AAR37: Why Chasing "The Number" is Hurting You

0:00Andrew:The likelihood of becoming a billionaire is 1 in 100 billion versus winning a lottery of 1 in 100 million. Wow. And again, when we try to compare those numbers, it just feels astronomically different. We're talking about 1 ,000 times more likely. So you could go win the lottery 1 ,000 times before that's likely to ever happen, which for a lot of people, that would probably get you more wealthy than a billionaire. But anyways, besides the point, and that's obviously ignoring luck or timing or circumstances that lead up to it. We're just talking about raw statistics. But even if, you know, let's just put aside for a second and say that becoming...

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4:13Andrew:Good day, everyone, and welcome back to At Any Rate. My name is Evan Rate, not Eric Rate. I get that confused all the time. I'll say about that in a second. But we're here to help you make sustainable financial changes without breaking a sweat. And as always, it is a fantastic, beautiful, currently very dark morning to have my buddy Andrew Saylor back on the show, here to talk about Bubba Billionaires with a B. How are you doing today, Andrew?

4:37Evan:I'm good. So how long have people thought your name is Eric? Are we talking about ever since you were born, or is this more of a recent podcast phenomenon?

4:45Andrew:I'm surprised that they didn't write it on my birth certificate. People have always gotten my name mixed up with Eric. I mean, I guess it's probably just Eric, but other similar names that start with me. Because Evan doesn't seem to be a particularly common name. But I don't know. Andrew, what is your opinion? Do you feel like Evan is a very uncommon name from your point of view?

5:05Evan:I never thought about it. Now, actually, I don't know any other Evans that I know other than you. But when I first met you and heard your name was Evan, I never thought about it. But now I'm not going to be able to get Eric out of my head every time I see you. So you've just perpetuated your own frustration.

5:25Andrew:It's unbelievable. I will converse with somebody only ever over an email with Evan in my email address, Evan in my email signature, and I will send them information that they need and they will put me on an online form and I will open that form and it will say Eric. Where did you ever get Eric? You could have never heard Eric. You've never met me before. It is a very consistent phenomenon that happens. I'm sure that people that listen to the show think I'm Eric Raitt. I feel very confident that there's somebody out there.

5:53Evan:I feel like now that people write in, they should call you Eric Raitt.

5:56Andrew:That'd be great. You'll be a real one if you write in and call me Eric. But anyways, today's episode, as you can probably tell, is going to be discussing billionaires. Billionaires are, especially nowadays, more and more a part of regular society's discussions. They definitely have an impact on how people live their lives, what kind of mindsets and goals and expectations for life they have and financial goals and that sort of stuff. They definitely have a massive impact on people. Today's episode, it's definitely going to contain some opinions as well as facts. It's definitely a very divisive discussion.

6:32Andrew:and at times when you talk about divisive discussions it can be impossible to separate facts from opinions you know you can state a fact but you know how did you arrive at that fact how did you go find that fact blah blah blah is always going to be impacted by opinions of bias but today's episode i i as always but especially today i don't want it to just be a one-way one-sided discussion of us talking through microphones assuming that we're right about every single thing we say and then walking away and having a good day i want it to be an open discussion so as always and especially today please feel free to let us know your opinion through comments and email if you want to email me at evan not eric evan at e investing for beginners.com and let us know how you feel and let us know what your feelings were but to start it off andrew what kind of a societal role do you feel like billionaires or do you see billionaires playing nowadays?

7:24Andrew:Big with a B?

7:26Evan:A lot of Bs. But I actually live under a rock, which might be obvious to people who are listening, but it's definitely obvious to the people who know me well. So I'm going to plead the fifth on this one, and I'm going to let you answer this question.

7:42Andrew:That is fair enough. As somebody who is not under a rock, or maybe under a very thin rock, or a very small rock, in my mind they're at the forefront of a lot of society's awareness mainly due to the internet, social media, that sort of stuff that gives access to ultra-wealthy talking to all the way down to very poor people. They can have a practically direct line of communication that just never really existed before. And so the more and more popular it gets and the more and more willing their media teams are to allow them or they forcibly get their way onto the internet, the more likely they are to have those kinds of direct conversations.

