September 24th, 2022: Greetings from Lisbon. We explored Porto and went on an epic bike ride through the city and dow the coast. Excited to be going back to Texas next weekend. Not sure if there will be an issue next week, so stay tuned.
+ “This episode was awesome” - a listener. New pod with Justin Moore. We talked about his 10+ years in the creator economy, his struggles with hustle culture, his love of music, and how he’s finally found the work worth doing (helping creators land sponsorships). Listen or watch.
+ My friend Khe Hy (one of the early friends I made a similar path in 2017) is launching the next cohort of his “Supercharge your Productivity” course. It’s ostensibly a productivity course but he tends to attract people who want to connect work to life’s larger questions. His 10k framework has been quite useful for me to figure out where to focus. We had a great convo earlier this year comparing our pathless path adventures (YouTube / Audio). If you want to check out his course, enrollment closes on October 3rd.
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#1 What is your rich life?
This question, “What is your rich life?” has become one of my favorite questions.
When I first ask this question, most people think I am asking an equivalent to: “If you won the lottery, what would you spend your money on?” but it’s not.
What the question is really asking is “what are the ways you can spend money in different ways to make your life interesting?”
The question was first asked by Ramit Sethi. It is the central theme of this book I Will Teach You To Be Rich, which was published in 2009. More recently, he has been asking it in his podcast of the same name, where he shares intimate conversations he has with couples who have money issues. This podcast is fascinating mostly because it’s quite rare to hear what people really think and feel about money.
Money is emotionally charged and most of us have elaborate stories to justify everything we spend money on. We are spending $150k on grad school because of the job opportunities. We are buying the expensive house because of the school district. Whether it be a house, a car, an expensive handbag, or giving away 1% of your wealth each year to a financial advisor, I’ve always been impressed with the reasons people come up with.
There is nothing wrong with this and I am not immune. It’s just that if you were trying to gather information on interesting ways to spend money, the worst way would be to ask others why they spend money in certain ways.
Are your preferences really the same?
Money and emotion go hand in hand but most discussion of money pretends as if we are all homo economicus assessing discount rates before breakfast. I’d guess that the majority of people are far less “rational” than they think, me included. People aren’t hiring financial advisors that take 1% of their overall wealth each year because it is a sound financial decision but more because most people they know are making the same decision or the decision helps them feel better about money.
Which is what makes Sethi’s question is so powerful. The default orientation of most people’s stance toward money is a negative one: how do I avoid running out? Sethi flips this on its head and forces people to see money as something that can make your life better:
I always ask people two questions:
Why do you want to be rich?
What does being rich mean to you?
Most people never spend even ten minutes thinking through what “rich” means to them. Here’s a hint: It’s different for everyone, and money is just a small part of being rich. For example, my friends all value different things. Paul loves eating out at Michelin-starred restaurants where a meal might cost $500. Nicole loves traveling. And Nick loves buying clothes. If you don’t consciously choose what “rich” means, it’s easy to end up mindlessly trying to keep up with your friends.
Like the default path of work, the default path of money is to spend like your peers spend. You might say, “I spend money on things I like already!” But is this really true?
We all have invisible scripts that we absorbed from our parents, the culture, and others around us about how we are supposed to spend and save money. If your parents were afraid of spending money, there’s a good chance you might have a similar stance toward money.
One of the most interesting data points in Nick Maggiuli’s book Just Keep Buying was how many people in the US overestimate how much money they need in retirement. He shared research that in any given year, “58 percent of retirees withdraw less than their investments earn.” The result? He writes, “the average retired adult who dies in their 6os leaves behind $296k in net wealth, $313k in their 70s, $315k in their 8os, and $238k in their 90s”
Probably not what you thought right?
Yet even if you accept those data points, you will likely tell yourself, I am different. I have more expenses. I will actually be the one to run out of money. Healthcare! Uncertainty! Stock Market!
So many stories to convince ourselves that we have everything under control!
A Better Relationship With Money By Making Less
I’ve thought a lot about this because after quitting my job, I went from being in a place where if I had continued, I never would have had to worry about money. On paper at least. One surprising thing about the people I worked with was that it seemed most of them worried and money a lot. They said things like “I don’t think I’ll have kids, they are too expensive,” or as one person said as I was leaving “I wish I could do what you were doing, but how would I pay rent?” These were people making salaries in the top 10% of one of the richest countries in the world!
Of course, I’m smart enough to realize that what they were really saying is that they were worried about their ability to continue to afford a certain type of lifestyle. One they projected to become more expensive. This may or may not have been their rich life though. Just like work, there is a default path of money and we should be aware of what we are opting into.
When I quit my job and went a few months without earning income, I realized that I had not just quit a job. I had walked away from financial security in a culture where making a lot of money is one of the most impressive things. I felt pretty stupid at first but after a few months I made some money and then I kept making it work. Despite never making more than 30% of my previous salary in those first couple of years, I somehow developed a radically better relationship with money. This was surprising to me. Part of this was from proving to myself that I could make money in different ways and on my own but a lot of it was from simply making less, seeing my net worth shrink, and realizing that not only was I okay, I actually liked my new life.
