AI Summary #
The host of the podcast explores the concept of wealth and what he considers to be the highest form of wealth: the ability to control one’s time and have independence and autonomy. He shares the story of George Vanderbilt, who built a 135,000 square foot mansion but spent very little time there due to its size and ostentatious nature.
The host defines “wealth” differently from traditional notions of it, stating that wealth means having unspent savings and investments that provide intangible and lasting pleasure. He highlights the example of George Vanderbilt’s story, who was rich but not happy due to his lifestyle debt, which weighed him down.
The host discusses the concept of independence and autonomy, citing psychologist Angus Campbell’s book “The Sense of Wellbeing in America,” which found that having a strong sense of controlling one’s life is a more dependable predictor of positive feelings of well-being than any other objective condition. He also shares his own story of realizing that what he truly wanted from money was not wealth, but independence.
The host notes that the United States is the richest nation in history, yet its citizens are not happier on average than they were 70 or 80 years ago. He attributes this to the fact that people have lost control over their time due to modern technology and the blurring of boundaries between work and personal life.
To address this issue, the host suggests acknowledging what makes most people happy, which is often overlooked in favor of traditional notions of wealth. He emphasizes that controlling one’s time is the highest dividend that money can pay and encourages listeners to prioritize saving and investing for independence and autonomy.
Key points highlighted by the host include:
- The ability to control one’s time is the highest form of wealth.
- Wealth is not just about having a lot of money, but also about having unspent savings and investments that provide intangible and lasting pleasure.
- Independence and autonomy are key drivers of happiness.
- The blurring of boundaries between work and personal life has led to people losing control over their time.
- Saving and investing for independence and autonomy can have the highest ROI.
- Prioritizing controlling one’s time is crucial for happiness, as emphasized by psychologist Angus Campbell.
Notable quotes include:
- “Wealth is what you don’t see.”
- “Money’s greatest intrinsic value is the ability to give you control over your time.”
- “People like to feel like they’re in control that they are in the driver’s seat. When we try to get them to do something, they feel disempowered.”
Actionable advice:
- Prioritize saving and investing for independence and autonomy.
- Focus on having unspent savings and investments that provide intangible and lasting pleasure.
- Recognize that controlling one’s time is a key driver of happiness.
- Avoid getting caught up in traditional notions of wealth and prioritize what truly makes you happy.
AI Transcription #
Welcome back to the podcast.
This is episode seven.
I want to talk today about what I consider the highest form of wealth.
At least start by just saying, wealth is obviously easy to measure.
Everyone can add it up, but it’s very hard to value.
And I want to make a claim that the highest form of wealth is not just how much money you have.
The highest form of wealth is the ability to do what you want, when you want, for as long as you want.
It’s just controlling your time and giving yourself independence and autonomy.
That’s the most value that I think you can get out of wealth and that’s what I want to talk about today.
A quick story to summarize at this point here.
George Vanderbilt, who is the grandson of Cornelius Vanderbilt, one of the richest people to ever walk this planet.
He spent six years building the Biltmore House, which is 135,000 square feet.
Hard to wrap your head around how big that house is.
It’s about three times the size of the White House or it’s roughly 30% larger than the average Costco warehouse.
It had 40 master bedrooms, whatever that means, and had a full-time staff of 400 people.
Just unimaginably large.
This is just the guys at Summer House.
But here’s the craziest thing about the Biltmore.
George Vanderbilt allegedly spent very little time there.
Because it was so big, it didn’t even feel like a house.
He told a friend that the Biltmore was, quote, utterly unaddressed to any possible arrangement of normal life.
It felt like he was living in a hotel by himself or corporate office building.
It was not enjoyable at all.
There’s a dining room that seats 100 people and he goes in there by himself to eat breakfast in the morning.
It’s ridiculous.
It was just too big, too ostentatious to even enjoy living it.
So he never spent that much time there.
The house, nevertheless, it cost so much money to maintain that a nearly bankrupt George Vanderbilt.
90% of the land was eventually sold off to repay his tax debts.
And the house, it was eventually turned into a tourist attraction.
You can go visit it today if you wanted to.