8:21Andrew:And so there's much more coverage on the things they say, the kind of people there are, their personalities, not just their wealth, definitely becomes more and more visible to us. And not to mention that always the ultra-wealthy is definitely going to provide unprecedented economic support and job opportunities to thousands or tens of thousands or even hundreds of thousands of people can be employed through people that are ultra wealthy and have many, many different businesses in many, many different sectors. Plus, I definitely feel like the US is going through a strong period of awareness of, and for some people, frustration of, and some people, celebration of massive wealth and massive financial success.

9:03Andrew:That's definitely always been true, but it's kind of a similar story if you look at the trend of housing growth over time and median household income growth. It's definitely a very similar trend when you look at the ultra wealthy versus average wealth that the ultra wealthy, even accounting for inflation, are definitely getting more and more wealthy over time. And again, how you feel about that is completely your opinion, but that's definitely a trend that's occurring. And so the more and more wealthy they get, the more and more awareness we're going to have to them. Also, I would say that it's very, very easy to see people in a very, very different situation like that and either say that they are the problem, bang, there's billionaires, that's the problem with society.

9:45Andrew:If we just fix billionaires, everything will be okay. And also, on the other side, I think it's very easy to have them as the ideal. They're the wealthiest, the most successful people, and therefore that is the ideal I need to live up to, and that's what I need to aim for. It's very easy to paint them into either one of those camps, just because the more extreme somebody is or something is, the easier it is to throw it to one extreme or the other. And the last one is that they definitely have a massive financial influence on laws in one way or another. Just the fact that they have that massive amount of wealth and they're going to be spending it and investing it somewhere is definitely going to impact the direction of the country, of companies, of laws, that sort of stuff.

10:25Andrew:And so the more influence they have to head in one direction or another, the more awareness we're going to have of, oh, we're being steered in this direction, maybe partially because of this person or they have a big impact. We definitely have that awareness. But I kind of wanted to throw out some numbers because at least for me, once you start getting above numbers of like 100 or 1 ,000, the sort of physical almost understanding I have of that number starts to dwindle and starts to just sound like a bunch of letters and a bunch of digits or zeros. that if we look at the likelihood of becoming a billionaire versus the likelihood of winning the lottery, the likelihood of becoming a billionaire is 1 in 100 billion versus winning a lottery of 1 in 100 million.

11:12Andrew:And again, when we try to compare those numbers, it just feels astronomically different. We're talking about 1 ,000 times more likely. So you could go win the lottery 1 ,000 times before that's likely to ever happen, which for a lot of people, that would probably get you more wealthy than a billionaire. But anyways, besides the point, And that's obviously ignoring luck or timing or circumstances that lead up to it. We're just talking about raw statistics. But even if, let's just put aside for a second and say that we're going to put becoming a billionaire out of your mind as a possibility. Not saying it isn't a possibility, but just put it out of our mind for a second.

11:47Andrew:Andrew, how do you feel like people can better their finances even if we just assume that this is an unattainable goal and we still want to aspire to improve our finances one way or another regardless?

11:58Evan:I think it's a really important step in maturing in your financial goals and giving yourself enough satisfaction that you make progress and you continue. because one of the weird things, I don't know if you want to call it financial awakening, just education, whatever it is, but when I learned that you could make six figures, you could be a doctor or a lawyer and still live paycheck to paycheck and still not build wealth for yourself. And then I heard and have read books about people who make median household income or below and becoming millionaires just because they know how they manage their finances, that has been an idea that has never...

12:52Evan:It's stuck in my head and it's never gone away. And what that hopefully illustrates is that building wealth is not about how much money you're bringing in, but it's about how you are saving and investing that money. And so in order to save, you have to make sacrifices. You have to not spend all the money and you have to put some of it aside. If you are so focused on becoming a billionaire and just more, more, more, more, more, to the point where you're not going to make those sacrifices, ironically, that mindset is going to work against your goals, which is to build wealth. So you need to have reasonable expectations of what's possible for your finances or what's most likely for your finances so that you make the sacrifices and feel good about the sacrifices.

13:54Evan:Let's say I'm just starting out, and I will say that because I was there. And it was a big achievement for me to save$150 in a month. That's actually a great achievement. But if you're looking at it from a billionaire path mindset, that doesn't feel great at all. And it's like, what's even the point? But it's that first baby step that leads to this compounding that is essential for your wealth building journey.

