The Best Financial Advice You’ll Ever Hear

What's the number one thing that keeps. people broke? >> It's ignorance. It's not a lack of. intelligence. It's ignorance. >> Today, you are getting the best. financial advice you'll ever hear from. the man that changed the way that I. think about money. The way that I make. money. You're going to love this. 10. million copies sold. Unpacking the five. biggest takeaways. Let's go. >> Morgan. >> Morgan Hel. >> Morgan Hel. >> Morgan Hel. >> He's the author of the psychology of. money. >> Psychology of money. >> Psychology of money. >> Psychology of money. Like we live in a. society that it's very easy to. overspend. A lot of people are willing.

to give you credit cards, give you debt. Is very easy to have bad financial. habits. >> Instagram has basically become the new, you know, QVC. >> If you're buying these things, particularly on credit, you have bad. habits. You're getting yourself into. debt. You know, every dollar of debt. that you have is a piece of your future. that somebody else owns. You can be one. of the richest men in the world and have. no independence. Morgan, what do you recommend we do. every time we get a paycheck or get. paid? >> I view savings as an expense just as I.

would view rent or food or whatnot. Anytime in finance that you can automate. it. So, automating your bank and say. every paycheck you're going to move $50. to savings, whatever it might be, and. making it automatic. What are the odds. that at least one of these happens to. you over the course of your life? Job. loss, divorce, medical illness, weward. children, living through a giant. recession, whatever it might be. What. are the odds that at least one of those. will happen to you? And the answer is. 100%. And we I think a lot of people. don't want to admit that. And when that. happens, the savings that you have is. going to be more valuable than anything. that you've that you've ever had.

>> And for the person who's still thinking, I mean, what's the point? I can barely. pay my bills. What do you want them to. know? >> The first thing I want you to know is I. feel you. I empathize with you. I don't. judge you. But the second thing you. should know is that it is. >> Hey, it's your friend Mel and welcome to. the Mel Robbins Podcast. Hey, it's Mel. My team was showing me. that 57% of you who watch here on. YouTube are not subscribed yet. Could.

you do me a quick favor? Hit subscribe. It's free and that way you don't miss. any of the episodes that I post here on. YouTube. It also lets me know that. you're enjoying the guests and you love. the content that I'm bringing you. because I want to make sure you don't. miss anything. So, thank you. Thank you. Thank you for hitting subscribe. All. right, you ready? I bet you are. So, let's dive in. Morgan Hustle, welcome to. the Mel Robbins podcast. >> Thanks for having me, Mel. Happy to be. here. >> I am so glad you're here. Thank you for. jumping on a plane. I am a huge fan. I.

got to give a shout out to my husband, Christopher Robbins, because he was the. one who first introduced me to your. work, The Psychology of Money, Changed. My Life. I am so excited for your new. blockbuster, The Art of Spending Money. And we're going to get into all the. takeaways from your mega bestsellers, but I wanted to start by asking you, Morgan, if you could speak directly to. the person who is here spending time. together with us right now and share. with them what could be different about.

their life or the life of somebody that. they care about that they share this. episode with if they take everything to. heart that you're about to share with us. and teach us today and apply it to their. life. I think it would be that your. ability to feel wealthy, to feel rich, to be financially independent is. absolutely in your control. It doesn't. matter who you are, where you're from, how much money you make, what your job. is, you can do it. And we I think we've. told ourselves for generations that in.

order to become rich, you have to have. the right educational background. You. have to have the right career. You have. to come from the right family. And I. don't think it's it's true. It's not. about how smart you are. It's about how. you think about money. It's about how. you behave. and behavior is in. everybody's control. >> I don't know why I believe you, but I. do. Like I literally. no matter how in debt you are, no matter. how old you are, you can learn. And. that's kind of one of the big lessons. I'm going to talk about that I've. distilled from your work that has. changed my life and my relationship with.

money and the way I think about money, the way I save it, the way I spend it. It doesn't matter the starting point at. all. Lesson number one that I've learned. from you is you can get good with money. You believe that? >> I've seen it time and time again. And. there are so many examples of it. Let me. give you this example here. An ordinary. person doesn't have a good education. Maybe they didn't even graduate high. school, let's say, but they have good. financial behavior. They can think long. term. They can keep their expectations. in check. They're patient. They have. those behavioral qualities. That person.

can do very well. But the person who. went to Harvard and got an MBA and went. to work on Wall Street has the best. education, the best connections, the. best experience, that person can easily. go broke. and they do not uncommon for. that to happen and that is not true in. other fields. It is impossible to think. of an ordinary person who didn't go to. high school, didn't go to college. performing open heart surgery better. than a Harvard trained doctor. That's. impossible. That will never happen. But. it does happen with money because it's. not about what you know. You don't need.

to know the secret formulas. You don't. need to have secret connections. If you. just get your behavior right and your. thinking right, you can do well. patience, keeping your expectations in. check, not comparing yourself to other. people, using money as a tool to live a. better life instead of a yard stick to. measure yourself against others by it's. very simple stuff and it's all in your. head and it's I think it's it's 99% of. what people need to know to do well with. money is in your control. Well, I think. one of the mistakes that I made for a. very long time, particularly before I.

bumped into your work, is I believed. that there was some secret formula, that. there was some private club for rich. people, that it was about who you know, where you went to school. And what I. love about your work is that you. basically say, "No, no, no, no. You're. focusing on the wrong stuff. There are. actual behaviors that we can learn that. will help you get good with money.". >> Exactly. And they're not that difficult. either. They're in your control. It's. not to say that they're easy, but. they're simple. And so just just a.

couple of the behaviors. If you have an. ability to focus internally on your own. goals rather than constantly comparing. yourself against others, if you can save. a little bit of your money, live even. slightly below your means, invest that. money and be patient. Just those things, just those very that's a kindergarten. list of topics that I just gave you. That's not a bunch of Greek formulas. It's not a bunch of Wall Street. gibberish. It's not a bunch of acronyms. These are very simple things and that's. it. Part of this too is redefining what.

what I mean by financially successful. I'm not talking private islands and. private jets. But for most people, what. they actually want if you said, "What is. your ultimate financial goal?" They. would say, "I want to have a stable. housing for myself and my family. I want. to have a little bit of cushion to fall. back onto if I were to get laid off or. have a medical emergency. I want to be. able to have a dignified retirement. someday. I want to be able to spend time. with my kids. Those are very good. financial goals. And that level of. wealth and success, I think, is in. within everybody's control.

>> Well, you said you wanted to teach us. how to use money as a tool. >> Yes. >> To live a better life versus using it as. a yard stick. >> to measure yourself against others by. >> Correct. And that's one of the core. things you're going to teach us how to. do and why this is so important today. >> Of course. And it's easier said than. done. It is so natural for everybody to. compare yourself against others. For me. to measure my level of success by not. saying what do I have but but by saying.

what do I have relative to that guy. Not. how not how not how comfortable is my. house but by saying how big is my house. relative to that person over there to my. neighbor to my co-orker to my siblings. And one of the problems that makes it. more difficult today than it's ever been. is that it used to be for my parents'. generation, my grandparents generation, when they compared themselves to other. people, it was relative to their. neighbors or their co-workers, it was a. pretty small group of people. Maybe a. couple people who you saw on TV or heard. about on the radio. But now today, just.

everybody, including myself, their. comparison group is the most. sophisticated algorithm on Instagram or. Tik Tok. And so no matter how well. you're doing, no matter how great your. house is, no matter how much money. you're making, you turn on Instagram a. 100 times a day like everybody else, you. open it up and there is somebody out. there who looks better, happier, more. successful, more beautiful than you are. And so this topic, I think, has always. been true. It's always been important. It is more important today than it's.

ever been. the idea of keeping your. expectations in check because it's. easier today than it's ever been to let. your expectations just spiral out of. control. I see this with my own kids. My. nine-year-old son, his when I was. growing up, normal people drove old. pickup trucks and rich people drove new. pickup trucks. That was that was like. the definition in my head. Like if you. had a new pickup truck, like, oh, there's a rich person. My son who's. nine, his definition of rich is like a. private jet in a private island because. he watches Mr. Beast and it's like, oh, sit in the circle and you'll win a. million bucks kind of. It's a completely.

different level of expectations than. even I had 20 or 30 years ago. And so. it's. >> and the hardest thing you're gonna have. is that even though you're one of the. most compelling financial experts on the. planet, your kids won't listen to you, Morgan. >> No, of course not. >> Of course not. No. I think that's really. important place to start because you. have already. dropped so many takeaways and one of. them was developing a skill set of.

