been for his entire life, and he grew up the life of a quintessential billionaire, if such a thing exists – mansions, private jets, multiple homes. He lives the life of a billionaire. And he is the nicest, most down to earth, humble, kind, empathetic person that I know. I don’t think that’s an exaggeration.
And so, I asked him one day, like, “How did you grow up like this, but your personality is that?” It doesn’t fit the stereotype of the spoiled little kid. And that’s what he said. He was like, “Look, I always knew that we were very wealthy, but it was not a part of what we valued as a family.” He said, “I always knew I had more money than my friends,” but it was taught in an early age that that doesn’t make you superior to them in any way. And the family valued empathy, and love, and caring, and understanding, and like all these other traits.
And I think that’s actually pretty rare because I think it’s actually more common that a wealthy family does have a sense of superiority and entitlement. By the way, that’s probably why they’re wealthy because they have this idea of like, “I can get ahead. I can do this. I am better than other people. I can go out and do it.” That’s why they’re wealthy. But if you pass down those values to your children, that’s where spoiled little brats come from. It’s a feeling of superiority to other people.
And so, now, whether that is cause and effect, whether my friend is caring and empathetic because of what his parents taught him or that’s just who he was, that’s just how he’s wired, to be determined. But I think there’s a lot to say to that, that I think most spoiled kids, it’s not because the parent was spending a lot of money on them. It’s because the parent had a sense of, that is what matters, and that’s what you should judge other people by is how much money they’re spending in life. That’s what makes them good or bad.
Jay Papasan:
Yeah. And so, that’s, again, the role models. It’s hard. It’s easy to talk about but hard to do. But how you talk about money, how you role play, your relationship with money is gonna imprint on your kids. And when I think about the biggest impact I can have, like it starts in my family, right? I get to shape these young lives, and then they’re gonna go off in the world where I’m not around. Like how can I impress upon them the right values? That’s ultimately one of the main things I want as a parent. Do they value the right things and have the right values? And that starts at home.
So, I would also say to people who maybe are thinking back about how they’ve been parenting, it’s not too late. Like you can always choose to act and think about and talk about these things differently, and your kids will notice that too.
Morgan Housel:
I remember many years ago, I read an interview with Zach Dell, who was Michael Dell’s son. Now, , I’m pretty sure Zach Dell was like a teenager, maybe early twenties at this point. In the interview, you were asked something along the lines of, I’m paraphrasing, but like, what was it like to grow up with a billionaire father, billionaire parents? And his answer was, “It’s all I’ve ever known. I’ve never known anything different. So, it’s not that interesting.”
And, of course, our children, even if we are not billionaires, our children don’t fully comprehend – at least, my young children – how much better off they are to a starving child in Africa because all my children know is a refrigerator filled with food. Like everybody’s reality is just their reality, particularly when you’re that young. They don’t understand any concept of privilege or where they stand on the ladder until they get older and they really start comparing themselves to their peers. But that also gets to the point of like, it’s not how much you spend, it’s the values that you instill and giving them a broader sense of the world and teaching them empathy and whatnot.
Jay Papasan:
Another thing, I’m gonna take a little leap here, we all want our kids to be happy, right? And so, this is one of the things that I think about with your book, a lot of people think that money will make them happy. And I also see a lot of people in our world who think that certain success metrics. And so, they play this, “I’ll be happy when, fill in the blank.” When I get the promotion, when the business makes a million dollars.
And you impressed this in the first book and in this book. It’s really easy to get on the hedonic treadmill, where the goalposts just keep moving, keep moving, keep moving, keep moving. And it’s never enough. ’cause the moment you get there, you realize that it’s not as nice. Like the graph that killed me in the book is that our desire for something is highest before we have it and after we lose it, and that we don’t value it when we have it because that’s just normal. So, how do we fight this idea that “I’ll be happy when…” and get out of that treadmill.
Morgan Housel:
It’s a difficult thing. And I feel like I first have to point out that the reason that we live in a world with so much amazing technology, and medicine, and wealth, and innovation is because, virtually, everybody wakes up every morning saying, “This isn’t enough. I can do better. I want more.” So, this is not like an indictment on the idea of feeling like it’s not enough. That’s actually one of the best. That’s the reason we live in such an amazing world of abundance.
At the individual level, it can be a tragedy because even if you’ve achieved every goal you’ve ever wanted, a lot of those people, almost all of those people will wake up every morning and saying, “Yes, but if only I had X, Y, and Z.” And even if you achieve a level of fame and fortune, you probably wake up saying, “Yes, but only if I had anonymity.”
I heard this story from Barack Obama. They said he has dreams, literal dreams at night of walking through Central Park by himself with nobody noticing him. That’s his life goal, which to you and I and everyone else listening, we have that. And so, no matter what, you have any level of fame, fortune, success that you can dream about today, you’re probably gonna want something different once you have it.