Ramit’s question can do the same thing I accidentally did in becoming self-employed: shift you away from justifying default spending habits and toward thinking about how you might use your money to make your life better.
Ramit points out the implications of this in the book:
Part of creating your Rich Life is the willingness to be unapologetically different. Once money isn’t a primary constraint, you’ll have the freedom to design your own Rich Life, which will almost certainly be different from the average person’s. Embrace it. This is the fun part!
Start With Appetizers
We do things like the people around us. Living in different countries, it’s interesting to see what people spend money on when they move into a new class of income or wealth. In some countries, you might hire a personal driver or migrant laborers to help in the house while in other countries, you would never do such a thing.
As long as your preferences are aligned with what is seen as normal you don’t need to think about how you spend money. But most people aren’t perfectly aligned with what the common things are in their current culture so I think most people are leaving some life alpha on the table.
Going against the grain comes does come with costs of course. Spending $150k on a two-year MBA is a normal thing to do and will earn you respect and praise. But spending $50k and not working for a couple years while traveling around the world will not come with the same amount of support.
I’ve talked to many in Big Tech who tell me they literally have millions in the bank. Why is it so hard for them to walk away? A big part of it is that in a way its “easier” to keep working and spending money on high-ticket items than to trade some of that money for time.
This is why “what is your rich life?” can be so helpful. It is a way of giving yourself permission to express your own preferences.
You can start small too. Ramit’s first answer to his question was that he wanted to order appetizers every time he went out to eat. He grew up never being able to order appetizers and to him, that felt amazing. Now for him, it’s being able to fly business class every flight.
I stumbled into a “rich life” that I didn’t know I wanted by becoming self-employed. I’ve written about how the biggest thing that held me back from leaving my job was that I couldn’t imagine different possible lives. My day-to-day reality reinforced this because money was my biggest lever to improve my life: trading it for convenience. Do this long enough and you start to think that money is the answer to all of life’s challenges. For me, it wasn’t.
Leaving my job revealed different preferences for a “rich life” because I had a radical increase in my available time and my control over it. I no longer felt the urge to trade money for convenience because lack of time wasn’t an issue anymore. I realized that my rich life is simple things like waking up without an alarm clock, rarely having meetings, not having to work for someone else, and being able to live for a month or longer in different countries.
As I’ve been asking this question I’ve also been challenging myself to think more externally and long-term about this question. What are the things I might uniquely be able to do for others? For example, I’d love to get to a point where I could give grants (and support) to others similar to what Tyler Cowen is doing. This may require more money but it may not. I sense this would give my life a lot more richness than other ways of spending money.
The question is a fancy of way of figuring out what we value. I figured out that I value time and space to work on my own projects. This is not “normal” for people my age and thus I wasn’t going to accidentally end up in this situation. But once I found it, I can start to reorient my life to continue to make it happen. And one way to do it is to radically cut costs on things you don’t value. And this is the other side of Ramit’s idea:
“A Rich Life means you can spend extravagantly on the things you love as long as you cut costs mercilessly on the things you don’t.”
His system is a way of spending money in a more aligned way to your actual values. Which can be a radical life upgrade if you don’t have average preferences.
Some Rich Life Examples
As I’ve asked this I’ve been entertained by other’s responses. Here are some examples:
By able to go to any Harry Styles concert at any time
Never have to worry about the cost of a flight (coach, for now)
Being able to pay for an house rental for my friends to fly out to every year
Being able to pay for my kids to go to any college
Being able to work in any job I want after 40
Being able to have tiny homes on my property friends could stay on
Being able to have a chef meal prep for me each week
Having a massage every week
And my favorite: Having a driver pick me up with drinks and a cool towel at the end of my run (yes, really)
When people come up with answers that are hard to reach in the present, I usually ask a follow-up, “How could you take action on this in the next month in a more accessible way?” This is really all that matters.
The quicker you can take action on something that is unique and important to you, the quicker you get to experience what it is like not only taking a stand for something you value but also taking a stand against the pull of default preferences.
Once you do that? Who knows where it will take you.
+I’d love to hear more answers to this question. Either comment below or hit reply and let me know what you think? I’ll share some of the answers next week.
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ICYMI - last week, my thoughts on money and income streams.
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Loved this - I think about where I spend my money and how that brings me fulfilment in the way that I value most. It also makes you realise you need way less and then you may be willing to spend way more in areas others might not (e.g. for me physio, massage, skateboards, oil painting supplies, drawing classes etc)
Well-written piece that covers a topic I frequently have thoughts on; I appreciate you sharing!
As a follow-up: how often is revisiting the “rich life” healthy?
(Context: while I am living well now, I wonder the “what’s next” -- I straddle the line of “continue earning a solid salary, until I can be FI...” and “now or never; my expectations will only rise to the point of FI being unattainable...”)