Morgan Housel: Wealth is What You Have Minus What You Want

It's not necessarily how much you have, it's just the contrast to what you had before.

Would you rather have a net worth of a million dollars when you used to have two million? Or would you rather have a net worth of 500,000 when you used to have 200,000? And psychologically, most people would rather have 500,000.

The speed at which a luxury becomes a necessity is two seconds.

What advice do you have for somebody living paycheck to paycheck?

I always say two things.

One is that- the second is, affordable housing, I think, is the single biggest social problem, because so many other social problems that might seem bigger than that are downstream of housing.

A lot of the drug problem, the fertility crisis, the degradation of politics, because if you don't feel like you're invested in your community or you're invested in your country, it's much easier to be like, "Burn the place down." And so much-- I wrote this in Psychology of Money: if you have to sort of, like, sum up doing well financially in one word, I think it's-

You've been incredibly successful and sold over ten million books.

What drives you today?

Well, you've been incredibly successful, too, Shane.

I've looked up to, to, to you for years as well.

But I bring that up, I think that's an important thing to bring up, because what has driven me are people like you and, and others, James Clear, Michael Lewis, people who I've really looked up to and not been so crazy to say, "I wanna be that person one day." Uh, both because they're-- it's, it's, that's, that's not...

You know, everyone should just do it in their own way.

But I've, I've always been-- Uh, I think there's a difference between envy and, and aspiration.

You can be really inspired by someone's success without envying them.

And the-- You know, if I could name half a dozen people that I've really looked up to and said, like: Man, they've-- they're a good role model." But the important thing is I don't envy them.

I can also name half a dozen people, I won't, who I, who I've envied.

And when I, when I try to get introspective about that, why do I envy that person? It's usually, it's because they achieved a level of success, but I didn't like how they did it.

And that's a subjective thing.

Maybe they're all, they're all good people in their own right.

I don't wanna be too judgmental, which is why I won't name them.

But I, I think, I think it's an important distinction, uh, people in your life who inspire you versus you envy them.

And I think everyone, if they're honest, probably has a, you know, some of both.

But I've really-- I, I like looking up to people where it's like, not only do I appreciate what you did professionally and think you did it with a high level of integrity, and, and you look like you're having fun doing it, but at least from my appearance, I like the whole package of the life that you're living, and that's really important.

'Cause there's also a lot of people, particularly in finance, who I can say, "Man, career-wise, you did amazing.

But as I get to know you, I realize that your home life isn't that great and your health isn't that great, or maybe you don't actually enjoy your life.

And so do I actually wanna chase what you've achieved?" Like, no, maybe not.

And so you ask what inspires me.

I think it's...

I, I think it's, I think it's that, having people in your life that you look up to and you can use as, as a North Star is important.

The other that I think is really important, I think this was a Buffett line, he said, "It's really good to have people in your life who you don't want to disappoint." Nothing is a bigger motivator in life than having a couple people, rarely more than that, that you really don't want to disappoint.

I really desperately do not want to disappoint my wife and kids.

I really don't want to disappoint my parents.

That's, that's fundamental.

I think most people will have...

They'll have their own version of that, but something like that.

And nothing is more of a motivator than that, to wanna leave- live a good life.

But if you look back thirty years ago and you could see what you've accomplished today, the financial success, the, uh, status success that you've had, you, you've blown away any goal that you would have had.

Why keep going?

I think in a healthy way, I can have a very split personality of, on one hand, I can say, "Man, I'm really good at what I do, and I'm, I'm achieving a lot, and this is amazing." And then I can very quickly flip a switch and say, "I'm a nobody, and I'm- I've done some really bad work lately." And I think on balance, that's a, that's a pretty healthy personality, 'cause if you only have the ego side, you're gonna run yourself off a cliff, and if you only have the humble/depressed side, you're never gonna get anywhere.

And so I've been pretty good at being able to toggle back and forth, sometimes, you know, within the same hour, certainly within the same day.

And so what keeps you going? A, I, I really enjoy what I do.

Writing has never felt like work to me, and I think that's- I think it's the same for you.

It's just an extension of kind of who you are.

It's never felt like work, and so I enjoy doing it.

But also, what keeps me going is, like, the healthy side of me, part of me says, like, "I can keep doing this and do good work." And then a minute later, the other bird on the shoulder being like, "You suck.

You suck at this." And again, on net, I think it's a very healthy personality, even if it's just the two extreme sides.

