Money CAN Buy Happiness (If You Use It In These Ways)
Episode Stats
Words per Minute
180.95512
Summary
In this episode of the Art of Manliness podcast, Dr. Daniel Crosby joins us to unpack the conditions under which money can buy happiness and facilitate our flourishing. Dr. Crosby is a psychologist and behavioral finance expert and the author of The Soul of Wealth: 50 Thoughts and Essays on Money and Meaning, a collection of 50 reflections on money and meaning.
Transcript
00:00:00.000
brett mckay here and welcome to another edition of the art of manliness podcast
00:00:11.120
money can't buy happiness it sounds good as a bumper sticker platitude but the truth is
00:00:16.560
money can buy happiness at least sometimes in certain circumstances if we view it and use it
00:00:22.220
in the right ways here to unpack the conditions under which money can buy happiness and facilitate
00:00:26.840
our flourishing is dr daniel crosby a psychologist and behavioral finance expert and the author of
00:00:31.980
the soul of wealth 50 reflections on money and meaning today in the show daniel shares the
00:00:37.440
minimum income level at which money buys happiness at least in the sense of avoiding pain we talk
00:00:42.400
about how to purchase material things in a way that increases happiness while avoiding materialism
00:00:46.520
and the value of using your money to buy health and freedom and we discuss the importance of finding
00:00:50.700
an overarching why that guides the way you allocate your money and doing a values audit to see if
00:00:54.960
your purpose and spending habits are aligned after the show's over check out our show notes at
00:01:00.600
all right daniel crosby welcome back to the show man thanks for having me back so you are a behavioral
00:01:18.780
financial expert who's written books about how to leverage our psychology so we can invest better
00:01:23.840
we've had you on the podcast to discuss those books but your latest book you get a bit more
00:01:28.680
philosophical with your approach to money you're trying to figure out how our relationship with
00:01:34.420
money fits into the larger picture of the meaning of life i'm curious what caused this shift in focus
00:01:40.860
yeah it's a great question there's really a micro and a macro response to this at the micro
00:01:46.280
personal level i'm just getting old you know i'm getting i'm middle-aged now i'm thinking about
00:01:52.280
mortality i'm thinking about legacy and i think my first couple of books you know i'm proud of them
00:01:58.200
i i stand by everything i wrote there but they were written in a very calculated specific way like
00:02:04.700
they were to get me where i needed to go in my career and to make me a subject matter expert in
00:02:11.940
places where i wanted to be viewed as an expert and you know mission accomplished it did that
00:02:16.680
but now as i age i'm sort of surrounded by people who have achieved some level of professional
00:02:23.300
success and i see that their personal lives aren't always as successful as their professional lives
00:02:28.840
and so yeah a big piece of it is just getting older considering my own legacy my own contributions
00:02:35.080
to the world and seeing myself and my peers achieve some financial and professional success but not
00:02:42.460
always have the wellness to go along with it the soul to go along with it and then at the macro level
00:02:48.640
i'm just this is the thing i think about more than anything i'm a big victor frankl devotee and he has
00:02:54.900
this great quote about ever more people have the means to live but no meaning to live for and i think you'd
00:03:01.540
be hard-pressed to find a better descriptor of the world we find ourselves in you know when the u.s
00:03:06.760
was founded 85 percent of the world was living in poverty what would today be two dollars a day
00:03:13.600
adjusted for inflation and today that number is about eight and a half percent which i don't want
00:03:20.100
to be insensitive is still millions and millions of people too high but the progress that we have made
00:03:26.580
there has never been a time of greater worldwide abundance than the time we find ourselves in today
00:03:33.440
you know forever war and disease and famine and all these things have made human life very hard and
00:03:41.640
while all those things still exist at some level and we should remain vigilant and fighting against
00:03:48.000
them we have never been healthier more peaceful more prosperous and yet when you look in the u.s
00:03:54.540
i'm gen x gen x and younger every single one of those age core cohorts describes themselves
00:04:03.280
as very lonely and isolated and living sort of a meaningless life and so we've got this weird
00:04:11.120
problem where we have the means to live but no meaning to live for and i wanted to take that on
00:04:17.260
directly yeah that is interesting it seems like it's a paradox because that prosperity comes with its
00:04:24.480
own set of curses if you're not careful certainly yeah so what you do in this book the soul of wealth
00:04:30.540
you basically it's like a compilation of 50 different thoughts reflections essays about money and
00:04:36.580
meaning and in one of them you talk about how money is a great tool that can fix a lot of problems in
00:04:45.240
life except for a few first let's talk about the problems that money's really good at solving what
00:04:49.420
are those problems that money like hey you can throw money at this and it can help you improve your life
00:04:54.460
yeah one of the greatest things about modern life that i don't know is fully appreciated is just how
00:05:00.880
much free time we have and i know that we conceptualize of our lives as being full to the
00:05:06.680
brim and you know i would i would say the same thing you know work and kids and all this stuff but
00:05:11.380
we have dramatically more leisure time than any previous generation now what we do with that is a
00:05:18.460
it's a different conversation all the research shows that all that excess free time has basically
00:05:23.840
been directed at tv but you know we we have more leisure and more free time than we ever have in human
00:05:31.040
history and that's a that's a wonderful thing money's also great at buying you wellness right it can buy
00:05:37.540
