The whole purpose of money is as a tool to give you a better life.
That's always been my mantra.
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A simple formula for a pretty nice life is just independence plus purpose.
Independence plus purpose.
Now, purpose is different for everybody where people find their purpose.
Sometimes it's family.
Sometimes it's community.
Sometimes it's religion or work, whatever it might be, people find their purpose from different spots.
Independence, though, tends to be far more universal.
Our desire to be independent, why we want it, what prevents us from achieving it, and why some people sabotage their ability to have it is such a common story across cultures and across generations.
Let me speak a little bit more about independence here, and I have a parenting story to share with you.
My son has always been very shy.
He is not just a little shy, he is painfully shy.
At times when he was younger, it was adorable, but at times my wife and I have worried about it.
During preschool, his teachers would sometimes give up trying to get him to participate in group activities.
He would just sit by himself in the corner, watching the other kids play.
There's one year where he would not trick or treat on Halloween because the thought of knocking on a stranger's door could bring him to tears.
Once we were traveling and he almost didn't make it through airport security because he refused to tell the TSA agent what his age was.
So that was our experience with our son when he was young and it worried us, but my wife and I had confidence that he would improve.
And like most kids, if you give him the time and the chance, he has.
Last week, my family was at a pool and my son asked if he could get some ice cream.
I said yes. But I said you have to do it by yourself.
You have to order it yourself.
You have to hand her the money.
You have to take the change, all of it, on your own.
I'm not even going to be nearby.
You have to go do it by yourself.
He said, I can't do it.
And I said, that's fine.
You don't have to. And he paused and he said, but can I still get ice cream?
And I said, yes, you can.
But you have to do it yourself.
He paused another time.
And he said, what if I get into trouble?
And I said, for what?
And he said, what if the ice cream people tell me no because I'm a kid?
I said, they won't.
But even if they do, that's fine.
You're not in trouble.
All the while, I could see the gears turning in his head.
He wanted to do this by himself.
He wanted to do it.
He paused again and he said, I don't know, I'm so scared.
And then he paused again.
I could see him thinking about it and finally he just said, I can't do it.
It's so difficult as a parent to on the one hand want to shower your kids with protection and help.
While on the other hand, you know how important it is to teach them independence.
Teach is probably the wrong word because you know that they'll figure it out on their own.
And sometimes as a parent, you offer the most help when you withhold assistance.
My son walked off after this, I had no idea what he was going to do next.
But a few minutes later, he came back, absolutely beaming, grinning ear to ear, with a cup of ice cream in his hand.
Now that story might seem benign to other parents.
It might even seem bizarre if you're used to a very gregarious kid.
But in the context of my son's past, it is hard to describe the impact that it had on him.
He was so proud of himself.
If I had gone with him and held his hand through this process, the ice cream that he received would have given him a small little happiness boost, right?
When he did it on his own terms, with a sense of independence, the psychological rewards were off the charts.
And I'll tell you the takeaway here, for you and me and everyone listening.
If you are used to being assisted, or supervised, or mandated, or dictated by somebody else and then suddenly you experience the glory of independence, independence, the feeling is sensational.
Doing something on your own terms can feel better than doing the exact same thing when someone else is peering over your shoulder, telling you what to do, and guiding you along.
And that is as true for adults as it is for kids getting ice cream.
Independence is the best financial goal for most people.
But independence is not just financial independence.
It's also moral, cultural, intellectual independence, and that is one of the highest levels you can reach in life.
The poet Christopher Morley once said, there is only one success to be able to spend your life in your own way.
The author Derek Sivers once put it at a different way.
He said, All misery comes from dependency.
If you weren't dependent on income or people or technology, you would be truly free.
The only way to be deeply happy is to break all dependencies.
Now, I've been thinking about independence for a long time.
It's so core to my financial beliefs.
But let me say a couple more things about independence and why it's so important in life.
Number one, independence is the only way to recognize individuality.
I read this great quote recently from an early Amazon employee.
I think I mentioned this quote in the last episode, but it's a good one, so I'm gonna do do it again.
Jeff Bezos said many times that if we wanted Amazon to be a place where builders can build, we needed to eliminate communication, not encourage it.
