699: Jack Raines - How to Build Your Career, Increase Your Surface Area For Luck, and Find Your Purpose | Why Memories Compound Faster Than Money

22:41Like I'm open to that for sure, but I'm not so New York or nothing that like. I would just not save money for the sake of living in Manhattan forever.

22:51Ryan Hawk:Yeah. One of the quotes, the best measure of one's life is the sum of memories you make while you're alive. And this is from the overall idea that memories compound faster than money. This is where you're ahead of your time. Can you riff and talk more about this? the best measure of one's life is the sum of memories you make while you're alive and how memories compound faster than money. Money is so fascinating because it's the one tangible quantifiable thing that like relates to everybody, right? Like it's kind of the like lowest common denominator of like human comparison points where you can ballpark guesstimate how much money people make based off of what they do for work or like within a standard deviation of like net worth based off of like where they went to school, who their family is, whatever.

23:38The trap you can fall into is treating money as the scoreboard and therefore treating it as like the thing you were trying to achieve. I am very pro making a lot of money. I would much rather be very rich than very poor. And I think that's a like, I think it's weird that people try to almost like vilify pursuit of money. Having money means you can just, you have much more control over your life. Like that's a very good thing to want. It means you can take care of your family. You can take care of people you care about. But the only purpose of money at the end of the day is to like spend on stuff.

24:12And that's not just like materialistic blow cash on like really expensive clothes or whatever. It's like truly the end of the day, you're either spending money on yourself, on people you care about, or you're leaving that money to other people. Whether that's leaving it as an inheritance, whether it's giving it to philanthropy. be like money it is literally just a like non on its own non-valuable asset it's only worth the things it's at some point exchanged for so the the thing everybody has to figure out is like how much of that money do i want to exchange for things now both physical goods experiences whatever how much of that money do i want to invest so it can compound and grow over time to spend on things later and what i think is pretty interesting is like my belief is that the amount of money it takes to like get a certain call it unit of enjoyment out of life is probably a lot lower when you're young because you're just quality of life and your expectations of quality of life are lower.

25:09For example, I live in a like 500 square foot studio apartment in New York. I have a fairly nice apartment. It's also just one dude living here, right? If I was married with a couple of kids, we need a bigger place. It's going to be more expensive. Or a few years ago, the whole backpacking Europe thing, I was in a bunk bed with like 10 random strangers and you have like a locker under your dead that you put your stuff in so people don't rob you. It was kind of hilarious being with like, there's like a French guy there and some of them were co-ed. It's like a French guy, Swedish girl, a bunch of like dudes that were at like Fordham.

25:40They were on study abroad. It's like a really funny setup. I would find that just so annoying and just terrible. And I'm still in my twenties, but I'm like five years older. That's just not what I want to do. Like, I'm just going to get a hotel or an Airbnb, right? So when you're really young, like a few years out of college, it just doesn't take that much money to like find the same level of enjoyment that it'll take later, which makes sense. Cause also you make more money as you get older and you should be investing money. So it compounds and grows over time exponentially. So there's this like constant tug and pull of how much money does it take to create those experiences that become memories now?

26:15How much money do I need to put back or how much work do I need to put in my career to increase my earnings to be able to maintain that level of enjoyment and satisfaction. What you want to optimize for is hitting like a pretty high level of life satisfaction in your 20s and being able to like maintain, I call it like an eight out of 10, maintain that over the course of your life. But the amount of money it takes to maintain that goes up a lot, probably peaks in your late 40s. Then as your kids grow up and start going to college, it flattens out and plateaus until you die, right? So how much money do you need to both earn and invest and have expendable to be able to keep that quality of life satisfaction is the thing people should be optimizing for.

26:56But because it takes more and more money to keep hitting that, people start focusing on money as the output they're optimizing for rather than money as step one, with step two being the things you should put that money toward.