And I think this gets back to what we talked about earlier of, if you don’t have a sense of what you want in life and what’s gonna make you actually happy and fulfilled, a life with more money is an easy assumption to make. And then, once you go down that path, if you start filling up that bucket with money, you realize, like, “Oh, maybe that’s not actually what I wanted.” And so, look, it’s different for everybody and maybe this is not uncommon of course, but what do, what do I want? I want a good relationship with my wife. I want happy and successful kids. I want good health for myself. I wanna live in a thriving community. I wanna live in a country, in a world that I’m proud of, those kind of things. And the size of my house and the horsepower of my car is not in the top 100 on that list.
And so, I think about that a lot of, like, the buckets that we’re trying to fill and the easy assumption that we can make, even if it’s not actually what’s gonna fulfill us.
Jay Papasan:
And I think if you get clearer on those things, like clarity is a huge thing, how people spend their time, how they spend their money, are you clear about as much as you can be, what you think this is gonna do for you and why? And are you pulling from the right context? When you think about all of those things you just said you wanted, I could check a lot of those boxes too, you could then ask, well, how would money make that better?
And kind of like you, you talked about your journey as a saver and like you’re wanting to provide to make sure that the low points for your children don’t knock them out of the game, right? A safety net is as important as, like, fuel to get them forward. And so, we can be a little bit more thoughtful about the approach of how money plays a part in the things that we truly want, but we also have to maybe spend a little time thinking about what is it we truly want or experimenting, which you’re advocating for, to figure it out. When you’re young, you have to experiment. You don’t know. It’s all projection.
Morgan Housel:
And certainly what I want, and this is not uncommon, I think a lot of people want this, I want independence. I wanna wake up every morning and say, “I can do whatever I want today. Even if most of the time what I wanna do is work. I wanna do it on my terms. I wanna take time off on my terms. I wanna spend time with my kids when I want to for as long as I want to. I want independence.”
And money is the fuel of independence. Money is the oxygen of independence. And so, if I can use my money for that, that’s using money to give me something that will actually fulfill me, will actually fill me up and say, “This is what gives me a happy life.” If I’m on my deathbed, hopefully many decades down the road, I can look back and say, “I spent as much time with my children as I wanted to. I raised them in a way that I’m proud of. I helped my community in a way that I’m proud of. I took care of myself, my relationships, I was helpful to others.”. That, to me, is what I’m gonna look back on and say, “That’s what I want.”
And so, I bring up this idea that I first heard from Warren Buffett in the book of The Reverse Obituary, which Warren Buffett said, “Write what you want your obituary to say, and then live your life to fulfill it.” And it’s kind, it’s kind of a morbid exercise. But if I were to do that, if I were to write what I want my obituary to say, I would want it to say something like, “Morgan was a good husband, a good father. He helped his community. He helped his friends. He helped his family.” That’s what I would want it to say. And what’s also important is, what-
Jay Papasan:
I will add, “His books changed lives.”
Morgan Housel:
Okay, thank you, but that’s not even what I would put. I would get much more selfish about it, I think. What’s important is like, what’s not on there. The square footage of my house is obviously not on there. The number of cars I bought is not on there. The number of vacations I took is not on there. And so, it forces you to realize what you actually value in your life, and it forces you to realize what is completely superficial because I think even if you are a car aficionado, like even if you love those things, if you were gonna write your obituary, you realize it would be ridiculous to put that in there.
Maybe you would have some things about your career and things you accomplish and whatnot but the things that we tend to chase most often on a daily basis would not be in there. And there’s probably true, too, that the things you value the most are things that are probably getting second thrift on a daily basis. Are you working hard and not spending time with your kids and doing other things in a way that you’re gonna eventually regret? I think the best definition of risk is what you are going to regret later on in your life. And so, that’s something I think about a lot.
Jay Papasan:
Going back to the beginning of your statement, your independence runs parallel to, kind of, how you defined wealth in the first book, which I think I commented the first time I got to interview with you, is that my favorite definition of wealth is kind of married between how you put it in The Psychology of Money and my friend Ben Kinney, and it’s also a great definition for health, to be able to do whatever you want for as long as you want with whomever you want, whenever you want.
And you run that through and you’re like, “Wow, that sounds good to me.” If you value freedom and independence, what a great utility for money, right? I can buy my time back instead of – one of my first buy-times-back was my wife said, “Jay, why are you mowing the yard?” And I was mowing the yard ’cause my dad always mowed the yard. And I had a crappy electric mower back then that had a cord and a giant yard and it took me like four hours in the Texas heat. She’s like, “We can pay someone. And then you can spend Saturday afternoon with your kids instead of passing out from heat exhaustion.”
And so, we can do little things like that. And I just remember that moment. Like I got my Saturdays back with my young kids, and that was one of the best uses of money during that season of my life, was to buy back four hours every Saturday.
Morgan Housel:
I’ve done similar things like that of buying that back. And of course, you know, my kids are six and nine. They’re pretty young. But my oldest, I feel like he was born yesterday, and his childhood is half over already. I’m not saying anything that every other parent doesn’t know very deeply in their bones of how quickly it goes by.