you nutritious food it can buy you good health care it can get you a gym membership or a personal trainer
00:05:43.080
and all of that stuff has a material positive impact on your life it can buy you self-improvement
00:05:50.800
and education you know college grads make over a million bucks more than than people who graduate
00:05:56.680
from high school and they also enjoy lower rates of divorce and heart disease and and sadness so
00:06:03.320
there's a lot that money can do to help human flourishing that way the the final thing that i'll talk
00:06:08.720
about and one of the things that sort of buys us a great deal of joy is novelty you know another thing
00:06:15.500
that we're uniquely positioned to do is just have new experiences one of the things that's true of
00:06:21.760
humankind is that we quickly become habituated to our circumstances whatever our day-to-day is that
00:06:28.320
quickly becomes the norm but you know going on a vacation going to a new place trying a new dish
00:06:35.360
all of these things introduce us to novel experiences that that bring us a great deal of joy
00:06:41.980
okay so money can can buy us it can buy us time it can help us get novelty we can get health care with
00:06:49.600
it what are some of the problems that money can't solve well the part where it can't solve problems i
00:06:56.960
think is is perhaps the more interesting conversation because it's riddled with half truths you know even
00:07:03.220
even among the things that i talked about you know money can buy you access to college but it can't
00:07:09.900
take the test for you you know money can buy you a gym membership but it can't do the bench press for
00:07:15.980
you and so the things that it can't help there's a lot of half truths there as well right i think a lot
00:07:22.400
of people treat money as an end unto itself but money can't buy you purpose you know what it can do
00:07:30.760
is give you the free time to to think about your purpose gandhi i'm i'm misquoting him here but he
00:07:37.420
effectively said to a poor man bread is god because if you're so mired in the struggle for those bottom
00:07:44.700
two rungs of maslow's hierarchy you don't have a lot of time to think about god or self-actualization
00:07:50.660
or love or friendship and so you know money can't buy us purpose but it can buy us you know the bandwidth
00:07:58.880
to think about and pursue purpose you know money can't buy us love the beatles were right about
00:08:04.380
that but we do know that it you know it can buy you chocolate and roses for a date and it can make
00:08:10.740
you more attractive to your to your potential mates as the research shows so i think one of the reasons
00:08:17.820
why people conflate money with just the good life itself is because it certainly facilitates the
00:08:25.640
pursuit of many of these things but ultimately it leaves off and and we're required to sort of take
00:08:31.720
that first step in the dark okay so money doesn't directly buy us the good life but it does give us
00:08:38.280
access to the things that can make a good life if we avail ourselves to them and this gets to the
00:08:44.520
larger question you know the common question people debate which is can money buy happiness and the
00:08:50.680
answer is yes but as you've kind of been saying it's nuanced so what does the research say about
00:08:57.500
money's ability to buy us happiness the first conversation we have to have is how how are you
00:09:04.840
measuring happiness because one measure of happiness is basically about needs reduction and sort of the
00:09:12.680
absence of pain and so you know i think animal behaviorists would say that even animals can
00:09:20.600
experience happiness they may not be able to experience purpose but they can experience happiness
00:09:25.720
which is sort of the lack of a negative state so one of the most famous studies is of course this
00:09:31.720
kahneman study that people like me and and others sort of shouted from the rooftops because it confirmed all of
00:09:38.300
our prior assumptions which is that happiness with money plateaus around seventy five thousand dollars a
00:09:44.700
year at the time of the study which is almost perfectly a hundred thousand dollars a year today adjusted for
00:09:51.580
inflation and that is true of needs reduction because at about a hundred thousand dollars per year
00:09:58.940
you know you have enough food to eat you have a warm place to lay your head your kids can go to a safe school
00:10:06.540
sort of the basics of life are met and there's not a whole lot of negative sort of physical
00:10:13.260
moment to moment pain in terms of your needs so you know the need reduction measure of happiness is met
00:10:20.640
at a relatively low level of about a hundred thousand dollars per year but there's a more philosophical
00:10:28.060
sort of more existential way to measure happiness as well which is just self-appraisal of life you know if i
00:10:35.980
say as we did before we press record just like hey brett how you doing you know tell me how your life is
00:10:42.540
like how are you doing and we find with this more qualitative this more subjective life appraisal
00:10:48.860
happiness and money are basically up and to the right as far as the eye can see i mean they've measured
00:10:55.580
it up to about half a million dollars a year in in earning you know there's not a ton of people who make
00:11:00.940
more than half a million dollars a year and so that's where they stop but they find that at every
00:11:05.960
income level people's life appraisal improves you know monotonically so in a stepwise fashion from zero
00:11:13.500
to half a million dollars a year so it really matters like are we are we talking about moment to moment
00:11:20.180
physical pain or are we talking about happiness with respect to how we sort of account for our lives
00:11:27.640
you know another another piece of nuance that i would add to this conversation is depending on the
00:11:33.900
study about 10 to 15 percent of folks money doesn't move the happiness needle at all and these people
00:11:42.700
you know it's it's widely assumed are are suffering from sort of a clinical depression or sort of an
00:11:48.100
emotional state that keeps money from having any sort of impact so if if you're making more money and it's
00:11:55.880