looking inside yourself for what matters. rather than looking outside yourself at. Mr. Beast or what's on the social. algorithm or what your neighbor is. driving for that yard stick. But you did. mention this sense that you're falling. behind. >> Yeah. And so many people today in. particular are feeling like they're. falling behind. I mean, I have we have a. 26-year-old and a 24 year old and they. are already feeling as though, okay, I'm. not making enough money and how am I. ever going to buy a house and how am I.

going to pay for a life? If the person. listening has that sense that they're. falling behind, particularly if you're. older and you say it's too late, like. I've already blown it, Morgan. What do. you want them to hear right now? I think. there's a couple things. One is empathy. because there are areas in life where. particularly a lot of people in their. 20s, 30s, and 40s are falling behind. relative to previous generations, particularly something like home. ownership where it was more attainable. in previous generations than it is has. been particularly in the last couple of.

years. So empathy, this is not me. saying, "Oh, you should just feel. better. You should just be more grateful. for what you have. You you actually are. doing fine." There is some empathy that. has to be involved here. And also for. people that thought they were going to. be able to retire at a certain age and. then the cost of living has gone up so. much or medical bills are at a certain. state that you're realizing oh my god I. don't have enough money right. >> to be able to retire and so it is. important to basically go these are very. real feelings that people have right now.

and so if we start with empathy where do. we go next Morgan? Well, I think you. start with empathy because if somebody. feels like they're falling behind, that's their truth. But I think it's. it's important to realize, too, that all. happiness is just the gap between. expectations and reality. >> All right, say that again. All happiness. >> all happiness is the gap between. expectations and reality. You have the. life you're living. You have the life. you expect to live. In between there is. is is where you can find some level of. happiness. And the wider that gap is, the more miserable you're going to feel. >> Okay. So, let's talk about somebody who. is in a situation where they thought. they would be further along with their.

savings and they're starting to panic. because they're worried that their money. is going to run out before they die or. they're not going to be able to retire. How do you use that happiness definition. right now if that's the reality? >> This is not true for everybody. This is. not black and white, but there are a lot. of these cases, I would say the majority. of these cases where the reason that. person has not been able to save as much. as they thought is because their. expectations for many years probably. have been spiraling out of control and. they were spending more money than they.

should have been because they were. trying to chase who they wanted to be. even if it wasn't necessarily the level. of lifestyle that they could afford. And. so they were renting an apartment that. was very nice because they had an. expectation that that's where they. should be and they were comparing. themselves to other people even if it. was kind of out of their budget. They. were traveling and dressing and eating. out in a way because that's who they. felt that they should be even if they. couldn't necessarily afford it. >> Morgan, you're calling us out here. >> I'm calling everybody out. Yes. I've. I've been in this situation, too.

There's no shame in it. This is a very. common thing that I think everyone will. experience. And I think a lot of why I. got interested in this topic, every book. that I've written started with looking. in the mirror and being like, when have. I been envious? When have my. expectations spiraled out of control? No. one is immune to this. So there's. nothing to be there's nothing to be. ashamed of. >> So there's a little bit of cuz cuz you. know, just in full disclosure, I entered. my marriage with $10,000 of credit card. debt that my husband did not know about.

and then proceeded to hide it from him. But the truth is, I just walked my. credit card into stores and bought stuff. I didn't need with money I didn't have. >> And then even if I look at what happened. to my husband and I when I was 41 years. old and his restaurants were going under. and taking our house and our entire life. savings with it, the truth is we did. spend a lot of money we didn't have. We. did rack up that debt. And I remember. several years later as we were starting.

to climb our way out, there was a level. of. relief when I could say to myself both, I'm responsible for this mess. I can see. how I made dumb decisions at the time. because I had outsized expectations for. how I thought things were going to go. And. admitting it to myself in a weird way. made me feel like, well, if I've got the.

power to make dumb decisions, then maybe. if I wake up and recognize that I've got. the power to make better decisions. >> Yes, that's that's absolutely true. What. happens with expectations for a lot of. people? Yeah. >> Is look, if I said I want to be a 10%. better dad, that's a good goal. But what. does that mean? How what does that even. mean? How how do I track that? How do I. measure? That's impossible. But if I. said, "I want I'm living in a. one-bedroom apartment and I want a. two-bedroom apartment." That that makes.

sense. If I said, "I want three new. pairs of jeans." That's easy to wrap. your head around. Money is so. quantifiable. It's so easy to just say, "Uh, right now I'm making $20 an hour. I. want to get to 25.". >> Got it? >> I can measure it so quickly that it. becomes this thing where we chase money. because it's so easy to measure. And we. chase spending because it's so easy to. contextualize. And so if you don't have. a good idea of what a good life looks. like, >> it's very easy to just say a good life. is one in which I have more money.

because it's so much easier to. understand than how can I become a. better dad? How can I become a better. parent, a better spouse, a better. friend, a better worker? That's hard to. wrap your head around. Will Smith had. this great I thought it was so astute. and profound. He wrote this in his. biography. He said when he was depressed. and poor, he could tell himself, "If. only I had more money, all my problems. would go away." And that gave him hope. I just need to go out and make more. money. And once I had more money, all of. my depression, all of my doubts would go. away. And then he became rich and he was. still depressed. And then he said he.

lost hope because he couldn't say, "If. only I had more money." And so we chase. money because it's so easy to wrap our. heads around. and we chase it with the. idea that it's the solution to all of. our problems. Even if it can solve some. problems, but not the biggest ones, the. hole that you're trying to fill, the. psychological hole that you're trying to. fill is probably not going to be filled. with money. >> So, the takeaway that I've got from what. you just shared, which is much deeper, is that if you're sitting there. listening and you're saying, "I'm so. behind. I'm so behind. I'm so behind.".

There's two things to do. First of all, you're in the right place because we're. going to be learning from you exactly. what to do, Morgan. And one of the first. things you said is it's not too late. because there are simple, you said. kindergarten level behavior changes. >> that you can make that will help you be. good with money. But the deeper thing to. ask yourself is what is the hole that. money is trying to fill for me? >> Yes. And are there things that I can do. right now in terms of redefining what it.

means in my 20s or my 60s to be a good. friend or to have a good life or to take. better care of myself that don't. involved hitting myself over the head. about my financial life. >> Exactly. That's it. >> Got it. You know, one of the things I. want to talk about before we really. start unpacking some of the tactics is. that at this exact moment in time, it is. a really challenging. moment when it comes to money, finances,

the job market. If you. really identify with that sense that I'm. actually scared, I'm scared I can't get. a job. I'm scared about being able to. make it. Where do you start, Morgan? I. think if somebody says, "I'm scared. about my money." Yeah. That's their. truth. And you have to empathize with. that. If someone were to say, "It is. worse now than it was for previous. generations." That I think you can push. back on a little bit more. And you can. say, "So, because you could look back at. how people lived in the 1950s and the. 1960s and the 1970s and say, look, I I.

empathize with how scared you are today. It is probably not true that we are. worse off today than we were in previous. generations." You know, I one thing I've. always thought is very interesting is if. you ask most Americans, when was peak. middle class prosperity? When was when. were the glory days? A lot of people. will point to a lot of people will point. to the 1950s is what they'll point at as. peak middle class prosperity. But what's. interesting is that if you looked at how. the average middle class family lived in. the 1950s and who we are aspiring to.

want to go back to, it is a quality of. life that we would consider abject. poverty today. I mean, the average. middle-ass family house in the 1950s was. about 800 square f feet for you, you. know, two bedrooms for you and your four. kids, no air conditioning, no washer and. dryer, no go on down the list of what it. was like back then. They were very. happy. They were very content with it. back then, but it's not a level of. contentment that you would have today. And so, a lot of what what is with with. finance is that it's not necessarily. that these things will make you happier. if you were to have more money. It's not.

necessarily that you would be happier. And that when most people think, "Oh, if. only I had a bigger house, then I'd be. happy." And when you imagine yourself. taking a fancy vacation, you imagine how. happy you would be. The emotion that. you're actually thinking about is not. happiness. It's contentment. If I. imagine myself in Hawaii with my kids. next year, and I'm just envisioning that. in my head, I can come up with this. emotion inside and be like, "Oh, that. would be great. I would be so happy with. that." But actually, the emotion that. I'm envisioning is being content with. that. It's being in Hawaii and saying,

"This is enough. This is all I want. I. don't want anything else." What actually. happens to people if they do go to. Hawaii with their kids is they're. sitting on the beach and and they say, "If only I had stayed at the nicer. hotel. If only we had stayed for a. couple days longer. If only we had eaten. at the nice nicer restaurant last night. How come those people got a better room? How come they got better beach chairs?". And so, you're not actually content with. the experience that you're having. And. so, when you realize that what you're. actually chasing is contentment, you're. not chasing more. you're chasing just I. I just want to be happy with what I.