It's not necessarily how much you have, it's just the contrast to what you had before.

Would you rather have a net worth of a million dollars when you used to have two million? Or would you rather have a net worth of 500,000 when you used to have 200,000? And psychologically, most people would rather have 500,000.

The speed at which a luxury becomes a necessity is two seconds.

What advice do you have for somebody living paycheck to paycheck?

I always say two things.

One is that- the second is, affordable housing, I think, is the single biggest social problem, because so many other social problems that might seem bigger than that are downstream of housing.

A lot of the drug problem, the fertility crisis, the degradation of politics, because if you don't feel like you're invested in your community or you're invested in your country, it's much easier to be like, "Burn the place down." And so much-- I wrote this in Psychology of Money: if you have to sort of, like, sum up doing well financially in one word, I think it's-

You've been incredibly successful and sold over ten million books.

What drives you today?

Well, you've been incredibly successful, too, Shane.

I've looked up to, to, to you for years as well.

But I bring that up, I think that's an important thing to bring up, because what has driven me are people like you and, and others, James Clear, Michael Lewis, people who I've really looked up to and not been so crazy to say, "I wanna be that person one day." Uh, both because they're-- it's, it's, that's, that's not...

You know, everyone should just do it in their own way.

But I've, I've always been-- Uh, I think there's a difference between envy and, and aspiration.

You can be really inspired by someone's success without envying them.

And the-- You know, if I could name half a dozen people that I've really looked up to and said, like: Man, they've-- they're a good role model." But the important thing is I don't envy them.

I can also name half a dozen people, I won't, who I, who I've envied.

And when I, when I try to get introspective about that, why do I envy that person? It's usually, it's because they achieved a level of success, but I didn't like how they did it.

And that's a subjective thing.

Maybe they're all, they're all good people in their own right.

I don't wanna be too judgmental, which is why I won't name them.

But I, I think, I think it's an important distinction, uh, people in your life who inspire you versus you envy them.

And I think everyone, if they're honest, probably has a, you know, some of both.

But I've really-- I, I like looking up to people where it's like, not only do I appreciate what you did professionally and think you did it with a high level of integrity, and, and you look like you're having fun doing it, but at least from my appearance, I like the whole package of the life that you're living, and that's really important.

'Cause there's also a lot of people, particularly in finance, who I can say, "Man, career-wise, you did amazing.

But as I get to know you, I realize that your home life isn't that great and your health isn't that great, or maybe you don't actually enjoy your life.

And so do I actually wanna chase what you've achieved?" Like, no, maybe not.

And so you ask what inspires me.

I think it's...

I, I think it's, I think it's that, having people in your life that you look up to and you can use as, as a North Star is important.

The other that I think is really important, I think this was a Buffett line, he said, "It's really good to have people in your life who you don't want to disappoint." Nothing is a bigger motivator in life than having a couple people, rarely more than that, that you really don't want to disappoint.

I really desperately do not want to disappoint my wife and kids.

I really don't want to disappoint my parents.

That's, that's fundamental.

I think most people will have...

They'll have their own version of that, but something like that.

And nothing is more of a motivator than that, to wanna leave- live a good life.

But if you look back thirty years ago and you could see what you've accomplished today, the financial success, the, uh, status success that you've had, you, you've blown away any goal that you would have had.

Why keep going?

I think in a healthy way, I can have a very split personality of, on one hand, I can say, "Man, I'm really good at what I do, and I'm, I'm achieving a lot, and this is amazing." And then I can very quickly flip a switch and say, "I'm a nobody, and I'm- I've done some really bad work lately." And I think on balance, that's a, that's a pretty healthy personality, 'cause if you only have the ego side, you're gonna run yourself off a cliff, and if you only have the humble/depressed side, you're never gonna get anywhere.

And so I've been pretty good at being able to toggle back and forth, sometimes, you know, within the same hour, certainly within the same day.

And so what keeps you going? A, I, I really enjoy what I do.

Writing has never felt like work to me, and I think that's- I think it's the same for you.

It's just an extension of kind of who you are.

It's never felt like work, and so I enjoy doing it.

But also, what keeps me going is, like, the healthy side of me, part of me says, like, "I can keep doing this and do good work." And then a minute later, the other bird on the shoulder being like, "You suck.

You suck at this." And again, on net, I think it's a very healthy personality, even if it's just the two extreme sides.