not moving the needle in any respect i i think there's this idea of wherever you go there you
00:12:02.260
are you may need to take a different approach to to trying to achieve that happiness and then you know
00:12:08.220
the the last thing that i would say that that i think is maybe the most interesting point of the
00:12:12.440
whole thing is there's newer research that shows how you spend money materially impacts your happiness
00:12:19.720
my my favorite piece of research around this has to do with cars if i go out tomorrow and buy a lambo
00:12:28.300
to stunt on my neighbors and show everyone how rich i am that doesn't buy much happiness there's a very
00:12:36.180
sort of high peak for the first couple of weeks and then that that habituation sets in quickly that
00:12:42.960
lamborghini that was so nice and new the door gets dinged you know you get bird poop on the window you
00:12:49.620
throw your gym clothes there and and suddenly it's just not so hot anymore you're just you just kind
00:12:54.080
of get used to it and the happiness falls off rather precipitously but there's research that shows
00:13:00.900
that people who buy a car to join a car club get massive happiness dividends because really it's a
00:13:09.360
relational exercise what they've done is yeah you you spend a lot of money to get an antique porsche or
00:13:14.980
whatever you did uh but now you're part of the you know the atlanta cars and coffee club and you get
00:13:21.360
to meet with your buddies and and look at your engines on saturdays and you you have a social
00:13:26.560
cohort so there are definitely examples where if you spend money even splurge on something that gives you
00:13:35.000
relational access or something that's consistent with how you want to be viewed as a human being
00:13:41.800
and your personality there's a big happiness dividend there okay so if you're spending the
00:13:47.160
money for those bigger things it's going to bring you happiness that's right yeah yeah i mean i've
00:13:51.760
heard i'm sure people have seen that research a lot it's like well you know if you want to be happy
00:13:55.440
you got to spend your money on experiences to maximize happiness and like i think that's true
00:14:00.060
but i've also yeah like you said there's things that i've bought in my life i've splurged on that
00:14:05.960
they brought me happiness and they still bring me happiness i've got a few things in mind do you have
00:14:09.800
anything like some items that you bought that continue to bring joy to your life yeah there's
00:14:15.260
there's a few i you know for me i got a i got a nice award from my alma mater last year and to mark
00:14:22.160
that event i bought myself a watch and so you know when i look at that watch you know it's not a it's not
00:14:29.220
crazy but it's certainly certainly you could get the time for a lot less and when i look at that watch
00:14:36.140
though i'm reminded of my hard work my accomplishment you know the the recognition
00:14:41.100
of a university that turned me away when i initially applied there which was like a pretty
00:14:46.360
a pretty sweet thing and i'm very proud of that you know my guitars i have some expensive guitars and
00:14:54.100
i'm a decidedly mediocre guitarist but having these nice guitars on the wall right here in my office
00:15:01.480
where i'm talking to you encourages me to practice and try and grow and become better
00:15:06.840
and test myself and struggle in new ways and then you know the last thing is something i'm sort of in
00:15:12.700
in the midst of right now you know you and i were talking before i've lost a lot of weight this year
00:15:17.740
and i had to get like my clothes were falling off me i had to get all new clothes and i've really
00:15:23.700
taken the time to try and put together you know a kind of classic american menswear vibe really nice
00:15:31.960
fitted stuff high quality you know fewer clothes higher quality and you know every time i see one
00:15:38.780
of those shirts or jackets that wouldn't have fit me six months ago i go hey you did it and it's it's it's
00:15:46.600
a really nice feeling so i think we have to move towards a more nuanced view of this and spending can
00:15:53.540
really buy you happiness i'd be curious what are some of yours first one i can think of i bought a
00:15:58.240
sauna a couple years ago a barrel sauna and i'd been wanting i love the sauna at the gym but then
00:16:04.180
i shifted to a home gym and i would still go i still paid for like a 10 gym membership 10 dollars
00:16:09.860
so i could just use their sauna but it was always crowded and they're just gross people in there they
00:16:14.460
like pick their toenails and the teenagers blasting music while you're in there trying to like
00:16:19.640
just zone out so after a couple years i finally decided to pull the trigger i bought a barrel
00:16:24.760
sauna and i love it my wife loves it i go in there like right now it's perfect sauna season's getting
00:16:29.720
cold starting to get cool at night and just sitting there in the heat for you know 30 minutes and you
00:16:35.700
got in the cold and it's just it feels good i've had friends over and we've had some great
00:16:39.700
conversations in the barrel sauna so like it's a thing that facilitated relationships the other thing
00:16:44.960
a recent purchase that i made that's brought a lot of happiness in my life i bought a wood pellet
00:16:50.260
smoker earlier this summer and it's been great because i can grill on it so you know do burgers
00:16:56.440
chicken things like that but then i can like smoke brisket i've smoked tinderloins and i'm using that
00:17:02.340
thing all the time and i think one of the things that does it facilitates relationships like i'll smoke
00:17:07.500
a brisket or something when i've got friends or family coming over that's one thing that's brought me
00:17:12.900
a lot of happiness and like with the cars like that's we we bought a 96 buick roadmaster like
00:17:19.880
the wagon a couple years ago where it's got the backward facing seat oh nice and we did that so
00:17:25.320
we could carpool with our kids friends and it's been yeah i i love that thing like i every time i get
00:17:32.720
into like it's so fun to drive we've made some some good memories in there see i think all the things
00:17:38.820