The Vanderbilts are one of the most fascinating families in the history of wealth because they were the richest family ever.
And if you dig into their lives, not just George Vanderbilt, but emuls any of the descendants, virtually all of them were not that happy.
And you start to begin to ask the question, what was the point of having all of this wealth?
What did it do for them?
And so often, just like in the case with the Billmore, it seems like rather than being showered with assets that they took advantage of, the Vanderbilts were overwhelmed by like a lifestyle debt.
Their money was actually like a debt that weighed them down.
And so look, money is fungible in the sense that my dollar bill is indistinguishable from your dollar bill.
But the value that people get out of a single dollar varies wildly, even among people of the same income and the same net worth.
I’m always interested in the difference between getting rich and staying rich.
We talked about that maybe two episodes ago.
Getting rich and staying rich are different things.
And many of those who are skilled at getting rich completely fail at staying rich.
Part of the topic, why I bring this up, is knowing the difference between what I would call rich and wealthy.
These definitions are my own, so you can take this as unciresly as you want.
But here’s how I define rich versus wealthy.
Rich means you have the cash to buy stuff.
You can make the monthly payments on your nice car and your nice house, whatever.
You are rich because you have the money to actually afford those physical things.
Wealth, by my definition, means that you have unspent savings and investments in the bank, net worth that provides some level of intangible and lasting pleasure.
Like independence and autonomy and controlling your time.
And just doing what you want to do when you want to do it with whom you want to do it for as long as you want to do it for, that is what wealth is.
And what I find so fascinating are stories like the Vanderbilts, who were the richest people on earth, who could afford 135,000 square foot house.
But by my definition, we’re some of the least wealthy.
Because money to them was less of an asset, it was more of a social liability, in dedicating them to a status-chasing life that left most of them seemingly miserable.
20 years before the built-more was constructed, the New York Daily Tribune wrote that quote, the Vanderbilt money is certainly bringing no happiness to his present claimants.
And that was not like a closet jealousy.
Armed with the world’s greatest fortune, the Vanderbilt family seemed committed to proving the idea that money does not buy happiness.
So many examples of this all over the place.
And they took it even one step further showing that money could in fact buy resentment, it could buy insecurity, it could buy social anxiety, it could buy all of that stuff in Costco size bulk.
It’s kind of like what Bob Marley said.
Some people are so poor, all they have is money.
Which brings me to the point of this episode.
What can most people get the most amount of pleasure from money and wealth from?
Well, look, everybody is different, but to me the highest form of wealth is the ability to just wake up every morning and say, I can do whatever I want today.
Everyone wants to become wealthier to make them happier, and happiness is a really complicated subject.
But if there’s one common denominator in happiness, like a universal fuel of joy for the most number of people, it’s that people want to control their own lives.
So the ability to do what you want, when you want with whom you want for as long as you want, that I think is the highest dividend that money can pay.
40 years ago, a psychologist named Angus Campbell wrote a book called The Sense of Wellbeing in America.
When he wrote this book in the late 1970s, it was an era when psychology was overwhelmingly focused on disorders that brought people down.
Like all the attention in psychology went to studying depression and anxiety and schizophrenia.
Campbell took this opposite approach where he wanted to study how to become happier.
Rather than bringing depressed people up to par, he wanted to bring people who are normal up to being happy.
He starts out as booked by pointing out that people are generally happier than many psychologists assumed at the time.
But some people were clearly doing much better than others.
When he studied thousands and thousands of people, obviously some people were much happier than others.
And what was so interesting, he took an academic approach to looking at this people, he said you could not necessarily group the happy people by income or geography or education.
Because so many in those categories ended up chronically unhappy.
But there was one common denominator that really summed up who was happy and who was not.
Amvious Campbell wrote in his book that quote, having a strong sense of controlling one’s life is a more dependable predictor of positive feelings of well-being than any of the objective conditions of life that we have considered.
More than your salary, more than the size of your house, more than the prestige of your job, just control over doing what you want when you want to do it.
Is the broadest lifestyle variable that makes people happy.
When Franklin Roosevelt was five years old, he complained to his mother that his life was just overwhelmed and dictated by rules.