14:22Andrew:So I think it's so important. Yeah, I really, really do love that because it's definitely easier and easier the more, say you start saving and investing and you're able to build that as more and more of a habit. Maybe as you get raises, you save more and more. It's definitely easy to look back and say, oh God, I was hardly saving anything back then. And like you said, when you're in that situation, it's easy to say, well, I'm hardly saving anything because I'd like to have enough to buy a house cash and how is this 100 a month going to help me get there? But it's starting to save that 100 a month up front is that mindset shift of being, I am a person who saves.

15:01Andrew:I am a person that sets aside money every single month, whether that's automation, whether that's manually doing it, whatever it is, I go and do this and take a portion of my income and save it and invest it is a massive mindset shift. And going from that saving zero to that saving a hundred is honestly a lot, lot bigger than going from saving a hundred to a thousand a month. that jump is much more because obviously going from zero to anything is infinitely more but your mindset shift of becoming an investor and a saver is huge and another thing that I feel about maybe having the goal of being a billionaire the not expectation but expectation that it's an option for you that it's a possibility for you I just think it's looking at wealth the complete wrong way around I think that that is something we've talked about before, that that's treating wealth as a scoreboard instead of a tool for happiness.

16:00Andrew:To a degree, I don't care how much wealth you have. That's not about you as an individual, as a person, that I give a single crap about. Are you happy? Are you having a good time? Are you treating people around you well? Are you making people's lives around you better and happier and just having a good time being a living human being? When the only focused or the only thing that we discuss is just how much you have in your bank account or how much you have you know saved and invested in companies and that sort of stuff while that is an important part of the equation and has a massive effect of what kind of life you can live when that when we narrow down our goals to just that and we narrow down people to just that and just aspire to be that aspect of a person and nothing else about them really i i think that is very reductionist and it doesn't aim you in the right direction.

16:48Andrew:Instead of seeing wealth as a tool to bring happiness and to live a good full life for yourself and the people around you, that's the most beautiful part of being alive. You can still quote unquote have wealth when you die. If you build a company and that company still keeps growing like crazy, then something you built is still racking up numbers, but you're not even there to enjoy it anymore. And the reason to do these kinds of things is to enjoy it and to live a good, happy, healthy life.

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20:03Andrew:Yeah, definitely a great irony. I've also definitely got some feelings about, you know, again, having becoming a billionaire as a goal or expectation for yourself, that there's definitely some trips along the way that you could run into. And one of the biggest ones for me, especially with more and more awareness of billionaires nowadays is that I think it's a big contributor to hustle culture that we assume that if we go grind, if we wake up at 3.30 a.m. every day, if we don't do anything but just grind, grind, grind and build wealth, build wealth, build wealth, or at least aim in that direction, that that's the best way to live life.

20:43Andrew:And again, if you want to do that and that makes you happy, I'm not here to disparage anything that you decide to do with your life, but I would definitely implore you to take a moment to think about why you want this wealth. If it's just a number on a scoreboard, then that number is never going to be high enough. I mean, even the billionaires, all they want is more wealth because a number is never going to be enough to live life on or to have a good life on. Instead, you need to have, we talked about it before, you need to have your whys. Why do you want more wealth? Why do you want to hit a certain financial goal or something like that.

21:16Andrew:Have understanding behind why you want that wealth, and that will aim you in a much more not only attainable direction, but also a tangible, positive direction than just looking at it as a number. It also definitely, when I think about these kinds of mindsets, it motivates me even more for content like this, because the fact is, if we just look at it statistically, very, very few people are ever going to generate gargantuan wealth of any kind of billionaire or not. Statistically, that is going to have to be very, very few people. And so instead, I want to focus on the other, I actually counted this out, 99.9999997 % of people.

21:57Andrew:I want to focus on that vast, vast majority of people and help them learn realistic, tangible habits to further their financial success. And for those other, I'm not going to say the number again 99 plus percent of people something like budgeting something like having an outline for a budget something like investing in you know some of these companies investing in the s &p 500 index as a whole or something like that putting your money somewhere that's going to help you grow and achieve your happy life your financially happy safe successful life is much more meaningful than just saying hey this is what you need to do to to rack up a bunch numbers and hit some number.