The Art of Manliness - Money CAN Buy Happiness (If You Use It In These Ways)

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

00:00:58.780 awim.is soul of wealth

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 1.00

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 0.90

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 0.99

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

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00:47:18.620 as always thank you for the continued support until next time it's brett mckay

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00:47:34.020 you

The Art of Manliness - October 16, 2024

Money CAN Buy Happiness (If You Use It In These Ways)

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