have. The first step is realizing that a. lot of your money woes and a lot of what. you're feeling in terms of falling. behind and a lot of your gap between. what you have and what you want is a. solely a factor of your expectations. What if you don't think you're good with. money though? Like cuz so because for a. long time I had a story in my head. I'm. just not good with money. Like I I'm bad. with money. And let's say you're. somebody who's gone through a divorce. You're financially wrecked. You gave all. the power to your partner. Now you're.

starting over. Can anyone get good with. money for real? >> You can if you want to. And I think the. people who say, "I'm not good with. money." don't want to be. That's that. they use that as their excuse to say. >> Come on now. Really? >> I think that they use that as their. excuse. This is not a difficult thing to. wrap your head around. This is very. basic arithmetic. Spend less money than. you make. Save the difference. Be. patient. That's that's it. This what. we're talking about. You could explain. this to a 5-year-old. And so if you're. saying I'm not good with money, it's. you're making a choice to not get.

better. Nothing is easier than bad. financial habits that you want to have. Like we live in a society that it's very. easy to overspend. A lot of people are. willing to give you credit cards, give. you debt. It is very easy to have bad. financial habits. And if you want those, that's an easy thing to do. As soon as. you actually want it, this is not a. difficult thing for anybody. This. conversation reminds me of something. that I saw a musician say. I wish I. could remember who it was, but I saw a. musician saying, "Everybody loves it. when I tell the story about how I had to.

live in my car for a year while I was. just starting out, but nobody actually. wants to live in their car for a year. >> Nobody ever wants to do it. >> while they're starting out, >> right?" And so a lot of these things for. people who are in debt, you you you are. one of these people, you can empathize. with this, I know, is that yes, it's. going to be a sacrifice to get out of. this. This might require a downshift in. lifestyle relative to what you are used. to. And so for a lot of people who say, "I'm not good with money." I think what. they're what they're actually saying is,

"I don't want to make the sacrifice. I'm. unwilling to make the sacrifice to do. it." And I think that is that is true. Now what is true the reason that you. like the story about the guy living in. the car is because I think people. actually love stories or doing this. themselves of suffering for a noble. goal. >> I think this is true in so many aspects. of humanity that it's not that people. like humans are very willing to suffer. and put in hard work and sweat if the. goal is noble enough. I'm wondering if.

the noble goal for getting good with. money is so that you'll be content with. your life, not so that you'll make a lot. of money. >> To me, the noble goal, what it's always. been for myself, and I think this is. true for the majority of people, is. independence. I have no desire to be. rich in the sense of a big a giant. house, flashy cars. I I I have no desire. to live that life. I want to be. independent. I want to wake up every. morning and say, I can do whatever I. want today. And I'm using money as a. tool to foster that. That's always been.

my goal. Now, that's very different from. saying, "I want a bigger house," or, "I. want a house." You know, it's it's it's. a goal of independence. And my. grandmother-in-law, who had no money, was completely independent. She was. beholden to no one else's influence but. her own. And she lived an amazing life. because of it. There are billionaires, there are deca billionaires out there. who are completely beholden to the. opinions and the influence of other. people. And so there are a lot of people. for whom money is a is a financial. asset, but it's a psychological.

liability. It completely controls their. identity and who they are. And there's. other people who actually don't have. that much money. They have no. psychological liability. They're in. complete control over their personality. and their goals. I've I've often used. this. It's a very imperfect idea, but I. think about if I was on a deserted. island, maybe with just me and my. family, nobody else could see how I was. living. Nobody else could see my house. Nobody else could see my car. It's. completely invisible to everybody else.

What kind of lifestyle would I live? If. nobody else was watching, what kind of. lifestyle would I choose to live? And in. that situation, myself and I think most. people would instantly shift from. uh status to utility. I have no interest. in status if nobody can watch it. I have. interest in utility. >> And so the kind of house that I would. want to live in, the kind of car that I. would drive would instantly shift from. what are other people impressed by. towards what is actually going to foster. a good life for myself and my family.

And they're very different things. You. could be you can make a hund00 million a. year and feel like you're falling behind. if you're chasing other people. There's. a great quote from the comedian Jimmy. Carr where he says, "Everybody is. jealous of what you've got. Nobody is. jealous of how you got it. And that's. another one of these points. It's very. easy for me or or you to look at people. who are more successful than we are and. say if we had that level of success, I. would be happier. Because when we look. at them, I can I can see your house. I. can see your car. Can see your clothes.

I can see the material aspect of your. success. I cannot see the hard work and. the stress of how you got it and what it. took and what it took to get there. So, this is one of the problems with envy. and financial envy that we have for. other people is that you don't have a. good sense of what their life was and. what else is going on in their life. outside of of money. And this is why. some of the studies that are so hard to. wrap your head around, there's so hard. to even believe that these are true, the. studies that show that people who are. wealthy are not necessarily as happy as. you would think they would be. >> But here's the thing. When I hear that.

study, I'm like, who cares? Because I. just want to be wealthy. You know what. I'm saying? Like, like, let them be. unhappy. I'll be the one person who's. wealthy who's happy. I promise you, Morgan. >> Or there's a lot of people who say, "Okay, that might be true, but let me. experience it myself.". >> Yes. >> They're like, they're like, "Let me get. there." Because I think the pull is so. profound in our heads that if only I had. more money, these problems would go. away. It seem It seems like, how could. that not be true? And I think the people. who have experienced it would say, "No, it can be true. Just much less than you. thought." As a financial expert with.

more than two decades of experience of. research and writing and teaching this. topic, what's the number one thing that. keeps people broke? >> It's this overwhelming sense of keeping. up with other people and this. overwhelming sense of other people have. more than I do and they're doing better. than I am and they're happier than I am. And that treadmill has has no end there. There's no end to that treadmill where. you're going to say, "If only I had this. much money, then I'd be content. If only.

I had a bigger house, then I'd be. content." Once you're on the treadmill, it's it goes on forever. And if you're. on it, it's almost impossible to feel. like you're doing well with money. There's no amount of satiation of if you. got a raise, then then you'll be okay. If you if you bought if you bought these. nicer clothes, then then I would be. happy. Then I would be content with it. you can be content with a pretty low. level of material items. Of course, there's a basic need of food and. shelter, whatnot, above what you need.

You move into the the realm of what you. want. >> Well, I think we're all there. Like any. one of us, if we're being honest with. ourselves, can walk into our closet and. say, "There are roughly 12 pieces of. clothing that we wear all the time.". Yes. >> And the rest of it were all things that. I wanted in the moment or I thought I. needed or I thought would impress. somebody if I were going to a wedding. But you didn't actually need it. And. that is what keeps people broke. That's. it. It's the simplest thing. And I think. people know it. They may not want to. hear it, but they know it. That it's. your desire to keep up with other. people.

>> Your mega bestseller, The Psychology of. Money, changed my life, changed the way. I think about money, changed my mindset. about money. And I want to read to you. on page 41. This is the chapter never. enough. >> Yep. And you write, "The hardest financial. skill is getting the goalpost to stop. moving. If expectations rise with. results, there is no logic in striving. for more because you'll feel the same. after putting in extra effort. It gets.

dangerous when the taste of having more. More money, more power, more prestige. increases ambition faster than. satisfaction. In that case, one step. forward pushes the goalpost two steps. ahead. You feel as if you're falling. behind and the only way to catch up is. to take greater and greater amounts of. risk. Can you unpack that for us? >> It's funny when you read that. I I. remember writing those sentences. I. remember where I was when I wrote those.

specific. I was in my basement at a. house in Virginia where I wrote this. book. And um I I remember writing that. and thinking I I mentioned this earlier, but so much of what I write about is. self-reflection. And it's not that I've. mastered these things and I'm just. trying to show you how smart I am. It's. like I wrote that because I've fallen. for that trap all all the time. It's. true that the expectations game has has. no ending. There's there's always. somebody who is getting richer faster. than you. And if you're always just. seeking validation, if your key to.

happiness is always if only I had what. that person has, you're never going to. be satisfied with with what you have. And the the more dangerous thing I think. is once you are once you have that. mindset that if only I had more, I would. be happier, then it kind of grows. exponentially because if if you tell. yourself, I'll be happy once I have. $10,000. And then you get 10,000 and. you're like, oh, maybe it's a. hundred,000. If if I had $100,000, then. I'd be happy. and then maybe you're. fortunate enough to get that money and. then it's oh maybe it's a million it. grows exponentially.