you just named are perfectly demonstrative of some of the stuff i'm talking about right it's it's
00:17:43.620
facilitating relationships another thing we know about about money and happiness is is one reliable
00:17:49.780
path to that is by getting out of stuff we hate and i was cringing hard over here when you were
00:17:55.760
talking about people picking their toes in the sauna so you know if it frees us from people picking
00:18:00.800
at their feet that's uh that's something you hate that's that's a good use of money you know i i joke
00:18:06.600
that i will i will never mow my lawn again you know i mean i live in georgia it's way too hot i got a big
00:18:12.240
yard it brings me a great deal of joy to see that high school kid out there sweating it out instead
00:18:17.940
of me so getting out of stuff you hate is another another big one yeah and going to that idea that
00:18:22.860
you know experiences if you spin on experiences i'll bring you the most happiness my experience not
00:18:27.800
necessarily so there's some experiences that i've gone on like that was actually i did not enjoy that
00:18:33.160
and when i think about like why did i go on this thing it usually was because like oh you know some
00:18:37.000
person said you should do this thing wasn't because i actually wanted to go there or do the thing
00:18:40.780
so yeah you can i think if you buy the experience or spend money on experiences just because you want
00:18:46.780
to impress somebody or you saw somebody on the internet said hey this is the greatest thing in
00:18:50.620
the world you should do it too and it's not actually something you you're interested in like you're not
00:18:55.360
going to get any joy out of that well i think that's worth commenting on because we live in a weird
00:19:01.300
time where it's kind of become socially okay to brag about experiences in a way that it wouldn't be
00:19:10.020
okay to brag about more obvious material things you know people will post pictures of a $25,000 vacation
00:19:18.120
and it's just you know sort of gets filed under oh look how beautiful the world is or something and i think
00:19:25.680
there's a lot of mimetic desire around experiences now and you know my family and i were talking about
00:19:32.320
going on a trip in november and i'm like i don't i don't really want to do this you know i'm like i i
00:19:38.960
travel all fall i'm like i don't really want to do this trip i think i just wanted to show off and so i
00:19:46.080
think i think even experiences have been corrupted somewhat in our social media age okay so buying things
00:19:54.240
can bring you happiness it's nuanced not this is not an excuse to go spend your money willy-nilly
00:19:59.500
but it can if you do it right but one of the dangers of spending money on stuff to find happiness is that
00:20:05.840
you can become materialistic and there's actually the psychologists have studied this and they've actually
00:20:11.180
figured out there's three characteristics of a materialistic person so what are those three
00:20:15.560
characteristics yeah this was news to me i was really excited to come across this research and happy to share it
00:20:21.520
here that the three characteristics the first is possessiveness so this is just around an inclination
00:20:27.700
to control both things and people so that possessiveness is sort of the first and perhaps
00:20:34.260
the most dangerous of this trifecta the second understandably is non-generosity sort of an unwillingness
00:20:43.020
to share back to the happiness conversation one of the most reliable paths to happiness with money
00:20:48.920
is by giving it away and yet people misapprehend that dramatically like better than 90 percent of
00:20:55.020
people think they'll be happier when they buy something for themselves versus give it away and
00:21:00.480
that's flipped in terms of actuality so possessiveness non-generosity and then finally envy and especially
00:21:09.200
ugly piece of this envy in addition to sort of the way we use it in everyday language is anger at
00:21:16.620
others success you know being unhappy when other people are successful so possessiveness a lack of
00:21:24.440
generosity and envy at others success are the three and you know i cited 259 studies in the book that
00:21:33.580
show that it's associated with lower well-being lower life satisfaction and this is true and you can't say
00:21:40.440
this about many psychological phenomena but this is true across demographic and cultural lines so men
00:21:48.180
women all over the world people possessed of this materialistic triad just don't have great lives
00:21:55.440
yeah so if you find yourself acting like a scrooge that's probably a warning sign you need to do
00:22:02.100
something yeah to fix it so how do you stave off the materialism you're visited by three ghosts in the
00:22:10.440
night no there's a there's a couple of there's a couple of things you can do the first is you got
00:22:15.340
to prioritize community community is sort of an antidote for this being other centered is one of the most
00:22:22.140
reliable paths to meaning when it comes to setting goals and measuring your own success you've got to run
00:22:29.640
your own race and measure your own success again it becomes very very easy in our time to benchmark to
00:22:38.160
the wrong stuff and to have a bad reference class you know a zillion years ago you would have known
00:22:44.500
about 150 people and you would have benchmarked your life and your wealth to someone who lived probably
00:22:51.460
within a mile of you you know now we have instant access through instagram and everything else to
00:22:58.060
the lifestyles of the rich and famous and it becomes very easy for us to pick a poor reference
00:23:04.080
class and that is a recipe for for misery another tip is to ground yourself in the moment and really
00:23:11.320
work on that presentness materialists are often focused on the future and do a lot to let the beauty
00:23:19.220
of a moment slip by always sort of anticipating that next big dopamine hit and then the final thing which
00:23:25.920
is just one of these simple but overlooked things is to practice gratitude you know my wife has a
00:23:32.840
bullet journal literally you know two lines where she tries to write down something good that happened
00:23:39.520