Little Frankie Roosevelt said, bomb, from the time I wake up to the time I go to bed, there is a strict structure that I have to follow throughout the entire day and he said he hated it.
So his mother, Sarah Roosevelt, said, okay, Franklin, tomorrow you can do anything you want.
You can have one free day where you can do anything that you want on any schedule that you want.
And Sarah Roosevelt wrote in her diary that next day that quite of his own accord, Franklin went contently back to his original routine.
So on this day where he can do anything he wants, he actually went back to his old routine but he did it on his own terms not because somebody told him what to do.
Money’s greatest intrinsic value.
This just cannot be overstated is the ability to give you control over your time.
To just obtain bit by bit a level of independence and autonomy that comes from unspent assets that give you greater control over what you’re doing and when you do it.
Charlie Munger, I think some this up best.
He is of course a multi billionaire and he said, I never intended to get rich.
I just wanted to get independent.
It’s such a wonderful goal that I think more of us should strive for and it is harder to measure the net worth which means it is chronically overlooked.
So the other important here is that by independence, I don’t necessarily mean that you have so much money that you can do nothing.
That by the way is virtually what the Vanderbilt had and it made them go nuts.
They were miserable.
But it’s important to understand that independence exists on a spectrum.
At the lowest level of independence, you have a complete financial dependence on the kindness of strangers.
That’s like panhandling on a street corner.
That’s the lowest level on the spectrum of financial dependence and independence.
And then at a little bit higher level than that, you have dependence on people who care about you like children who are relying on their parents.
And then at a little bit of savings means that you have enough savings to cover run of the mill problems.
You can endure hassles that every person should expect to experience on a regular basis.
Some level above that you have retirement savings and education savings.
And maybe you can avoid some level of consumer or auto debt.
You still rely on your bosses and your customers like you’re not totally independent of them.
But you can foresee a time when your current savings will open up a new level of independence for you and your family.
That like kind of level of independence is probably like the most reasonable area to shoot for.
But at some level above that, you have enough money that you are comfortable enough with your social status that you don’t feel the need to show off and flash your peacock feathers with expensive consumer goods whose only value is signalling to other people.
That is a form of independence too.
And the inability to do that is actually a hidden form of debt and dependence on others that exists.
And then of course there is some high level of like super independence where you are completely unconcerned with what other people think of what you’re saying or you have no desire to please and a piece strangers.
Historically this has been called FU money of course.
That’s maybe the highest level of independence.
It tends to backfire by the way.
But it’s just the realization that independence exists on a spectrum.
One way to think about this is that every dollar of savings that you have is a piece of your future that you own.
And by the way on the other side, every dollar of debt that you have is a piece of your future that somebody else owns.
So independence is not black and white.
It’s not either your independent or your not, which is how most people think of it.
If there’s a spectrum of it where you realize that every little bit of savings that you have is giving yourself control today and in the future to be independent and autonomous and live a life and do what you want to do when you want to do it.
Using your money to buy time and options, I think has a lifestyle benefit that few luxury goods can ever compete with.
I’ll tell you my own little story here.
All throughout college, I wanted to be an investment banker.
If you go back to the mid 2000s, every aspiring young man in college, particularly in finance and economics, wanted to be an investment banker.
That was the cool thing to do during that time for people who are in their late teens or late 20s.
All of us wanted to be bankers.
We thought it was so cool.
If I’m honest, when I look back, there was only one reason why I wanted to do it, which is because as I understood it, bankers made a lot of money.
That was the only drive.
That was the only reason I wanted to do it.
And I was 100% positive that it would make me happy once I got there.
I had this feeling as soon as I became an investment banker and started making six figures in my early 20s, I was just going to be like a walking ball of happiness.
That was my assumption.
And I got a summer internship at an investment bank in Los Angeles.
It was like junior year of college.
And I just thought I had won the career lottery.
This is all I ever wanted.
Boom, I made it.
It’s like nothing could get better than this.
And on my first day, on the first day of the internship, I realized why investment bankers make a lot of money.
It’s because they work longer hours and are more controlled by their bosses than I had ever imagined.