>> and so I also think that there is this. thing that happens at least it happened. for me that as I started to feel like I. wasn't under such crushing debt or I got. some reward at work a small bonus. whatever I immediately upticked the. amount of money or the expense of the. thing that I was already buying. >> right and and part of that I think is is. fine I think people can spend money in a. way that's going to make them happier. There are some people who would give you. the advice of like it's never going to. make you happier. Just save everything.

that you can live like a monk. And I. that that's not my message. I think you. can spend money as well. I I found ways. of spending money in my own household. I'm like, "Oh, that was that was well. worth it." But I also back to the. expectations thing. I grew up around. Lake Tahoe, California. Okay. >> And this was before tech money where. Tahoe and Truckucky, the town that I. lived in, was not very wealthy. It is. now because tech money came in, but back. then it was very much a middle class. town. And then I I went to college in. Los Angeles and I couldn't believe. making that shift from middle class.

mountain town to Beverly Hills kind of. area. What it did to my e to my. definition of rich. As I said earlier, it used to be that my definition of rich. was a new pickup truck, a new a new. F-150 was that's a rich person. And I. moved to LA and it would just it just. exploded. No matter how successful you. are, you pull up to a stoplight and even. if you're driving a Lamborghini, there's. 17 others right there and you never feel. like you're you're getting enough. And. the conditions for happiness, I think, were much greater in that middle class.

town. Now, I was I did a pretty good job. in LA in my own mind of still keeping my. expectations in check. I think a lot of. that was fear. I always had a fear that. I was never going to make it. And so I. was saving as much as I could just out. of a sense of of of fear. Um but if I. look at everybody else like who who who. was happier? It was the people who were. living a modest life, enjoyed their. family, had good time with their. friends, focused on their health, and. lived what was by comparison to others a.

very modest life. And so I think about. that now of like what should your. aspiration be? It's interesting with. parents. If you ask parents, "What do. you want for your kids?" Particular if. their kids are young, most parents will. say, "I I I just want them to be happy. when they're older." And then if you. say, "Well, do you want them to be rich. and successful?" The parents will. probably say, "Well, yeah, that would. probably be great, but I just want them. to be happy." And I think parents say. that because you know there's a. difference between the two. You know, there's a difference between being rich. and being happy. You've experienced it.

as an adult. Mhm. >> And so even if your kids are middle. class, doing modest by expectations, you. know that they can be happy if they're. keeping their expectations in check and. they're focusing on the things that. matter. >> Well, what I love that you keep coming. back to is that your definition truly. for the word happiness and the way we. casually use it is contentment, which. means you are in the present moment of. your life. >> Yes. >> And you are not seeking something more. you're able to be okay with where things.

are and where things aren't. How can. somebody. figure out why they're buying something? Because I think most of us mindlessly. spend money because in the moment we. want that thing or we're bored or. stressed or whatever. Like most people. don't actually know why they're spending. money. So how can you Morgan start to. become conscious of exactly why you're. spending your money on things? I think. with every dollar that you spend, it's. always one of two buckets. And you.

should ask yourself which bucket this. falls into. Is buying this thing going. to make me and my family happier, or am. I buying it to impress other people, most of whom are strangers? It's it's. always one of those two things. If I'm. buying food, that's for me and my. family, clear as day. If I'm buying uh. new clothes, a lot of that might be or. new car, a lot of that might be my. attempt to impress strangers, most of. whom are not paying any attention to you. whatsoever. It's always one of those two. things. Do you want to use money as a.

tool to live a better life, or do you. want to use money as a as a as a yard. stick of status to measure yourself. against others by? It's completely. normal and natural to have that. But. when you realize that that's the game. that you're playing, that a lot of these. aspirations that I have are to impress. people who are not even paying attention. to me and they're not paying attention. to me because they're busy worrying. about themselves. They're busy in their. own heads saying, "Are people impressed. with me? Are is are people looking at. me?" And that is a that's that's a huge. part of what's going on inside these. people's heads is that their biggest.

aspiration in life is trying to impress. strangers who are not even looking to. begin with. Well, that was a huge that. was one of the big lessons from your. work for me, which is every dollar you. spend falls in two buckets. >> One of those two things. >> You're either spending money to make. other people think something about you, or you're spending money in a way that. makes you feel good about you. How do. you know the difference between the pair. of jeans that you're about to buy that. you don't need, but they look really. cool, and you know, you think you're.

going to look good in them, and you're. also feeling bad about your body, so you. hit spend. How do you dissect that? Because I think a lot of us don't. understand exactly why we're buying. things. >> I had this experience in in college. I. wrote about it in my first book, The. Psychology of Money. I was a valet at a. five-star hotel in Los Angeles. >> I love this story. >> It was it was so much it was such a cool. job. There's never been a better job. I. would I would go back and do that job. again. It was so. >> Why did you love that job so much? >> It was two things. I got to drive very. fancy cars and in the mind of a.

19-year-old boy parking a Ferrari, there's there's nothing better in the. world. And two, I didn't really realize. this uh explicitly at the time, but it. was my first window into the psychology. of very wealthy people. And that to me. was absolutely I learned so much during. those years age, you know, 18 to 22. And. one of the things I realized and it I I. I remember when this hit me during a. shift that if somebody came into the. hotel driving a Ferrari or a. Lamborghini, I would stop and look at. the car and be impressed. But I would.

never look at the driver and say, "That. guy is so cool." What I would do is I. would imagine myself as the driver. And. I imagine that if I was driving, people. would look at me and say, "Look at. Morgan. He's so cool." And one day I was. like, "Do do you see the irony? I don't. care about the driver, but I want to be. the driver because I think people will. care about me." And it was this stark. realization of like nobody is thinking. about you as much as you are. They're. busy thinking about themselves. And even. when people are impressed with your. house or your car, what they're actually.

doing is saying, "If I had Mel's house, if I had Morgan's car, then I would be h. then people would look at me." And so. the idea that everyone is pretty selfish. and self-centered in that sense where. they're not impressed with you. They. might be impressed with your stuff. because they're imagining having your. stuff. Once I came to terms with that, my desire for impressing other people. plunged. Didn't plunge to zero. I don't. want to walk around in a burlap sack. I.

want to impress my co-workers and my I I. want to look professional. I want to, you know, back then when I was trying to. find a girlfriend who became my wife. Then then it was very important. But the. idea that no one's thinking about you as. much as you are will collapse your. aspirations in a wonderful way and it. will get you towards contentment much. quicker than anything else. >> That is such a mindblowing realization. because if we're all chasing all this. stuff on the outside so that people look.

at the stuff that we have and then think. we're amazing. >> Yeah. You're proving in that simple. example that's not how the human brain. works at all. They think the stuff is. cool. They don't think you are. >> Everything being a competition for. resources. It's it's it's rarely saying. being impressed with another people. Not. not never. And this is I think it's the. same with your spouse, your partner. My. wife does not care at all what kind of. car I drive. She doesn't care about what. new jeans I bought. She couldn't care.

What she cares about is am I a good dad? Am I a good spouse? Am I a good friend? Am I patient and understanding and. helpful? That's it. And I think you can. extend that analogy to anything else in. your life. Your friends, your. co-workers, your relationship with your. children. We spend so much time saying, "If only I had nicer things, bigger. things, better things, then that would. be better." What matters, and people. know intuitively that this matters, is. that you are a good spouse, a good. friend, a good parent. If you do want. strangers to be impressed with you, they're not going to be impressed with.

your car. they will be impressed with. how kind and caring and helpful you are. to them. Now, that's easier said than. done, too, because I think the. overwhelming urge is, "Yeah, Morgan, like, I might I I might believe what. you're saying, but I still think this. car would make me happy." Like, it's. such a powerful thing that we have that. it's it's not something that you can. just get over immediately. And even. after doing this for 20 years and. writing these books, it's not something. that I've been able to fully overcome. And another way to prove this point is. that I guarantee you in your social.

circle, there is somebody that you know. that has a huge house or an amazing car. and you would not want to be near them. and they're miserable. >> And so just having all that stuff that. you want doesn't make you like them. And. so I think intellectually we know this, but if you have bad spending habits, how. do you change them? Morgan, >> I think you first have to ask the. question, why do you have bad spending. habits? What hole are you trying to. fill? What has buying these things done.

to your happiness in the past? And if. the answer is nothing, which is probably. the answer, trying to fill that hole. first, trying to answer that question. first. So, I think you have to kind of. start on the therapist's couch, literally or figuratively, and take a. look in the mirror and being like, what. am I trying to achieve? Who do I want to. become? Why do I want to be that? And. why am I striving for these things? And. for a lot of people, it's kind of like a. binge spending that has got them into. trouble where it's a stress relief. It's. a relief valve. >> And I think what the valve I think in.