27:09Ryan Hawk:So that is the Jack Rain's philosophy on life cycle of money. Okay, in chapter five, you have how to be stable from a financial perspective. I'll list out the bullets and maybe you can riff on these because I mean, they seem pretty obvious, but they're not. If you actually follow these, I think you're good. One, spend less than you make. Two, build an emergency fund of six months living expenses. Take your company's full 401k match. It's free money. Contribute to your IRA. Don't gamble on individual stocks. Stay invested. Stay employed. don't go into credit card debt and don't get divorced talk to me more about these bullets from chapter five yeah i mean to be clear i've never been married nor divorced but my understanding from seeing other people that have is like divorce looks like it really sucks and it takes like all of your time half your money and like i'm a huge tom brady fan but man his like post-divorce like going on like maybe wwe and all this stuff is just like tough to watch what's going on now this is a little bit time sensitive and we're we're both on twitter 24 7 but yeah oh my goodness it hurts me man i love i'm a quarterback like yeah what's going on dude it's like watching watching his retirement arc versus peyton manning or tony robo who have just like done a great job of like they're making some investments they're talking on tv versus tom brady like viral clips of him like flicking off the paul brothers and like fake slapping them i don't know if you were old enough that you have like five-year-old kids and you want to be seen at michael rubin's all white party come on man like what what are we doing you know like that happens is for people in their 20s get out of there at least that version of it so i don't know tom brady's midlife crisis needs to be studied this is my my main take on this and i hope he gets through whatever he's going through because it's like i'm not even a pats fan i'm just somebody who respects like dominant performance i really wish i just never saw anything about tom brady post-retirement because he really went out on top with the Super Bowl to bucks.

29:04And it's just like, dude, even if he's making money from this, you're just like ruining your legacy. And like, I don't know if it's because he like wants to be a billionaire and he's like being too performative chasing these things, or he just wants to be in the scene. It like kind of sucks though. I agree. I hope LeBron James doesn't have a similar arc as the other kind of goat of this generation, but we'll see.

29:25Ryan Hawk:Yeah. Sorry. I took you off track from the financial stability thing. No, you're good. I can riff on the downfall of Tom Brady forever. I mean, look, I'm a, I'm a Falcons fan. So like after what he did to us in the Superbowl several years ago, he kind of deserves it. That's the end of my talk track. I'm Brady. Yeah. But what about those rules, you know, spending less emergency funds, 401ks, IRA, don't gamble on individual stuff. You're not smarter than them. I mean, most of us are not stay invested, stay employed. Don't go into debt. Where are you at there? My take on personal finance is it's actually like incredibly simple to compound wealth over time in the U S where just like max out your 401k or at least get the company match.

30:03And then like, don't spend more money than you make literally just track your budgets. If you have credit card debt paid off immediately and then say for retirement, have it be like automatic contributions. So that way you don't have to think about it. It's just, you have like, if it's a thousand bucks a month, 2000 bucks a month, 500 bucks a month, just like have that going in the market and compounding for the amount of like podcasts, newsletters, whatever, that are giving personal finance advice, up until you have like several million dollars and you're really optimizing for like taxes or estate planning or whatever, you can spend 10 minutes of chat GPT and figure out like, how do I make sure my money's compound and get eight to 10 % a year?

30:44What I think is like much more interesting is like people don't spend enough time thinking through like how they want to spend that money. Again, it's not in the personal finance stuff isn't important. Like you should have that foundation set where it's like, I don't think about the money going into my 401k, right? For all the, all the stuff I say about don't pick individual stocks. I do still sometimes pick individual stocks and I both made and lost a lot of money when I was 24, really aggressively picking stocks. But I'm like aware that that's probably not the optimal use of money or like brain power.

31:16Yeah. My like broader take on that is like, it just isn't that hard to put yourself in a position where assuming you remain employed and are competent at your job, like you have a few million bucks saved up for retirement in your sixties just by doing the boring thing right over and over and over again. And it's actually like user error can interrupt compounding way more than like you need to use like second and third level thinking to figure out how to make more money. We just like overcomplicate personal finance. you should spend a little bit of time figuring out what's the like lowest lift hands-off way to benefit from compounding and spend a lot more time thinking about once that structure's set up how and where do I want to be like spending this money and like you model out how much am I going to save up over time okay what am I going to want to use that for is like the much more interesting

32:05Ryan Hawk:question because you also cite some of Nick Majuli's work yep that retirees basically they spend their whole life saving it and then they retire they don't spend it because they're like in this mode of save save save save save and this is a good problem right but save save and then all of a sudden it's time to start taking it and they they don't really do it can you talk more about that research some of nick's work as well as maybe what we could think about now before we get to those days right because again i'm the generation right ahead of you those days are they're not close yet, but they're going to get here and like how to better think about that.