that day and this simple practice has been shown to give about a 10 percent bump in well-being
00:23:46.340
experimentally which is equivalent to the bump that folks get from taking ssris which is which is an insane
00:23:55.100
thing you know to say that hey psych meds and writing what you're thankful for in a journal have about
00:24:00.900
the same sort of impact on happiness but gratitude cannot be overlooked it's it's a big piece
00:24:07.500
that idea of generosity and just spending your money on others going back to the christmas carol
00:24:14.620
example like don't be a scrooge the antithesis of that i think is fizzy wig remember fizzy wig i do i read
00:24:23.540
that book every year yeah so it's like one of my favorite parts in the book where it's the it's he's
00:24:29.100
doing the ghost of christmas past and scrooge goes back and he sees his old boss fizzy wig and fizzy
00:24:35.340
wig put on this big party and it's just a great time everyone's having a great time it's something
00:24:39.680
that kate and i we do every year we like we just it brings us so much joy is having a big holiday
00:24:44.840
party we invite our friends to and it's just it's awesome because we always think we want to be
00:24:50.440
fizzy wig like fizzy wig was a baller we want to be fizzy wig we want to provide like you know those
00:24:57.160
memories that people have when they're you know these because we have a lot of kids there we want
00:25:01.420
them to like hey we this is a great thing that i had a lot of good memories so that's that's one way
00:25:06.820
you can counteract the materialism be fizzy wig don't be scrooge be generous with your hosting and
00:25:12.040
hospitality we're gonna take a quick break for your word from our sponsors
00:25:15.780
and now back to the show so one aspect of our lives that you recommend that we don't skip on
00:25:23.800
is our health and you mentioned this earlier but in this essay you started off talking about your
00:25:28.560
experience with a toothache that really brought this principle home of spending money on your health
00:25:33.120
what happened there with your toothache yeah so i began to have like bad migraines
00:25:39.880
sensitivity to light just enormous pain in my head and i assumed that it was a toothache i had
00:25:48.280
never had a cavity in my life i had never had a single dental problem in my life but i'm like this
00:25:54.080
feels for the life of me like like a toothache so i went to my dentist my dentist looked me over and
00:25:59.720
he's like it's not your teeth and so the pain persisted i mean i could barely get up off the couch
00:26:05.980
i was like incapacitated by the pain the headaches were so horrible sensitivity to light and sound
00:26:13.400
and so i go on this multi-month nearly a four-month journey of trying to figure out what the heck was
00:26:22.060
wrong with me and i went to the hospital i mean i went to the emergency room once when the pain got so
00:26:27.300
intense i went to psychiatrists and sinus doctors and got a cat scan and got mris i mean just on and on
00:26:35.520
trying to figure out what this thing was and it just wouldn't go away and the pain got so intense
00:26:42.720
one day i was just driving with my family and the pain was so bad and i just started crying i mean i
00:26:48.660
just started crying in the car because i'm like i'm gonna die i'm gonna die like i have some mystery
00:26:54.720
illness and at this time at that moment when i'm crying in in the car i would have given you
00:27:03.440
every dollar i had for the reassurance that i was gonna be okay and for relief from that pain well
00:27:12.780
about two weeks later i was at a client event down in atlanta and we were breaking for lunch
00:27:18.420
and i bit into a sandwich and the whole side of my face swole up and sure enough it had been my tooth
00:27:25.920
the whole time my dentist had missed it i had a crack in my tooth it was i won't go into gory details
00:27:33.280
but it was enormously abscessed once it broke and the minute so i i my my face starts swelling i'm
00:27:43.040
looking crazy i excuse myself from my client engagement i drive straight to an emergency dental
00:27:48.500
place get that tooth pulled and immediately i felt incredible i mean i i felt a relief that i had not
00:27:56.940
felt in months but it drove home this platitude right we we all know that health is wealth but you
00:28:04.360
know a sick person only wants one thing right you know a healthy person has a million desires but a sick
00:28:11.360
person only wants one thing and when you dig into the research around you know health and wellness and
00:28:17.340
money you see that there's this incredibly powerful reciprocal relationship all right yeah so the
00:28:24.360
takeaway there doesn't matter how much money you have if you don't have your health it's all for not
00:28:28.080
pretty much so how can people you know use their money to invest in their health i think one of the most
00:28:34.420
powerful things you can do is control the controllable you find these statistics where people who are taking
00:28:40.740
care of themselves just do a lot better financially than people who don't so frequent exercisers
00:28:47.260
make 10 percent more than their no exercise peers with similar educational and professional
00:28:53.460
backgrounds people who had a mentor make way more than people who don't men who go to therapy make some
00:29:01.280
astounding you know some astounding double digit increase in their pay versus their same education
00:29:08.900
peers who don't go to therapy so there's all these ways that we see that you know controlling the
00:29:15.860
controllable taking care of yourself just leads to not only better health but but better financial
00:29:22.960
health as well and then just because of the soapbox i'm on right now with sort of this this fitness
00:29:28.900
journey that i've been on this year one of the biggest things for me was to get current information
00:29:34.260
you know the thing that really transformed my relationship to my body was just having daily input on
00:29:41.400
what i weighed how i was doing what volume of exercise i was doing we lie to ourselves in some
00:29:48.500
really big ways people under report their calorie intake by between 25 and 50 percent a day people
00:29:55.700