your head, what you probably think it is. is if I bought these things, then my. problems would go away. And the truth is. that that might be true in the moment. For spending, it's almost never true. It's very rarely true that your. spending is going to fill any kind of. emotional hole that you have. And the. other thing is that if you're buying. these things, particularly on credit, you have bad habits, you're getting. yourself into debt. the new sweater that. you bought might give you a day or two. of happiness before it's either worn out. or you don't care about it much anymore, but the but the paying it off is going. to stick with you for years or months or.

even decades. And so that kind of thing. of controlling your future and. independence. You know, every dollar of. debt that you have from these poor. spending habits is a piece of your. future that somebody else owns. It's a. piece of your time that you owe to the. bank, you owe to the lender. And the. opposite of that is every dollar of. savings that you have, the reverse of. bad spending habits is a piece of your. future that you own, that you have. control over. Every single dollar, >> I viewed this since I was 17, that every.

dollar that I save, even if it was. literally $1. of my future that I gained back. >> That's always how it felt to me. And. that's always been my. uh my goal for saving and my motivation. for saving was I just want to be. independent. I just want to wake up and. do whatever I want. And I feel like my. savings has bought that. It's not when I. save money, it's not because I say, "Oh, I'm saving up to buy a new car." Even. though there there can be that and that. could be great. If I save $100, I view.

that as purchasing $100 of independence. I'm spending that money. It's giving me. independence today. >> And I think that can be an antidote to. bad spending habits. A lot of people. will say, "Why save money?" like they. they don't really understand the purpose. of saving money, >> right? Because if you don't have a lot. of money, >> it feels it feels useless. >> It's weird. Why would I put $20 away. from my paycheck because that's all I. can afford to do right now? >> It's all that you can do. And so it. feels like why even bother? I might as. well just yolo to spend spend all of it.

I think once you shift the mentality. from why save $100 to spend in the. future if I could just spend $100 right. now, why am I putting why am I delaying. this gratification if I could have it. immediately? If you view it like that, then I understand the mentality of yolo, spend everything. Why even save? Doesn't. matter. Let's just go into debt. Who. cares? Once you view it as at $100, you. are purchasing today $100 of. independence, $100 of peace, $100 of. sleeping better at night. >> Then it it completely shifts the game. And so if I save $100, that's not.

delayed gratification. that today in. this moment today and tonight gives me a. $100 of happiness and more contentment. today because I feel like I'm more. independent than I was before I saved. that money. And when you get back to I. think what most people want out of. money, >> oh my god, most people think the buying. the nice car is the flex. You're saying. >> independence is the flex. There's a. great quote from Nasim Taleb where he. says uh my only metric of indep of. success is how much time you have to. kill. And now, you know, there's there's.

obviously a spectrum of that, but that's. always been I I just want independence. And you can have independence at a. pretty low level of financial income and. assets. That was my grandmother-in-law. She had nothing and she had pure. independence. You can be one of the. richest men in the world and have no. independence. Completely beholden to the. opinions and the desires of somebody. else. And there are multi-billionaires. who are way less independent than my. grandmother-in-law. And that I think is.

a empowering message of like your. feeling of being independent is a is a. feeling. It's a story that you've told. yourself. >> It's not there. There there's no. financial level at which like okay once. you have this much money then you're set. free. You can be a multi-billionaire and. completely beholden to other people. You. can have very little money and have pure. financial independence in your head. Let's touch on investing because you. have a really great take on this. You. said that success in investing has more.

to do with long-term thinking and. avoiding jealousydriven behavior. >> Yeah. >> Why is that so powerful? >> All compound interest. So compound. interest is an incredible thing of just. you're growing your money over time and. it grows at an increasingly higher level. and that's how you become. Can you. explain that to the person listening who. may not know what that is? Cuz I know a. lot of people are going to share this. episode to people in their lives who may. have never ever listened to anybody when. it comes to the psychology of money or.

how to change your behaviors around. money. So what is compounding interest? >> So let me explain it very simply. We. have we have $100 and we earn a 10%. return on our money this year. So in one. year we have $110%. return. So you earn $10 in profit this. year. I'm also going to earn a 10%. return next year. So now I earn 10% on. $110. So my profit that year is 11. So. my profit in year one is $10. My profit. in year two was $11. The profit in year.

three might be 12 or $13. It's growing. every year because you are earning gains. on your gains. And if and if you extend. that over a lifetime over 30 or 40 or 50. years, the returns get absurd. And so. the example that I use in my book is. Warren Buffett, the greatest investor of. all time. He's worth over hundred. billion dollars. Nobody comes close to. the level of investing success that he's. achieved. 99% of his net worth was. accumulated after his 60th birthday. >> Say that again. >> 99% of his net worth was accumulated.

after his 60th birthday. Now when he was. 60, he was a billionaire. absurdly. successful by any metric, but he became. worth over a hundred billion dollars. from age 60 to he's 94 today. And so the. reason that's the case is that how. compound interest works, it's not. necessarily about what your returns are, it's about how long can you keep it. going. And I think what is so empowering. for ordinary people is that if you can. be an average investor for an above.

average period of time, you can achieve. absolutely incredible returns. And so a. lot of people when investing they look. well I can't compete against Wall. Street. I can't compete against all. these smart hot shots and the hedge. funds. They know more things. They can. earn higher returns that I can. And so. you become discouraged. The truth is. that you don't need to do anything. extraordinary with your returns. You. need to have extraordinary patience. And. so if you can be average for 30 years. you will end up in the top 1% of.

investors. My parents uh really. personified this. My parents are smart, educated people, but they have no. financial experience, no financial. education, no financial background, no. connections, no information that anybody. listening to this doesn't have. Uh, but. they have had extraordinary patience and. and self-control and discipline. So, they have been investing consistently. every month for 40 years. Never sold. anything. Every month they invest a.

little bit of money, leave it alone for. 40 years. If you look at their returns, they would literally be in the top of. professional money managers without. knowing anything, without having any. extra information that you and I or. anyone listening can't have because they. had the one skill that actually mattered. which was just patient patience and. discipline. And that's all you need. That's the only thing that you need. And. you know there's a there there's some. very interesting stories of professional. investors who I remember hearing the. story about this professional investor. who in any given year was never in the.

top half measured against his peers. In. any given year you look at this money. manager and you're like yeah did okay. Nothing extraordinary. But over 30 years. he was he was the best because that's. all you need. It's not about what you. earn this year. It's about how long can. you keep it going for is all that. matters. you know, having been $800,000. in debt and having leans on my house, I. and clawing my way out of it. You know, it's funny in almost every interview I. get asked, "How did you get out of. debt?" I'm like,

>> 15 years of just clawing away at the. bills and saving more than I spent. I. mean, it was lowering expectations for. my lifestyle. I mean, it was grueling. But now I notice that I'm afraid. to really do anything that feels. slightly risky. >> No. >> And I know there's a lot of people that. are worried about losing their money. And so if you have a mindset where. you're worried about losing the money.

that you have, do you still recommend that people. invest in the stock market? >> Yeah. Uh but it's always the question is. how much? And so I have that fear. I was. I've never been buried in debt. I've. always been a diligent saver, but I. probably have. And if you put me on the. psychologist's couch, you could maybe. pull a string of why this might be, but. I've always had kind of a worst case. scenario, prepare for the worst. mentality of everything that I've done. in life. So, I think that's why I've. been a big saver. And so, I have, if you.

looked at my entire net worth, I'm. trying to, it's probably a half, maybe a. little bit more than half in the stock. market. Most financial adviserss, if you. looked at somebody my age or my income, would say, "You can have way more than. that.". >> And I said, "No, no, no." Like, this. that's that's fine. That's plenty. Because I have this kind of worst case. scenario, yeah, thinking. And that's. fine. That works. That works for my. personality. My my financial goal in. that aspect is maximizing for how well I. sleep at night. I have no desire for my. tombstone to say he was in the top 5% of.

investors. He outperformed the S&P 5. I. I couldn't care less. I want to use. money as a tool to help me sleep at. night. That's the metric I'm going for. And so during periods when the market. has done very poorly 2008 2020 during. COVID, uh it didn't really have that. much impact on me because it was I was. never 100% in it. I always had plenty to. fall back on to if things happen. So I. have quite a bit of cash and bonds and. like boring basic savings. >> And look, you like you you can overdose.

on that. You can overdo that. But I. think the idea that most financials. advisors would just say, "Well, look, you know, if you want to maximize your. investing returns, this is this is how. much you should have in the stock. market." That can be true for some. people, but you really have to look in. the mirror with you and your maybe your. spouse and your partner and say, "Well, like what are we trying to maximize. for?" And I think there's no amount of. investing return that can compensate for. waking up at two in the morning and. saying, "Oh am I doing this right?