And I wrote about this in my first book. There’s a gerontologist named Karl Pillemer, and he wrote a phenomenal book called Lessons for Living, where he interviewed 1000 elderly Americans. They were in their eighties, nineties, hundreds. And he just asked them for life advice. And there’s a part in his book on money, and he says, “Of the thousand people that he interviewed, these elderly Americans, not a single one of them, looking back at their life, wished they made more money. But virtually, every single one of them, almost universal, looked back at their life and said, ‘I wish I spent more time with my kids. I wish I was nicer and kinder to people.'” That was universal.
So, back to risk is regret, like, what am I gonna regret? Statistically, we know the odds here of when you and I are 95 years old, what we are likely to look back on in our life. It’s probably not gonna be money. It is gonna be spending time with the people who we liked and admired
Jay Papasan:
Relationships.
Morgan Housel:
Relationships. One other way that I phrase this in the book, just to make a stark example out of it, is, which would you rather be, a billionaire who was recently divorced, kids hate you, you’re in terrible health, your community despises you, everybody’s suing you, or a mere millionaire who has an amazing relationship with your soulmate, your kids love you and can’t wait to talk to you and hang out with you, your community loves you, your’re proud of your work, you have a clear cosncience, you sleep well at night, which one of those would you rather be?
So easy when you think of that in those terms because, again, like money is so tangible to latch onto, but when you actually dig a couple layers deeper, you’re like, “No, no. It’s actually like not even in the top 10 of what would actually make a great life for me.”
Jay Papasan:
So many of the questions you asked, like, what would I choose if I were living on an island and nobody but my family would see it, right? Just being the stark contrast. Our head coach sometimes says like, the greatest tool of any coach is the imagination, you know? Go out six months, what do you wanna remember from this season? Like going and using your imagination to get outside of the day-to-day gives us so much more clarity around what is often the clear and obvious choice. But we’re just so busy and harried, we’re making snap decisions based on other things.
So, I have like three pages of notes. We barely cracked the surface ‘ cause every time you talk, I want to ask you three different questions. And probably everybody listening is like, I picked the wrong one every time. But thank you for writing and thinking so richly and deeply about something that has such an impact. I was reading your preamble and I’ve got all the books. I’ve studied money. I’ve helped write three different bestselling books on money. And you look up and so much is written about how wealth and money is accumulated and so little is written about the utility of it and how to use it best once you have it.
So, thank you for adding to that very small but important category of books is, “We work so hard for this. Now, what’s the best use of it?” is the question that you’re trying to help us answer for ourselves. So, thank you for that.
Morgan Housel:
Thanks.
Jay Papasan:
I’m gonna ask you to give us a challenge. So, every week, we ask our listeners to take a tiny challenge. What would be a challenge that we could give them, maybe in 30 minutes or less, that they could complete between now and next week that would fly from this episode?
Morgan Housel:
Ask yourself and maybe your spouse, what are you spending money on that doesn’t give you joy but society told you that you’re supposed to enjoy it? And I’ll give you the example that my wife and I’ve very recently came to terms with. You mentioned earlier in the show that you and your wife really value travel. A lot of people do. My wife and I finally came to terms with the fact that we really don’t, and a lot of the vacations that we had taken in the last couple years, the best part of the vacation was coming home. And after the fifth time of realizing this, we were like, “Should we just spend a summer home and hang out?”
I travel a lot for work. My idea of a vacation is not traveling. And so, that’s something society tells you you’re supposed to like it. It can be great. But back to everybody’s different, if it works for you and your wife, awesome. Very happy for you. My wife and I are spending more time at home, but it took a lot of effort to ask, what are we spending money on that we don’t get a lot of joy from but the world tells us that we should, and can we just be a little bit more honest with ourselves and embrace that rather than going down a path that other people want us to go down.
Jay Papasan:
Thank you, Morgan, for this great talk. Thank you for the amazing book. I can’t wait to share it with my friends. I’m gonna buy lots of copies.
Morgan Housel:
Thanks, Jay. Appreciate it.
Jay Papasan:
Well, I hope you enjoyed that conversation with Morgan. I just love talking to the guy and I always walk away smarter than I was before. I hope you’ll take his challenge as well and maybe get a little bit of insight in how you are spending money in ways that maybe don’t serve you and your future because the world wants you to or expects you to. So, definitely take that to heart.
Next week, I’ve got a really fun episode. It’s gonna be another solo episode. We found some trends with our coaching clients and our executive coaching clients. And here’s the thing, what if I told you that some things don’t get easier? The more successful you become, they actually get harder.
So, we identified a handful of these trends. We’re gonna tell you how if you’re early on the journey, you can nip them in the bud. Or if you’ve already gotten there and you’re like, ‘Yeah, it’s really harder now,” we can show you how you maybe can break out of that cycle. I hope you’ll tune in next week when we cover the High Achievers Paradox.
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