overestimate their level of exertion and exercise by 47 percent so a lot of times i think just having
00:30:03.300
information just monitoring these things and keeping an eye on them that that knowledge is is real power
00:30:10.500
that helps us to not sacrifice a replaceable thing like money with an irreplaceable thing like our
00:30:17.680
health so it sounds like we should be thinking of investing in our health as more than just investing
00:30:24.120
money you can invest time and tracking things and when you do invest money you can motivate yourself
00:30:31.420
to do so by remembering that it's actually a good financial investment it's going to pay off
00:30:36.220
you know actual dividends eventually and it'll also improve your health you know going back to
00:30:41.920
the things that we've you know material things that we've spent money on or splurged on that's
00:30:46.160
had a lot of roi i'd say my home gym like over the past decade we've built up there's been a
00:30:51.300
significant roi on putting money there like first off i just enjoy exercise and training but like the
00:30:58.080
health benefits have i'm sure been phenomenal yeah yeah okay you have an essay that i really enjoyed is
00:31:04.740
it's entitled you don't really want to be rich you want to be free what do you mean by that
00:31:09.080
so in the book in the book i don't name this person by name but i guess i will on the podcast i'll be
00:31:15.660
in politic and name the person on on your podcast i was reading a story about elon musk and so elon
00:31:21.780
musk was talking about this standing 9 p.m saturday meeting that he has and he's like yeah i was in my
00:31:29.580
standing 9 p.m saturday meeting and i don't know why that piece of information hit me like a ton of
00:31:37.660
bricks because in that moment i was like i am richer than this guy i know that he has hundreds of
00:31:45.660
billions of dollars but at nine o'clock on a saturday i'm having fun and he's not and that is
00:31:54.000
true wealth and so i think that's sort of the point of this chapter one of the things that i
00:31:59.660
talked about in a previous book of mine the behavioral investor you know you can demonstrate
00:32:04.500
this with brain scans and other things is that people value money for its own sake independent of
00:32:12.920
what it buys which is a very goofy backward stance to take towards money because you don't want money
00:32:20.260
for its own sake you want what it can do for you and one of the things that it can do for you
00:32:26.300
is free you up from having to do things you hate or be around people you don't want to be around or do
00:32:32.600
things that you don't want to do so this chapter is all about making money your servant and not your
00:32:40.000
master and not getting wrapped up in this idea of just more more more but what is it that i really
00:32:48.240
want this money to do for me and i think if we're honest with ourselves very often for most people
00:32:55.180
the highest and best use of wealth is to buy back your life you know to buy back your independence
00:33:02.500
yeah i mean i've seen i'm sure you've seen this too with your work people who've gotten richer and
00:33:08.440
richer and they've just become less and less free because they build those what gilded bird cages for
00:33:14.060
themselves that they can't get out of it's like well i can't i can't quit this job or i can't stop
00:33:18.640
this business that's i don't enjoy because if i do then i'm going to lose everything that i have
00:33:24.080
yeah i have seen that again and again that was a big impetus for writing the book you know just by
00:33:30.320
virtue of my day job i am proximal to lots of people with really really really big bank accounts like
00:33:39.380
send to send to millionaires billionaires and more often than not i would say that these folks
00:33:47.060
lack a sense of freedom they are so wrapped up in the pursuit of more even in cases where they have
00:33:54.540
more money than they could ever serviceably spend in a lifetime even in those cases there is an inertia
00:34:01.700
and a lack of freedom that makes them less free with people with a lot less money who've been more
00:34:08.160
thoughtful about its deployment all right so if you have an opportunity to buy freedom do it you'll
00:34:14.320
be happier that might mean you take more vacation you talk about that a lot of americans i think
00:34:19.300
americans are really bad at vacation oh yeah i think most of us don't use all of our vacation time
00:34:23.820
but take it like take that the other things too if you have the means you know buy a long care guy
00:34:29.520
buy an hour of babysitting so that you can go on a date with your wife there's all different
00:34:34.080
little ways you can buy buy back some time yeah yeah you also talk about finding a why for your
00:34:39.760
money this is kind of like the meta meta theme of your book what does that look like because i don't
00:34:45.300
think most people when they think about their money they're not thinking about the purpose of money or
00:34:50.360
like their why so how do you go about figuring out your why for money yeah i think you're right most
00:34:57.540
people aren't thinking about this and and one of the things that i want to do is encourage them to
00:35:02.080
because the power of tying your dollars to your purpose is so incredible it almost sounds like
00:35:09.440
science fiction when you read some of the research but people who had named their dollars right so you
00:35:16.240
know not just account abc one two three but brett's retired to the bahamas fund you know something that
00:35:24.180
simple just labeling it for purpose one study found that in tough markets they were 10 times
00:35:31.900
less likely to bail on their investments and go to cash another study out of canada found that
00:35:38.300
when people looked at a picture of their kids before they logged into their bank account they were twice
00:35:44.060
as likely to save morningstar big you know big financial firm found that that accounts that were labeled
00:35:50.460
with a specific purpose had 15 more in them than their peers so one reason to do this is just because it
00:35:59.820
elicits a host of good financial behaviors right i mean it really takes investing saving spending
00:36:07.820