Have I gone too far?" There's no amount. of return, at least for me, that would. be worth it for that. I I would much. rather just use money as a tool to be. happy and look at my savings and think, you know, I have young kids right now. When I think about my savings, >> I think about if something terrible. happened to our family, my career, our. health, whatever it might be, this. savings is a cushion. >> to prevent hardship on my children. >> Now, everyone's in a different. situation, but for me at this phase of. my life, that's that's what it is to me. And so it's not about like, oh, am I.

maximizing investing return? It's, am I. using this as a tool to give myself and. my kids, my wife a better life. That's. what it is for me personally. >> Well, and that's what you said at the. very beginning. You either use your. money as a tool in order to live a good. life and to be content. And you've now. introduce this question, what am I. maximizing for? >> Right? and or you're using it as this. yard stick so that you can measure up. with people externally. >> Right. And there's. >> those are the two things.

>> and there's a graveyard of stories of. people most of them were very wealthy. people who the goal of their investments. was beat other people. >> Yeah. >> Their goal was outperform the next guy. and it completely backfired on their. they were chasing a goal that had no. impact on their quality of life and that. has that's never made much sense to me. It's always just been like, how can I. use this as a tool to be happier? And. there are a lot of people I explained in. psychology money how I invest my money. And I was maybe not surprised, but I. think it's so interesting to me that it. seems like their goal is making the.

spreadsheet happy. >> Yes. >> Their goal is so that you could come up. with a formula that says you're. maximizing return. And my goal has. always been. use it as a tool to live a better life. >> What is the shorthand version? I do I. know you do write about it in your book. for how you do invest your money. So I. invest in what are called index funds. which are very boring, very basic. You. basically own every stock in the. universe. Pick a public company. I own. it in this fund. Very low cost. And I. invest consistently every month, every.

quarter. And I've never sold anything in. any significant amounts. And I hope to. do that forever. I hope this is money. that I pass along to my kids or charity. or whatever it might be. And and that's. it. It's as boring and basic as that. And if you look at my entire net worth, it's a house, cash, index funds, and. shares of a company called Markeel, where I'm on the board of directors. And. that that's it. It's it's as simple and. boring as basic as you can get. The more. complicated your investments are, the.

lower the odds that you can actually. stick with them for 10 or 20 or 30. years. And getting back to compound. interest, like all that matters is, can. you stick with this? Can you keep this. going for years or decades? And I think. the simpler it is, the fewer levers you. have to pull in your portfolio, the. higher the odds that you're going to be. able to stick with it for a long period. of time. >> You keep saying the word patience. >> Yeah. >> And I think it's both patience with the. things that you're doing, patience with. yourself as your life is not meeting. your expectations. Yeah. Patience with.

your emotions when you feel like maybe. if you bought that new thing, those new. set of golf clubs, it'd make you feel a. little less depressed. Patience. Patience. patience for somebody who's. never invested. They don't look at their. money. They feel intimidated by this. What would you say to them, Morgan? >> One of the most important things about. investing in the stock market is that we. know historically you can do very well. over time. You can make a lot of money. in the stock market over time. Like.

anything else in life, there is a cost. of that. >> There there is a fee for doing that. And. when I say fees, I'm not talking about. fees to your adviser, fees to your. broker. The fee for doing well in. investing is putting up with a constant. never-ending chain of volatility and. uncertainty. That's what you're getting. paid for. That's the cost of admission. is putting up with the fact that I am. very confident that the stock market. will do well over the next 20 years. But. I have no idea when that return is going. to come. We might get all of that return. next year and then have 19 years of.

stagnation. We might get 19 years of. stagnation and then it all comes in year. 20. We have no idea when it's going to. come. And enduring that and putting up. with that. >> is the cost of admission. There are. other investments out there that have no. volatility. The savings account in the. bank, you have no volatility, very. predictable what your returns are going. to be. Your returns are going to be low. Those are the returns that you deserve. And so if you're willing to put up with. volatility and uncertainty and not. knowing, that's that's the cost of. admission. And historically, that has.

been a cost of admission that is worth. paying. that if you can put up with that. over time, 10, 20 years, you can do. extraordinarily well. >> You know, Morgan, you make a huge. distinction between being rich and. wealthy. Can you walk us through the. difference and why it matters? >> I think if you are rich, that by my. definition, that means that you have the. money in the bank to buy the things that. you want. You can make your mortgage. payment, you can make your car payment, you can pay for your dinners out, whatever you want to do. That's rich. Wealthy is independent. It's money in.

the bank that you're not spending. It is. money. It's things that you have not. purchased. It's savings. It's. investments that's sitting there not. being spent, but it's giving you. independence. It's giving you financial. independence and psychological. independence where you can live your. life in your way without chasing what. other people what you think other people. want out of you. And there are some. pretty astounding examples of the two. sides of the spectrum. I use this in the. book, The Art of Spending Money. The.

Vanderbilt family was the richest family. that the world had ever seen. Uh back in. the 1800s, Cornelius Vanderbilt, if you. adjust it for inflation, he had. something like half a trillion dollars. was his his net worth. And some of the. other very wealthy families, the. Carnegies, the Rockefellers, did a. pretty good job at giving most of their. money away to charity. The Vanderbilts. basically said, "We're going to give it. all to our kids and our grandkids and. our great great grandkids." And their. job is to live the biggest, most.

ostentatious life that you can possibly. imagine. And the biographies that came. from there of those Vanderbilt heirs. would show, I think without exception. that every single one of them was. miserable. every single these are you know if you. were a Vanderbilt heir in the early. 1900s the day that you were born you got. half a billion dollars trust fund and. the only thing that was ever expected. out of you in life was that you spend as. big as you possibly can and every single. one of them was miserable there's a book. called fortune's children written by one.

of the heirs name is Arthur Vanderbilt. and he talks about the history of his of. his ancestors and it is a saddest one of. the saddest books I've ever read because. these people are people who maybe you. and I and people listening would look at. and say, "You're so lucky. That's I. can't believe how lucky you got. You. just got a billion dollars the day you. were born." And you read it and you say. like, "I I would not I would never I. would never want that life because they. were so they were very rich. They were. the richest people in the world, but.

they had no independence. >> Everything was dictated about even. including who they were allowed to marry. was dictated by kind of the social. circle of of their family. And to me, the most interesting part of the. Vanderbilt family is that by this point. today, virtually all the money is is. gone. There are a couple Vanderbilt. heirs that have some money, but the. first Vanderbilt heir who got no. inheritance, no trust fund, was Anderson. Cooper, the CNN Post, who I'm sure most. people are familiar with. His mother,

Gloria Vanderbilt, was kind of the last. person to get a big trust fund. And. Anderson Cooper has talked about this. that. being the first Vanderbilt heir who. didn't get much money was probably a. good thing. He was the first person in. his family in like 150 years who was. told you have to go figure it out for. yourself. You have to build your own. career, make your own money, figure out. your own way. And he's talked about this. like he's probably the happiest person. in his career. Not that he's had a. perfect life, but he's he's probably one. of the happiest. And I think that is. again like if you look at the richest.

people because the Vanderbilts were the. richest people in the world and they had. no wealth by my definition. They had no. independence. They had no ability to. live their own life. I think that's the. difference between rich and wealthy. >> It all comes back to what are you. actually using money for? And the. clearer you are about the drivers for. why you're doing it, it changes what and. how you're doing it. >> Yes. And it's so clear in my head like, would you rather earn $70,000 a year and. your kids admire you? You've have a.

great marriage. You have barbecues with. your friends and you sit and laugh and. you're in good health. And would you. rather have that life or make a million. dollars a year and you're on your fifth. divorce, your kids don't talk to you. anymore, you're in terrible health, you're being sued by all of your. business partners? It's when you frame. it like that, it's the most obvious. thing in the world. like would you. rather have a good life and less money. or more money and and a worse life? If. you frame it like that, it's obvious. But still, even if you agree with that.

framing, it is so normal and natural to. say, "Okay, but I'd still rather make a. million dollars a year." Like the pull. is still always there. >> Well, cuz you think you're going to be. the exception. >> Everybody does. >> Everybody does. So, if you're in your. 20s and you're just getting started, you. haven't been a big saver, you're just. got your first job out of college, Morgan, what is your advice in terms of. getting good with money? >> A really simple tool that I I came to. this by realizing that most people's who.