And actually, most people cannot handle how little autonomy and how little control you have as a junior investment banker.
Going home before midnight was considered a luxury on the job.
There was this saying in the office, they said, if you don’t come to work on Saturday, don’t bother coming back on Sunday.
Those were the kind of hours that were expected from young investment bankers.
The job was intellectually stimulating and it paid well and it made me feel important at the time.
But every waking second of my time became a slave to my boss’s demands.
And that was enough to turn it into one of the most miserable experiences of my life.
From what I thought was my dream of winning the career lottery came within a couple of days became one of the most miserable things I’d ever done.
And I had now the single second of control during my day.
It was a four month internship and I lasted one month.
At the time, I was ashamed of that, but I look back and I’m actually proud because I think what that taught me was what I actually wanted out of money.
It wasn’t that I wanted a huge income so I can buy nice stuff.
I wanted money so that I could be independent, just like Charlie Munger said.
The hardest thing about this is that I love the work.
I love doing it and I wanted to work hard.
But doing something that you love on a schedule that you can’t control can feel the same or worse as doing something that you don’t enjoy at all.
There’s actually a name for that feeling.
Psychologists call it reactants.
Reactants is the unpleasant feeling that you get when people experience a threat to or a loss of their free behaviors.
That’s the technical definition of it.
Jota Berger, who was a professor at the University of Pennsylvania, he once summed it up really well.
He said, quote, people like to feel like they’re in control that they are in the driver’s seat.
When we try to get them to do something, they feel disempowered.
Rather than feeling like they made a choice, they feel like we made it for them.
And so they say no or they do something else even when they might have originally been happy to go along with it.
And so I think when you accept how true that statement is, you realize that aligning your money towards a life that lets you do what you want.
When you want with whom you want, where you want for as long as you want, that has an amazing, incredible ROI.
Derek Sivers, who was a very successful entrepreneur, he’s one of my favorite people, he’s such a good writer.
He once wrote about this time when a friend asked him to tell the story about how Derek got rich.
And Derek told this amazing story.
He said, when he was in his early 20s, he had a day job in Manhattan, when he worked at for two years.
And during those two years, he saved up $12,000.
He was 22 years old.
And he knew that once he had $12,000, he could quit his job and become a full-time musician.
Because he knew he could get a couple of music gigs per month, that would pay his cost of living.
So when he had $12,000 saved up, he said he felt free.
He quit his job and he’s never had a formal job ever again.
And when he finished telling that story, his friend said, no, no, no, I want to hear the story about how you got rich.
Tell me about the time you started and sold your business.
And Derek said, no, no, no, that didn’t make any difference in my life.
He said that was just more money in the bank.
The difference, he said, happened when he was 22 years old.
When he had $12,000, and he became independent.
Compare that story to the Vanderbilt.
It’s night and day.
You can’t get any more different.
The Vanderbilt’s were rich.
And maybe Derek Sivers is not.
No offense, Derek.
But Derek is wealthy.
He is so wealthy.
He’s completely independent.
And the Vanderbilt’s by that definition are not.
The United States is, of course, the richest nation in the history of the world.
But there’s actually not that much evidence that its citizens are today on average happier today than they were 70 or 80 years ago.
And wealth was way lower than it is now, even adjusted for inflation.
Gallup in 2019 ran this a poll of 150,000 people in 140 countries.
And it found that 45% of Americans said that they felt a lot of worry and stress in the previous day.
The global average, through the rest of the world, was 39%.
55% of Americans said they felt a lot of stress in the previous day.
For the rest of the world, it was 35%.
So we are more stressed out and more unhappy than the rest of the world that is by and large, way poorer than us on average.
Part of what’s happened here is I think that we have used our greater wealth to buy bigger and better stuff.
But we have simultaneously given up more control over our time.
And at best, those things that cancel each other out.
Media and family income in the United States adjusted for inflation.
So the average family adjusted for inflation, their income was $29,000 per year in 1955.
In 2020, it was just over 70,000.
So over double, for the average family adjusted for inflation, their income is more than doubled over the last 70 years.
What’s happened to our time, on the other hand, barely looks like progress.