you know out of the ether and it ceases to become a video game and it becomes this real thing that's
00:36:14.920
tied to life but in in some research that i've done since this book i really have found that there's
00:36:21.420
sort of three facets to meaning if we look back over the research you know a life purpose has
00:36:27.720
three legs to that stool and i think if you apply it here that the three are believing
00:36:33.720
belonging and becoming so people with purposeful lives first of all believing they have a
00:36:39.800
philosophy a religion or a moral framework that guides their life you see this again and again and again and
00:36:48.660
again religious people are reliably happier on average and this is one of those reasons they have a
00:36:56.080
moral framework to help them make sense of the good times and the bad times in life doesn't have to be
00:37:02.620
religion but you need to have thought through your sort of personal philosophy of why things are the way
00:37:10.640
that they are and let that guide how you spend money the second piece the most powerful piece is
00:37:17.420
belonging right again back to back to relationships if you say you value relationships are you spending money
00:37:25.160
like that's the case and then the third piece that people with meaningful lives have is becoming
00:37:30.980
which is they are growing they are learning they're progressing so you need a moral framework you need a
00:37:39.360
group of people to love and who love you back and you need a vision of the kind of person you want to
00:37:46.180
become and if you've got those three things you are on your way and each one of those three things
00:37:52.880
has a financial component to it right and if if you value those things it should show up in your budget
00:37:59.360
yeah you recommend if to people i like this idea of doing like a values audit of your bank account
00:38:06.180
if you don't know what you value or what's the why of your money just take a look at your your statement
00:38:14.260
from the last month and see where you're spending your money and then you can start kind of putting
00:38:18.480
things in the categories like oh i spent a lot of money eating out with friends okay well friends
00:38:23.900
seems like friends are important and saving time is important but then you might see well i'm spending
00:38:28.780
a lot of money on subscriptions that i don't use maybe i can do something better with that money
00:38:34.520
yeah that that's exactly right i i love this idea there's there's sort of two things at work here
00:38:40.760
the first is that your money is your vote and i mean i had this conversation with my youngest kid the
00:38:46.240
other day we always we always go to the local farmer's market on saturdays and we were buying
00:38:51.400
some spaghetti sauce and she was like that's a lot that's that's really expensive like that's a lot
00:38:56.480
more than it is at the store and i was like yeah that's right but i want to live in a world where
00:39:02.880
local entrepreneurs who are growing tomatoes in their backyard and working hard can make a living so yes
00:39:09.280
it is twice as much as the prego or whatever but it it brings about an outcome that i care about
00:39:17.280
you know and it's just it's it's a powerful way to think about money is am i spending it in a way that
00:39:25.000
brings about the kind of world that i want to live in and am i casting my vote wisely and you know the
00:39:32.100
flip side of that is is the ultimate bs detector you know we'll say oh you know i value growth and
00:39:38.280
spirituality and purpose and relationships and then you know i look at my budget and it's all
00:39:44.140
netflix and doritos then maybe it's time for a reckoning and it just it's very easy to lie to
00:39:50.420
yourself about what's important to you and money shines a very bright light on what you truly value
00:39:57.320
yeah what's that saying on i i tangentially very loosely follow like financial twitter and you'll see
00:40:04.820
every now and then this big blow up when some financial guy gives a bit of advice and then
00:40:10.420
someone respond like show us your books show us what are you what are you doing because they want
00:40:15.260
to make sure like they got skin in the game they're actually putting into action what they're encouraging
00:40:18.880
people to do yeah yeah not nasim toleb wrote about that never ask like never ask a person their
00:40:24.980
opinion just ask to see their portfolio like i don't care about your hypothesis like what are you doing
00:40:29.540
with your money yeah yeah so that's something i do every once a month i go through the bank statement
00:40:33.720
and see what i'm spending my money on it has a couple purposes one it just helps me figure out okay
00:40:38.860
am i spending my money on anything dumb and can we cut back on that or am i spending too much on a
00:40:43.960
certain area so just you got your your eye on the till basically then also i'm the same time i'm saying
00:40:50.040
what is my spending matching up with our with our family's values and if it's not then you can do some
00:40:55.600
correction i think once a month like that i think that's that's plenty of you don't have to do it
00:41:00.180
every day or every week but like just do it once a month it doesn't take a lot of time so something
00:41:04.520
else you talk about and we've had conversations about this there's a temptation in some people not
00:41:10.260
not everybody there's a certain segment of the population where they just want to keep squirreling
00:41:15.040
away money for retirement like they're aggressive aggressive savers and there can be some upsides to
00:41:21.080
that but the downside is like you just don't enjoy your life now and you can't spend money on
00:41:25.020
other people now are there any biases that might lead some people to excessive money hoarding
00:41:31.840
yeah there's a host of them so i i actually did some research at at orion my employer where we
00:41:38.420
interviewed 425 couples and we asked them effectively we did it more delicately than this
00:41:44.940
but effectively we asked them what do you fight about when you fight about money and the number one
00:41:50.360
point of friction among couples was whether money was best used to enjoy today or to secure against