are making financial mistakes and have a. problem with money, it's not because of. the lack of intelligence, it's it's. ignorance. And for most people, they. actually have no idea how much money. they're making or spending. And if you. ask them like, "How much money do you. make per month?" And how much money do. you spend per month overall? Most people. in that situation either couldn't tell. you or they would give you an answer. that's false. And I think the the very. basic such boring advice that goes the. longest is check your bank account.

balance every single day. It takes every. day. Every day it takes 10 seconds. It's. not that hard. And just to give yourself. some sense of how much money is coming. in and how much is going out, just be. cognizant of it. I've never, now people. don't do this anymore, but back in in a. different generation, balancing your. checkbook was always a big thing. Most. people don't do it anymore, but I. remember for my entire life since I've. been a teenager, I've never had any. desire to never need to do that because. I know my bank account balance down to. the dollar every day since I've been 16.

or 17. And I think just having that. awareness of what's going in and what's. going out, it's the most basic advice. But for people who are new and starting. out, nothing goes further than that. It's not a lack of intelligence, it's. ignorance. You just have to become aware. of what you're spending and how much is. coming in and how much is going out. That's the very first thing. >> And what's the next thing? >> The other thing is financial. independence exists on a spectrum. It's. not black and white. So most people. would say, we talked about this earlier, why save $20? That doesn't seem like. it's going to make any difference. whatsoever. So, I'm not even going to.

save. Every dollar that you save is a. piece of your future that you own. Every. dollar that you save is a little bit. marginally more comfort that you're. going to have if you get laid off, if. you have a medical emergency, if your. car breaks down, every single dollar is. getting you to that place. So, if you. view independence as black and white, either I'm filthy rich or there's no. reason to do it, then I understand why. you would say, "Why even save?" When you. view it as every dollar that I save is a. piece of my future that I control, it's.

a night of sleep in the future that's. going to be a little bit better. I think. the desire to save becomes even more. And you don't feel like it's idle money, like you're saving money and it's just. sitting there not being used. It can. give you pleasure today, right now. And. I think some of the best financial. decisions I've ever made was what I. didn't do. I almost bought a house in my. early 20s that I wouldn't have been able. to afford. that would have locked me. down to a region of the country that I. didn't want to stay in. That would have. done all kinds of things that in.

hindsight would have been terrible. And. the freedom, the independence that I had. by renting earlier in my life of getting. up and going, moving to where the jobs. were, I look back at that in hindsight. as being an absolutely wonderful thing. >> Well, you know, as I listen to you, what. I'm realizing it's also a matter of. expectations. >> Yeah. If you expected to be able to. afford a house in your late 20s or early. 30s, then of course you're going to. think you failed, >> right? >> But if you shift your expectations and. say to yourself, if I'm patient, markets.

go up and down, >> inflation goes up and down, >> mortgage rates go up and down, if I am. patient, I will be able to figure this. out. And when the timing is right and. when I can afford it, I will find the. right house for me. >> Yes. And that's the way that you manage. the stress that you feel right now. because it's your expectation based on. what societyy's telling you or your. parents are telling you that is making. you miserable around the topic. You. know, one of the other big lessons of. your work is the importance of mastering.

saving money. And I had always made the. mistake of thinking about making more. money. I got to make more money in order. to have more money. and you really. switched my thinking to. focus on saving. Can you talk about why. saving is so important versus the. obsession with making more? >> Well, so much is is just what you need. to be happy and content. And um you. know, for someone it's I've always felt.

like my level of savings since I don't. need that much to be happy. We live a my. wife and I live a good life, but not a. not a very materially flashy life. So, we don't need that much to kind of check. the boxes in our life. And so, I feel. like that can be a a superpower for your. savings. If if you need $10,000 to be. happy, but I only need $1,000 to be. happy. Like, I'm getting way more out of. that savings than you might. And so, once you realize that that gap between. expectations and reality is like the.

feel the super like supercharging your. savings, then it has a totally different. feel. And so this is especially true. when I was younger where saving $100 or. $1,000 that was that made an. extraordinary difference in my life. I. think the wealthiest I've ever felt was. when I had $5,000 in the bank. And I I. remember just feeling like that's it was. such an unfathomable amount of money at. that phase in my life. And I look back. at it now where that would that's a less. meaningful amount of money to me now. than it was back then. But I look back.

at it now, I'm like, "Yeah, but I was. like I I I I thought it was more. extraordinary back then." And isn't that. kind of sad that like that made me feel. so rich? I remember waking when I had. $5,000 and just being like, I can't even. fathom how much this is. And now I don't. get that feeling with that kind of. money. And isn't that kind of sad? That's what happens when your. expectations kind of kind of spiral up. So the idea that the power of your. savings is completely dependent on the. expectations of what you have and the. lifestyle that you want to live, I think. is is is a pretty powerful idea. How do. you switch the focus though from this.

obsession of making more to. understanding the importance of saving? >> I' I've always viewed it as again back. to independence. And if you are earning. a high salary, but you need that money. >> to to pay your bills this year, you have. no independence whatsoever. But if you. have lower expectations and a lower. level of life, still a good life, not a. not a completely frugal life, a good. life, and your savings can cover some. portion of that, that's going to give. you a better sense of contentment in.

there. And so, look, I want to earn more. money. I want to earn more money this. year than I did last year. I want to. earn more money next year. I have that. as well. I think ambition is is a. wonderful thing, but I also have a level. of savings that would tell me that if I. did not earn more money next year, even. if my income collapsed next year, I'd be. okay. And particularly at this phase of. my life with kids, nothing matters more. than me to that. If my career collapsed. next year, we'd still have our house. We'd still have this level of savings. that I've been saving for for, you know, 25 years having the savings built up to.

which we're going to be okay. Because. income can be much more fickle than. savings is, you know, most people over. the course of their life, what are the. odds that you will get laid off at some. point in your life? >> Very high. >> Guaranteed. very almost 100% that at. some point in your life your income is. going to fall to zero. >> It might be for a week, it might be for. a year, it might be for you, who knows. how long it's going to last, but it will. happen to you. So income is much more. fickle than savings. >> And when that happens to you, and it. will, or maybe it already has, the.

savings that you've built up in the. previous years is going to be the most. valuable thing that you've ever. imagined. >> Morgan, what do you recommend we do. every time we get a paycheck or get. paid? I view savings as an expense just. as I would view rent or food or whatnot. Now, obviously, it is more subjective. You don't have to save in the sense that. you have to buy food, but if but once. you view savings as a nice to have, it's. it's almost unavoidable that you're. going to you're going to avoid doing it.

Once you view it as I don't need to do. this, you're going to view it as I. shouldn't do it then. >> So, how do I think about it? If I think. about it as an expense, >> I think about savings as the most. valuable portion of my of my financial. life. I think the idea that life is more. fragile than we want to admit. Careers. are more fragile than we want to admit. The economy and geopolitics are more. fragile than we want to admit is why you. should save. If we all lived in a world. where we knew exactly how what our.

income and expenses would be in the. future, this would all be very easy. But. we don't. It's a constant chain of of. unknowns and surprises in your personal. life and throughout the broader country, the broader world. And that's why. savings is mandatory. And I just like I. think everyone has a desire has an. obligation to manage their health. You. have to manage your health. You can't. just put it off. It's going to affect. you whether you like it or not. I think. money falls in that bucket or two as. well. Even if you don't have any desire. to learn about money or finances, you.

have an obligation to learn about it and. to respect it because it's going to. impact your life whether you like it or. not. >> Here's one way that I have started. treating savings like an expense. Use. the 10% rule. No matter what you're. getting paid, save 10%. So, if you're. working a restaurant shift and you get. 50 bucks in tips, save $5. That's the. 10% rule. If you watch somebody's dogs. this weekend and somebody's paying you a. hundred bucks to watch the dogs over the. weekend, save $10. That's the 10% rule.