32:41So Daniel Kahneman has some really good studies on like humanity's propensity for a loss aversion where to like really, really quickly summarize his work on this, the pain you get from taking a loss like financially is about twice as strong as the joy you get from like a gain where if you make a hundred dollars, you get like five feel good points. If you lose a hundred dollars, you get negative 10 feel good points. and because of that, like people are really wired to not want to lose money, which means that when it comes to like saving for retirement, most people will really optimize for I need to keep stacking money because I do not want to be in a position where I lose money and granted like the older you get, the higher chance of like a health scare or there's a natural disaster that messes up your home or like the just over time, the number of things that can go wrong that could really screw you financially increase exponentially So it's like, it's not an ungrounded fear that you could think I need to have such a big nest egg that like nothing can touch me.

33:40But going back to Nick's point, like Nick's the COO of Ritholtz Wealth Management. I would say he's probably the, one of the, if not the best, just pure play, like personal finance guys out there right now. And he pulled a bunch of data over the last, I don't know what the time period was, 30 years or whatever, of like retirees. and his findings were that like most people, they don't ever touch the principle of the money like put their retirement account, meaning that like their gains are compounding faster than they're spending it down. When in reality, I don't think you should try to optimize for like I spend down all of my money in retirement because you actually just don't know how long you're going to live.

34:19You should always keep a margin for error where you can keep compounding. But like if you retire at call it 70 with like$10 million and then you die at 90, with$25 million, that actually probably wasn't the optimal amount of, like, you probably should have spent more money sooner where, like, you still have money to leave to your kids and grandkids or whatever, but how much utility did you just, like, leave out there on the field that you didn't take advantage of when you were alive because you were, you had a scarcity mindset? So, the way that I think about it is, like, if you're that person who they couldn't spend on their retirement if they tried to, because the other thing is, when you're in your 40s or even your 50s, your burn rate is probably way higher than it's going to be when your kids are out of the home and they're self-sufficient.

35:01And the amount of money you're spending on your kids in like high school and college of like sports and tuition and all this stuff, maybe like helping them out right out of school. By the time they're 30, say they're 30, you're 60. They're probably like totally self-sufficient at that point, but you are going to be anchoring to, wow, my burn rate when my kid was 21 was this. And you think you need to keep hitting that when actually, as you get close to retirement, you're just going to spend less money. You have less energy to do stuff. You have way less expenses on like your family. You're probably not supporting your kids anymore.

35:30So you probably should have spent more money on stuff when you were younger because like the burn rate's just not going to be that high later. Again, I think running out of money in retirement is a way worse problem than having too much money. Like I do not think you want to be like destitute and like a burden on your family in your eighties, but having way too much money at a point in life where you don't have the energy to do anything with it is like a completely self-induced problem that like shouldn't happen. So I think the thing to think about is like, actually like look at the data of like people in your income cohort of what their burn rates actually are in retirement to realize that, okay, what I'm spending at 45 or 50 is actually probably higher than what it will be at 70.

36:14And then thinking about, okay, you might have like 10 years in retirement where you're still high energy, maybe in your 70s where you want to go do stuff. And that's going to like slow down a lot in your 80s. where should I be spending while I actually have the ability to do it? Because I don't think people really internalize how much their mobility and energy drops with age, especially like old age. And once you get to that point, like when you're 85, you can barely see or walk. There actually isn't that much you can spend the money on to do other than just healthcare related, like staying alive stuff.

36:45So versus you're 60, you still have a ton of energy. Your kids are probably out of the house. Like you should probably take the, like, I don't know. I have like a great uncle and great, they just twice now, they've just sailed around the world. They're getting too old now where they can't really do it anymore. They took a mini retirement in their 40s and just like sailed to Australia and New Zealand, which is like kick ass. It's my grandpa's sister and her husband. They did that. My uncle went down and visited them when he was in high school or college. And then they did it again in their 60s.

37:13And it's like, yeah, take a mini retirement. You made all that money in your 20s and 30s and early 40s. That's like 25 years of making money. take a year off and go do a sabbatical and then come back to it if you need to. I just, the whole idea of I'm going to save all my money over the most valuable parts of my life to then try to spend it and be like least valuable part of my life is just a really stupid trade where I think it comes down to either people aren't really running the numbers on it or my more like meta philosophical introspective take is like people really don't like contemplating their own mortality and aging and just like the like call it depreciation their physical self where to fully understand that you need to capture the moment now you also have to accept that like you're fighting against the clock it's almost easier to just ignore that reality and then if you're ignoring that reality you just keep focused on making the number go up so my my like this is my like crazy young person take on a lot of this is that a lot of people's problems just come from like, they don't want to deal with the fact that they're going to die one day.