Such a great quote.
And the idea here is that if you want to do something great, you cannot have a group of people constantly telling you that you're doing it wrong and why it doesn't mesh with their own goals.
That's not necessarily because those other people make you wrong, it's because they might be playing a completely different game than you are.
In business and finance and everyday life?
A great decision for me might be terrible for you and vice versa.
If everybody had the same goals, and the same family dynamics in the same personalities, we can make finance a hard science, and we could say here's how everybody should save and invest their money.
But it's not like that.
It's not one size fits all.
The difference in how you and I want to live our lives, what our own definition of success might be, can be 10 miles wide.
A potato farmer and and hedge fund manager might be equally happy, all while looking at the other as if they were from a different planet.
A lot of financial mistakes come from decisions that might be right for somebody else but wrong for you.
They are the most dangerous mistakes because smart people around you can say, this worked for me, it changed my life, you should do it too, and that might be right for them and wrong for you.
Here's another idea I read recently from G .K.
Chesterson, he said, quote, ideas are dangerous, but the man to whom they are least dangerous is the man of ideas.
He is acquainted with ideas, he moves among them like a lion tamer, ideas are dangerous, but the man to whom they are most dangerous is the man of no ideas.
The man of no ideas will find the first idea fly to his head like wine to the head of a tea totler.
Another great quote.
So, look, if you have no strong views on what kind of life you want to live, you don't have any strong views about who you are or what you desire or what makes you happy or what doesn't, you are likely to want to mimic the most visually appealing person that you come across, which is very often the person who has the biggest house or the fastest car or the nicest clothes or whatever and that may or may not work.
And so it is so vital to constantly reflect on who you want to be and what kind of life you want to live, and ask if you are on an independent path versus chasing somebody else's dream.
Alright, number two.
Independence in thought and philosophy and morals and culture are as important as financial independence.
Charlie Munger once listed three practical rules for success in life.
He said, don't sell something that you wouldn't buy, work for people who you admire and partner with people who you enjoy.
That's it. So simple, three rules for success in life.
I have seen many people achieve some level of financial independence only to be sucked into a new kind of dependence, which is the culture of their tribe.
Maybe financial freedom is achieved, but it's replaced with being a sincofant to a new boss or blind in here it's to tribal views that you might disagree with deep down.
that, I think, is a unique form of poverty.
Rather than needing to work for money, you are indebted to needing to think a certain way.
I once heard this good litmus test.
If I can predict your views on one topic by hearing your views about another, unrelated topic, you are not thinking independently.
So, for example, if your views on immigration allow somebody to accurately predict your views on abortion and gun control, there is a good chance that you are not thinking independently, that you are going along with the thoughts of other people.
There are so many versions of this rule happening all over the place.
The salesman who doesn't believe in his products, the worker who secretly thinks her boss is crazy, the employee who can't stand as high as paying client, the voter who nods along all while wincing inside.
Now, there is a difference between the practical need to accept different views, versus pretending to agree with different views, especially if you're just doing it for more money.
Investor Ed Thorpe once said, quote, it is vastly less stressful to be independent, and one is never independent when involved with a large structure of powerful clients.
Pointing out that it is less stressful is a great point because it can be mentally exhausting To pretend to be somebody that you are not.
It's part of why so many people look forward to retirement, because once they are retired, they don't have to put on an act at work, and it might be the first time in the professional lives that they can truly be themselves.
Financial independence is very easy to grasp.
You no longer rely on other people for income, but intellectual and moral independence is much more nuanced.
But not having it is a unique form of debt.
When you are independent, you feel less desire to impress strangers, which can be an enormous financial and psychological cost.
Speaking of hidden forms of debt, how much of what takes place in our modern economy is done purely for signaling reasons.
It's impossible to quantify that, but you know it when you see it, and it's everywhere.
Taking an action to impress other people is a direct form of dependence.
It happens in many different ways.
One is physical signaling, with your clothes or your cars or your homes.
One is clout chasing, which is the desperation for social media engagement.
One is tribal signaling, like battles in politics and status superiority and election bumper stickers.
One is moral signaling, making everything in life us versus them.
Each of those points is about measuring your own value through the opinion of others.