And a lot of the reason has to do with the kind of jobs that more of us have now.
Derek Thompson of the Atlantic, one of my favorite people, also one of my favorite writers too, he wrote this piece a couple years ago.
They really described what has happened over the last 20 or 30 years.
He said the modern factory, what used to be the factory that people work is not a place at all anymore.
It’s the day itself.
Because the computer age has liberated the tools of productivity from the office.
So most knowledge workers, people who use their brains to make decisions rather than using their bodies to do physical work, their laptops and their smartphones and their portable all-purpose media making machines can theoretically be as productive at two in the morning as they are at two in the afternoon.
And in Tokyo or in a wee work or at midnight on the couch, your day never ends.
There is no distinction between your home and your office.
He wrote that in 2019 and then COVID, of course, took that to a whole different level.
Where now working from home means that there is absolutely no distinction whatsoever between work and home.
And what that means is effectively people are always working 24-7.
It never ends.
And compared to generations prior, when there was more distinction between work and no work, control over your time has diminished.
With so many people, what does the first thing they do when they wake up at 6.30 in the morning?
They check their phones, they check their email from their boxes and their coworkers.
As soon as you wake up before you get out of bed, you’re working.
And since controlling your time is such a key happiness driver and influencer, we should not be surprised that people don’t feel much happier in that situation, even if they are on average richer than ever.
And so what can we do about that?
This is not an easy problem to solve because everyone is different.
There is no universal advice to say, just do this and everyone will be happier.
Even if I said just try to be more independent and you’ll be happier, that’s too simplified.
But I think the first step for everyone is merely acknowledging what does and does not make almost everybody happy.
And I’m not going to say that nice stuff, nice clothes, nice cars don’t make you happy because I like those nice things too.
I have some of those nice things, they’re great.
I’m not saying live like a monk, that’s not my advice.
It’s just acknowledging what is so easy to overlook and what is not the knee jerk reaction to most people when they think about money.
Which is that you’re going to get the most happiness out of money, not by spending it on nice stuff, but by saving it in a way that gives you independence and autonomy and control over your time.
One of the ideas that I write about in my book, the psychology of money, is that wealth is what you don’t see.
I can see the car that you’re driving and the house that you live in, but I cannot see your bank account.
I have no idea how much your net worth is, but that net worth that has been saved up, that is the oxygen of what gives people independence and autonomy.
Of course, nice stuff, everyone knows you tend to get used to it over time, but freedom and independence and autonomy is something that most people will never get used to.
It will always feel great waking up every morning and knowing that you can do whatever you want today is a level of happiness that I think you will never become accustomed to.
It a great way.
The money that you don’t spend stuff on is not worthless.
It’s not wasted.
If you’re just saving money, piling it up in the bank, piling it up in your investment accounts, investing for the long term.
To the extent that that can give you independence and autonomy, I think that has some of the highest ROI that you can actually get from money.
In his book, 30 Lessons for Living, a gerontologist in Karl Pilemer interviewed thousands of elderly Americans, some of whom were over 100 years old, and he was just looking for the most important lessons that they learned from decades and decades of life experience.
And there’s a passage that is stuck with me for years, maybe over a decade since I first read this.
The passage is quote, not one person, not a single person out of a thousand, said that to be happy, you should try to work as hard as you can to make more money to buy the things you want.
Not one person, not a single person in a thousand, said that it is more important to be at least as wealthy as the people around you.
Not one person, not a single person, said that you should choose your work based on your desired future earnings power.
It’s amazing.
These are, of course, some of the oldest people in America, and they’re 90s and hundreds, and when they look back at their life, not a single one of them said that to be happy, you should try to earn more money.
What they did value and what they did say was incredibly important to their happiness, were things like quality relationships, being part of something that’s bigger than yourself, spending quality unstructured time with their children, that came up all the time.
Call Prillimer writes, he says quote, your kids don’t want your money, or what money buys them, anywhere near as much as they want you, specifically they want your time to be spent with them.
So take it from those who have the most life experience and have lived through everything.
Controlling your time is the highest dividend that money pays.
That’s all for this week.
We’ll see you next time.
Thank you again.