38:21And if you actually internalize that, you would probably be a lot more intentional about how you spend your money and your time.

38:27Ryan Hawk:Have you talked to Bill Perkins, the Die With Zero guy? We have never talked in person, but like we've chatted on Twitter before a few times. What do you think of him? So one, I think Bill Perkins has, I think he is the perfect type of rich dude where, I don't know, as far as he made a lot of money as a trader and running a fund, he's also a pro poker player. He's produced movies. He's a bestselling author. I don't know. I follow him on Instagram. Him and his wife and new kids seem to be having a great time just like bowling around on their boat or whatever. He made the money and knows how to spend it.

38:58But he's still like an, he started a couple of venture backed companies. He's like still a super active entrepreneur businessman, like runs a fund. But his whole philosophy of like die with zero and like spend out the money over the course of your life, I think is right. Like if you put yourself in a position where you're at the top of your game, what do you want to do with that? But what's really interesting about him is in the first chapter of his book, he talks about how his best friend in his first job took a few months off and just went to Greece and just like hung out in Europe. He took a payday loan from a loan shark because they were only making like 20K a year at the time in Manhattan, which was even back then, that was nothing.

39:32And just went to Europe for three months. Guess what? He came back and he was a successful energy trader in Texas. Him and Bill had very similar career paths. The difference was one of them had way more fun at 24 than the other one. And like one of Bill's regrets was that he didn't really do a trip like that until he was 30. And by then that window of like crazy young guy going on journey, he had some story about like meeting some Greek girl and like falling in love or some fling. Like he just didn't get all those random things at 24. And he was like, I could have done that and still have the same career.

40:02So Bill's whole take on like the usefulness of money. I'm like pre-aligned with.

40:06Ryan Hawk:You just retweeted this. I think right before we started somebody's advice, basically here it is. It says for young people. I just think, I disagree. I think it's for people. I think you could cut out the young part. Experiment as much as possible. Don't feel like you're wasting time. The only real risk is not doing anything. Again, we're increasing the potential. You mentioned this earlier, but every single opportunity in life, literally every single one of them comes through a person. Yep. And that comes through a person. you probably have some sort of a relationship with. And the only way, I think, to develop an actual real relationship with a person is to go out there and be with them, to see them, to increase the odds that you'll actually touch shoulders, you know, going out there and doing things.

40:56Ryan Hawk:So I think the only risk is not doing that. And I feel like this is kind of the mode where you're at. Yep. So that retweet was Steve and WAP. The company's called WAP. It's like a e-commerce company. hilariously. I joke that they're like the Shopify for course bros, but they're like the e-com platform for all the like, call it Gen Z people doing weird e-com sort of scammy stuff. WAP is a real business. I don't know if a single one of their customers have real businesses or not, but they built like a sick platform. It's funny. There's this whole subset of advice that like, like Stephen's proud about my age.

41:32He looks like he's in his twenties. There's this whole subset of advice that like young people give that probably applies to everybody, but you don't want to be the 28-year-old who's like intentionally giving advice to the 50-year-old because you're not there. So you say this is for young people. That's kind of like my book, like the whole thing that I have geared it toward people in their 20s. In reality, a lot of the like time and money and opportunity costs and status game stuff is like pretty applicable to anybody, but I can only like with confidence say like, I know what it's like to be a 25-year-old dealing with this stuff.

42:05because I had been a 25 year old. I've never been like a 40 year old with kids. But yeah, going back to like that take itself, I mean, the one thing I'll push back on you a little bit is like, I agree that like being like very like experimental taking shots and trying stuff is basically like say like having high agency and the ability to like be uncomfortable is a useful lifelong skill. I think you have a lot more leverage on it when you're young because like the older you get, the more you have to have like proof of work for people to take you seriously versus when you're young. I talk about this in my book, but your potential gets valued at a premium in your 20s.

42:42And then like, as you hit your 30s and older, proof of work matters more and more. Being heavily experimental and trying a lot of stuff when you're young just speed runs the time in which like you can make contact with interesting people in a lot of different domains. And also like your learning curve accelerates because the more that you're experimenting when you're young, the more you can like go up these like proficiency curves and different vectors. And you can develop a feel for like what you actually like doing and where you want to spend your time. So by the time you hit your 30s and 40s and you really want to see those bets compounding, you have like a very good sense of self, right?