And that's how you can make savings a. habit, no matter how little or how much. you make. Anything is exponentially. better than nothing. And I I meet people. I I I remember when I was younger, when. I was a teenager, saving $5, saving 10 I. remember transferring $15 from my. checking account to my savings account. And that might seem completely worthless. to people, but it made sense to me back. then of like that's that's that's a meal. in my future that I have now that I.

didn't have before. It's like anything. is better than nothing is is is the most. important rule of thumb. >> Is there a simple and effective way to. make saving money a habit? >> Anytime in finance that you can automate. it as well. >> Okay. Okay, so automating your bank and. say every paycheck you're going to move. $50 to savings, whatever it might be, and making it automatic, the more that. you can take behavior out of the system, >> because we're all flawed, we're all. emotional, we're all biased, we've all.

got social pressures, I do, you do, everybody does. The more that you can. take emotion out and put automation in, the better you're going to do over time. >> And for the person who's still thinking, I mean, what's the point? I can barely. pay my bills. What do you want them to know? >> The first thing I want you to know is I. feel you. I empathize with you. I don't. judge you. I'm sure you're a good person. and you should not be embarrassed about. it because there are tens or hundreds of. millions of other people in your shoes. So, knowing that you're not alone, I. think is an empowering thing for most.

people because a lot of people look at. their lack of savings, look at their. poor financial uh skills, and they feel. guilt, shame, and embarrassment. >> And you shouldn't. This is a very, very. common thing. It doesn't mean you're a. bad person. But the second thing you. should know is that it is in your. control. I use this in the psychology of. money. It's an astounding story. It's a. guy named Ronald Reed. Ronald Reed came. from the most humble, if not. impoverished background that you can. imagine. And even as an adult, he spent. his entire career as a janitor and a gas.

station attendant. And when he died, he. left millions of dollars to charity. And. everyone was like, where this janitor. has millions of like what in the world. happened here? And the answer was he. saved what little he could. $10 here, $20 there, maybe $100 a year. He. invested in the stock market. He left it. alone for like 70 years. And that's it. That's the whole story. And that's. that's all you need. If you have the. right behavior, if you have the right. mindset, you don't need much else to. even achieve extraordinary returns over.

time. >> You know, one of the big lessons from. your work for me is also this idea that. enough is better than more. And I'm. reading from your blockbuster. bestseller, The Art of Spending Money. This is page 36. Desiring less can have. the same impact on your well-being as. gaining more money. And desiring less. does not mean giving up. It doesn't mean. you don't know how to spend money and. have a good time. I think it's quite the.

opposite. To be content with what you. have is the deepest way to enjoy the. house you've purchased, the clothes you. wear, and the vacations you take. Talk. to us about that. >> Having enough does not mean you have no. aspirations for more. I want to work. very hard this year and earn as much. money as I can. I want to do that next. year and the year after that. but with. as much emphasis with as much strategy. and will. I want to think about my.

expectations and keep my expectations in. check. And when you realize that wealth. is what you have versus what you want. >> and the the wider that gap is, the worse. you're going to feel. The narrower that. gap is, the better you're going to feel. You can mix aspirations for wanting more. with contentment with what you have and. appreciation for what you have as well. And how do you do that? You have to go. out of your way to think about it all. the time because it's not normal and. natural. What is normal and natural and. everyone's knee-jerk reaction is I want. more and once I have more, I'm going to.

be happier about it. The idea of being. gracious and having gratitude for the. world that we live in, for what we have. rather than what we don't have. For me, it takes effort to do that. But every. therapist, every psychologist would tell. you how powerful gratitude is. And it. sounds kind of mushy and wishy-washy, like how can that possibly be be a. thing? Nothing in psychology, I think, is more powerful than keeping your. expectations in check and being gracious. for what you already have. There's a. great quote from Stephven Hawking, the. great scientist, who of course had ALS.

and uh was had absolutely no control. over his body. He could not even speak. He was in a wheelchair for his almost. his entire adult life. And he gave this. interview with the New York Times. several years before he died. And in the. interview, he was talking about how. unbelievably happy he was and how. grateful he was to be able to do this. research and how great his life was. And. if there's any of us who have the right. to complain about life, it's somebody. like Stephen Hawking. If there's anyone. who has the right to wake up and say, "I. was dealt an unfair hand in life and I'm.

so jealous of you and me," it's him. And. he wasn't. He was so happy. And so the. New York Times asked him, they said, "What's your secret to happiness?" And. he said, "My expectations were reduced. to zero when I was 21." That's when he. got his disease. And he said, "Everything else since then has been a. bonus.". >> And it just made him in that dealing. with that tragedy made it much easier. for him to exercise gratitude for what. he did have. Now, obviously, I hope to.

not be in that situation. I hope you're. not, and I hope I hope nobody is in that. situation. But it's unavoidably true. that when you experience that kind of. trauma, whatever the trauma might be, it. can be losing a job, it could be. divorce, whatever it is, that it can. push you closer towards appreciating. what you do have. >> How do you take that quote, everything. was reduced to zero, so anything else. that happened became a bonus. and use. that philosophy to change your mindset. about money, you know, for somebody cuz. I because there was so much that you.

just shared that I think is super. important and I want the person. listening who maybe has no savings, who's living paycheck to paycheck to be. able to take everything that you've. shared with us and really use these tool. two tools because what you're saying is. whether it's constantly comparing. yourself to other people or having. outsized expectations for where you are. or the power of being grateful and just. stopping for a minute that you are where. you are and that you can change your.

behaviors based on everything that. you've shared with us today. >> Yeah. >> That that's a foothold. >> Yeah. >> To be able to work with like how do we. apply this to flip our mindset right. away. >> I remember reading the story many years. ago about a family, husband, wife and. two or three kids and their house burned. down. Burned completely to the ground. They lost everything. the house that. they had grown up in and imagined their. future being in. And when their house. burned down, everyone is distraught and. in tears. We lost everything. And the.

mom gathers everyone together and says, "Guys, everything that we need to be. happy is right here. The five of us, this is all that any of us ever need to. be happy. It's right here. We have each. other. We lost everything material, but. none of that mattered. Everything we. have is right here." And I think there. is some version of that in everybody's. life, regardless of what your family. situation is, that you have all the. tools that you need right now to be as. happy as you are capable of becoming. It's not to discount your problems. It's. just that everything is the gap between.

expectations and reality. And you have. those tools right now. And I think if. you go out of your way to not compare. yourself to what you don't have, but to. appreciate what you do have at any level. of life, >> I think you get a little bit closer to. that feeling of what you're trying to. get to, which is contentment. >> And rather than waking up and saying, "What don't I have and what hole is that. going to fill," you're waking up and. being like, "Look, I'm pretty grateful. for the control that I have over my. emotions. I'm grateful for the hope that. I have in the future. I'm grateful that.

I can control those thoughts without. them being dictated by society and move. ahead from there. >> I love it. It's also a way to double. down on what you are capable of doing. once you get out of your own way. >> Right, >> Morgan? If the person who's listening. wants to change the story they tell. themselves about money, what is the. story that you would say this is what. you should say to yourself from this. point forward? >> Money can make you happier. having more. money, spending more money can make you. happier, just not in the way that you. probably think and not as much as you.

probably think. That you can use it as a. tool to live a better life and that is a. great thing. It can also be much more. commonly a yard stick of status to. measure yourself against others by. We've repeated that multiple times. because I think it's the most important. thing today in this era about money is. that because it's so easy to measure. It's so easy to quantify and our society. has made it so that that is the level of. success that your net worth is equal to. your self-worth. And it's obviously a. broken and damaging story. And once you.

exercise controlling your expectations, controlling your emotions, being having. gratitude for what you do have, I think. that's the ultimate that's the ultimate. wealth for me. It's not necessarily. about what your net worth is. It's your. ability to control what you think and be. grateful for what you do have. If the. person who's spent this time together. with us takes one action today from. everything that you've shared, what do. you think the most important thing to do. coming out of this conversation?

>> Realize that other people are not. thinking about you as much as you are. >> that you and your goals are often. attached to wanting to impress other. people, but they're not paying attention. because they are busy worrying about. themselves. That's the first step to. controlling your expectations. Once you. can control your expectations, you get. much closer to what I think the ultimate. goal is, which is being content with. your money. >> Well, the most important thing uh for me. right now is to thank you. You and your. work have made a huge difference in my.

life. And so, thank you. Thank you. Thank you for what you do. And thank you. for being here with us today. >> Thank you, Mel. This has been fun. Thank. you for having me. >> You're welcome. And I also want to thank. you. Thank you for making the time to. listen to something that is going to. improve your financial life. He talked a. lot about independence and what I heard. in that was freedom. And when you apply. the simple things that he told you to. do, I promise you, you're not only going. to gain more independence, you are going. to feel freer. And one more thing, in.

case no one else tells you this, as your. friend, I wanted to be sure to tell you. that I love you and I believe in you and. I believe in your ability to create a. better life. There is no doubt in my. mind if you and I apply everything that. Morgan taught us today, we will create. and we will live a better life. All. righty, I will be waiting for you in the. very next episode. I'll welcome you in. the moment you hit play. I'll see you. there. And thank you for watching all. the way to the end. I love being here.

with you on YouTube. And I know you're. thinking, "Okay, Mel, tell me what I. should watch next." But first, I got to. tell you something. Hit subscribe. Got. it. Good. Thank you for supporting me. Thank you for supporting the team. Now, let me recommend the next video you. watch. You're going to love this one. And I will welcome you in the moment you. hit play.