00:41:57.860
an uncertain tomorrow and it was almost 50 50 and if you think about it the appropriate response is
00:42:06.100
somewhere in the middle right i mean both both things are important like it is both important to
00:42:11.000
use money to seize a moment because tomorrow is not promised and we need to be setting aside for that
00:42:16.560
future self and and that rainy day but we found that people tended to be far more decamped into sort
00:42:22.640
of extreme sides of this position and so there were a lot of moral judgments around this too like for
00:42:29.860
folks who find themselves in the save for tomorrow camp they see the other folks as sort of frivolous
00:42:35.580
and and unserious and for people who were in the you know enjoy the moment camp they see the savers as
00:42:41.740
sort of fun haters and sticks in the mud and so the behavioral biases that load onto this are are
00:42:47.820
there's a few of them one of them would be loss aversion right we perceive spending as a present
00:42:52.820
loss and we are two and a half times as upset about a loss as we are happy about a comparably
00:42:58.660
sized gain so that that hundred dollars hurts worse coming out in retirement than it felt good to save it
00:43:06.340
when we were in the accumulation phase the other thing is uncertainty aversion uncertainty is perhaps
00:43:13.060
the thing which humankind finds most distasteful like we hate not knowing even more than we hate bad
00:43:20.240
news and then we also engage in anchoring which is sort of benchmarking to a high watermark so if we
00:43:26.080
retire with a million dollars we go oh you know i'm i'm a millionaire like i did it and then when you
00:43:32.220
have to start drawing that down it's painful all the way down so there's a couple of ways i think to
00:43:38.580
overcome what is admittedly a pretty thorny problem the first is something called bucketing which is
00:43:44.320
kind of back to this naming it for purpose there's a psychological phenomenon known as mental accounting
00:43:50.180
where the way that we label money materially impacts our willingness to save spend and invest it so
00:43:57.640
something as simple as saying you know here's my principal here's my dividends here's my living
00:44:04.540
money here's my vacation money here's my don't touch it money that can give us permission to spend it as
00:44:10.740
we ought to second powerful thing is to just automate the inflows and outflows so we don't have to think
00:44:16.920
about it you want to kind of minimize touches and so if you can make a good decision once and kind of set
00:44:23.100
it and forget it that's that's powerful and then finally kind of ripping off stephen covey here he has
00:44:28.860
this idea that that effectively the only way that we can say no to something difficult is to have a
00:44:35.200
bigger yes burning inside of us right and and so we need that purpose again you know we have to
00:44:42.280
love our grandkids enough to spend that money on them even though there's some pain associated with
00:44:48.580
with taking it out you know whatever whatever the case may be so bucketing automation purpose
00:44:54.960
are all sort of powerful workarounds for what is a very complicated human tendency yeah i think that's
00:45:02.120
i mean a lot of times the focus is on people who aren't saving enough which is a problem right that's a
00:45:07.300
problem but then a lot of i don't think a lot of attention is given to people who save too much
00:45:12.440
because that can become a problem because you hit retirement or whatever and like you said there's some
00:45:17.520
people who have so much money saved away in retirement they can't even like draw it down
00:45:21.420
by the time they so they're they're left over with a big chunk of money that yeah they can pass on to
00:45:26.920
their kids and grandkids but then there's gonna be like it's gonna be taxed and it's like all there's
00:45:30.780
other problems that come with that so it's yeah trying to figure out how to manage that nut you may
00:45:37.400
have scrolled away during your working life that that's that can be tricky it's it's very tricky and
00:45:42.420
and in a real sense like every dollar that you die with and look i get it you can't probably you
00:45:48.800
know none of us knows when we're gonna go specifically but every dollar that you die with
00:45:54.480
is a dollar that you weren't able to spend in life on time with your kids time with your loved ones
00:46:01.700
being generous being kind blessing the world i mean it's in in a real sense it's a missed opportunity
00:46:08.340
uh and there's a great book called die with zero which covers this very thing well daniel has been
00:46:14.000
a great conversation where can people go to learn more about the book in your work yeah the book is
00:46:18.400
the soul of wealth i hope people will go check it out i'm active on twitter at daniel crosby i have
00:46:24.600
my own podcast standard deviations and uh yeah just daniel crosby phd on linkedin as well fantastic
00:46:30.480
well daniel crosby thanks for your time it's been a pleasure thank you my guest here is dr daniel
00:46:35.100
crosby he's the author of the book the soul of wealth it's available on amazon.com and bookstores
00:46:38.880
everywhere check out his podcast standard deviations pod.com where you get your podcast also check out
00:46:43.700
our show notes at aom.is soul of wealth you can find links to resources we delve deeper in this topic
00:46:48.640
well that wraps up another edition of the aom podcast make sure to check out our website at
00:46:59.740
artofmanless.com where you find our podcast archives and while you're there sign up for our newsletter we
00:47:04.020
got a daily option and a weekly option they're both free it's the best way to stay on top of
00:47:07.900
what's going on at aom and if you haven't done this already i'd appreciate if you take one minute to
00:47:11.680
give you a podcast or spotify it helps out a lot if you've done that already thank you please
00:47:15.720
consider sharing the show with a friend or family member who you think was something out of it
00:47:18.620
as always thank you for the continued support until next time it's brett mckay
00:47:21.860
reminding you to listen to the aom podcast but put what you've heard into action