Sometimes it's a clear comparison.
It's your net worth versus mine, for example.
And other times, it's a much more subtle comparison.
It's like asking, hey, do you like me?
The person who is desperate for attention and acceptance from a group of strangers is hardly different from the person who is begging for money on the street.
They are both dependent on the actions of other people.
Well, the wild thing about all this effort is how easy it is to overestimate how much other people are thinking about you at all to begin with.
And the truth is, nobody is thinking about you as much as you are, because they are too busy thinking about themselves.
Even when people are thinking about you, they often just do it to contextualize their own life.
So, when somebody looks at you and thinks, I really like her sweater, what they actually might be thinking is, that sweater would look really nice on me.
I once called this the man in the car paradox.
When you see somebody driving a nice car, rarely do you think, wow, that driver is cool.
What you think is, if I drove that car, people would think I am cool.
And do you see the irony there?
Nobody's thinking about the driver, but they wanna be the driver because they think people will then think about them.
When you are truly independent you rid yourself of that silly burden.
And it can be such a relief when you do.
Only when you stop caring what strangers might think of you do you realize how much effort you may have previously put into their validation.
But let me make an equally important point here.
Independence does not mean that you don't care what anyone thinks of you.
It just means that you strategically decide who's attention you seek.
So, let me frame this in terms of my own life.
I need the love and the admiration of my wife and my kids and parents.
I enjoy the presence and camaraderie of about five close friends and I want to foster relationships with a small group of people I admire in my professional orbit.
But you can see how this funnel just keeps tapering off from there, right?
right? When you independently choose who you want to include in your small circle of life, the actions that you take and the work that you pursue and even the values that you hold can completely flip.
Rather than trying to appease everybody, which is foolish and impossible, you select the life that you want to live and focus your attention on a smaller group of people whose love and support you deeply desire.
It is the opposite of when a business leader or a politician panders for the support of the masses.
Now, on one hand, you could say that when they do that they're doing it to get something that they want which is often just power.
On the other hand, how independent are you if the words coming out of your mouth and the actions that you take are dictated by the beliefs of a group of people who you've never met before?
A related point here is that loyalty to those who deserve your loyalty is a wonderful thing.
— so your family, genuine friends, companies who you deeply respect and admire — it can be so satisfying to offer your loyalty to somebody who deserves it.
But that's the key word, deserves it.
It is rare. And only when you're independent can you be honest about whether you are being appropriately loyal or if you are just attached to the attention and the money of people who you secretly do not admire.
All right, next point here.
Financial independence does not mean that you stop working.
This idea is actually related to the previous one.
Financial independence is a wonderful goal, but achieving it doesn't necessarily mean you stop working.
It just means that you choose the work that you do, when you do it, for how long and with whom you do it with.
Those who retire early, that was a big trend in the last 15 years, you know, the fire movement, they tend to come from one or two camps, they either hated their work, but they kept doing it to make as much money as they could.
Or they enjoyed their work, but they quit when they had enough money.
And to each their own I don't want to judge them but both of those situations look like a situation where money controls your decisions.
And the irony then is that some people who think they're financially independent are actually completely dependent on money.
So much so that they spend their day doing things they would rather not do because the money tells them that they should do it.
Rather than using money as a tool, the money is using them.
Last point here. Being independent does not mean that you are accountable to nobody.
You become accountable to yourself, which is often when you do your best work.
Study any great creator, a scientist or an artist or an entrepreneur, and you'll find an independent drive.
They were not working to appease their boss or to earn a paycheck.
They were driven solely by their own curiosity and expectations.
When you are working for somebody else's expectations, the path of least resistance is to put in the minimum effort required.
Or worse, it's to give off the appearance of effort while not actually being productive at all.
I think almost everybody is creative, but it's very often hard to dredge up creativity when you're doing it for somebody else.
In my own profession, writing for yourself is fun and it shows, but writing for other people is work, and that shows too.
You always do your best work when you're doing it on your own terms, when you're doing it independently, without someone looking over your shoulder, telling you what to do or why to do it.
And I bet that applies to most other professions and actually most other areas of life.
That's it for this week.
We'll see you again next time.
