Do You want to Be Rich or Wealthy? (And Why the Difference Matters)

The Art of Manliness

Education, Society & Culture, Philosophy

4.7 • 14.9K Ratings

🗓️ 13 October 2021

⏱️ 52 minutes

🔗️ Recording | Apple Podcasts | RSS

🧾️ Download transcript

Summary

Note: This is a rebroadcast. It originally aired in November 2020.

When we think about finance, we typically think about numbers and math. My guest today, however, argues that doing well with money is less about what you can put on a spreadsheet and more about what goes on in your mind, and that if you want to master personal finance, you've got to understand how things like your own history, unique view of the world, and fear and pride influence how you think.

His name is Morgan Housel, and he's an investor, a financial journalist, and the author of The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness. Morgan kicks off our conversation by explaining how doing well with money is less about what you know and more about how you behave, and illustrates this point by comparing the true stories of a janitor who saved millions and a prominent Wall Streeter who went bankrupt. He then explains how the seemingly crazy decisions people make around money actually make a kind of sense. From there we get into why you need to know the financial game you’re playing and not play someone else's. We then turn to why it's hard to be satisfied with your position in life when your expectations keep rising and why not continually moving your goalposts is the most important skill in personal finance. We discuss how getting off the never-ending treadmill of wanting more requires seeing money not just as a way to buy stuff but to gain greater autonomy, keeping the "man in the car paradox" in mind, and understanding the distinction between being rich and being wealthy. We then talk about the underappreciated, mind-boggling power of compound interest, using the example of Warren Buffet, who made 99% of his wealth after the age of 50. We then discuss why you should view volatility in the stock market as a fee rather than a fine, why pessimistic financial opinions are strangely more appealing than optimistic ones, and why it's best to split the difference and approach your money like a realistic optimist. We end our conversation with the two prongs of Morgan's iron law for building wealth.

If reading this in an email, click the title of the post to listen to the show.

Show Highlights

Why personal finance success isn't about knowledge, but psychology
Understanding that nobody is actually crazy when it comes to money decisions (even though those decisions might be crazy)
Why context is crucial to understanding people's financial choices
Who buys lottery tickets? Why do they do it?
Why personal finance is more "personal" than "finance"
Are there overarching principles to follow, despite the personal nature of finance and wealth?
The underappreciated role of luck in our finances
How to be more content with what you have
Keeping your expectations from rising in lock step with your income/net worth
The difference between being rich and being wealthy
The mind-boggling power of compound interest
Balancing optimism and pessimism
Morgan's golden rule of financial success

Resources/People/Articles Mentioned in Podcast

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Transcript

Click on a timestamp to play from that location

0:00.0	Hey, it's Brett. It is Fall Break here in Tulsa, so our family is taking a short trip.
0:03.4	So we're going to do a re-broadcast today. Episode number 659, do you want to be rich or wealthy
0:07.9	and why the difference matters with Morgan Housel? It's one of the most popular episodes in 2020.
0:11.9	I think you'll enjoy it. See you back on Monday with a brand new episode.
0:22.1	Brett McKay here and welcome to another edition of the Art of Manliness podcast.
0:25.8	When we think about finance, we typically think about numbers and math.
0:29.0	My guest today, however, argues that doing well with money is less about what you can put
0:32.5	on a spreadsheet and more about what goes on in your mind. And then if you want to master your
0:35.9	personal finance, you've got to understand how things like your own history, you need view of the
0:39.6	world, and fear, and pride, influence how you think. His name is Morgan Housel,
0:43.5	and he's an investor, financial journalist, and the author of the Psychology of Money.
0:46.9	Timeless lessons on wealth, greed, and happiness. Morgan kicks off for conversation by explaining
0:51.2	how doing well with money is less about what you know and more about how you behave. And it illustrates
0:55.6	this point by comparing the stories of a janitor who saved millions and a prominent Wall Streeter who
0:59.6	went bankrupt. He then explains how the seemingly crazy decisions people make around money actually
1:03.6	make a kind of sense if you look into it a little more deeply. From there, we get into why you need
1:07.6	to know the financial game you're playing and not play someone else's. We then turn to why it's
1:11.6	hard to be satisfied with your position in life when your expectations keep rising and why not
1:15.9	continually moving your goalposts the most important skill in personal finance.
1:19.4	We discuss how getting out the never-ending treadmill of wanting more requires seeing money,
1:23.2	not just the way to buy stuff but to gain greater autonomy, keeping the man in the car paradox in
1:27.8	mind and understanding the distinction between being rich and being wealthy. We then talk about the
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from The Art of Manliness, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of The Art of Manliness and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.