43:18It's like you experiment a lot when you're young. You develop a skill set to experiment and take shots versus if you never really take shots. I think it's much harder to start being risk on at 35 if you were never risk on in your 20s, right? So it's a lifelong skill, but like anything else, the ability to do things in the compound compounds, but you want to take a lot of weird, interesting shots when you're young. So like you can figure out which of those paths you want to double down.

43:44Ryan Hawk:It reminds me of, um, I have the section most recent book. It's just called the best networking tool. And in my opinion, the best networking tool is doing great work, which is what you're talking about, like competence, not just experimenting, but I mean, one of the examples, it's a little bit crazy and it's not a perfect example because her dad's famous but like how does gracie abrams get on the arrows tour as an opener i i saw her open it was one of the shows i went to and with my daughters and um she did it because she she worked really really hard and wrote beautiful great music in some people's eyes i like it yeah and taylor noticed and taylor called people who she noticed was really really good so how did gracie get in front of taylor she created great work she was very competent at her job right she's very good at being a musician and taylor said let's go did her dad and all that help probably yes right but if she wasn't good it doesn't matter that's not happening i think part of it is the best networking tool in the world by far is doing great work other people will then notice and then And that creates the opportunity for you to meet.

44:55Ryan Hawk:And then it's on you to make the most of those opportunities. But the best networking tool is creating great work. Yep. Yeah. Totally agree with that. One question more before we go. The champagne question comes from my friend, Jason Gaynard. It's a year from now, you're surrounded by all the people you love, friends, family, and you guys are popping bottles like crazy. You're celebrating. I'm curious, what are you celebrating? I mean, hopefully my book blew up. Like at the time of recording this, this will come out in two weeks, I guess. like when it actually like comes out it'll be right around watch day i mean the like you've been through the book gauntlet a few times now this is my first time going through it it's like there's so much you can do to try to make a book do well but at the end of the day you write the best thing you can you do what you can to you know get people to know about it and care about it and then ultimately like it either travels word of mouth or it doesn't right so like i'm less concerned with the oh i need to get big marketing pop and i want this to be a thing that like a lot of people do that speed run the launch fine.

45:52I want it to be a thing that a year from now people actually care about and have like told other people about and whether that's like, I don't know, like I'm not going to put a set number on number of sales or if it's a New York times list or whatever, but like for what I wrote to be a relevant thing, people are talking about a year from now and there being some milestone or benchmark that I hit a year from now, probably that.

46:12Ryan Hawk:Yeah. I love it. Book is called young money, a field guide to wealth and purpose in your twenties. as we just said though it certainly applies to people beyond that look at that dude the hardcover i think looks a lot better the colors look better than the soft back it looks good they sent me one of the soft ones early ones i gotta get the i gotta get the hardcover too but it's really well done dude like your other writing it's obviously uh i love it big fan of your work man and uh certainly we're going to continue our dialogue as we both progress man 100 thanks again for having me

46:45Ryan Hawk:It is the end of the podcast club. Thank you for being a member of the end of the podcast club. If you are, send me a note, Ryan at learning leader.com. Let me know what you learned from this great conversation with Jack rains. A few takeaways from my notes, get the boring stuff on autopilot. Spend less than you make build the emergency fund. Take the full 401k match and automate the contributions, dollar cost averaging every month, no matter what. Set it up once so you can stop thinking about it and spend your attention on the decisions that actually change your life. Get the boring stuff on autopilot.

47:25Ryan Hawk:Next, spend on the things that expire. Some experiences only work at a certain age. Some of this comes from Bill Perkins and Die With Zero, meaning if you're going to go hiking, do it now. If you're going to go skiing, do it now. Maybe later in life, you won't be able to. So like in Jack's case, sleeping in a hostel with your best friends is an adventure at 24, but you don't want to do that at 40. So what's something you want to experience right now, but haven't done it yet? Take this as a nudge to do that thing right now. Much like Jack's grandmother taking him to Africa when he was 11 years old and spending on experiences.

48:03Ryan Hawk:And then the best networking tool, do great work. The most reliable way to meet people worth knowing is to do something worth noticing. Jack has created some life-changing relationships for himself because he's had the guts to publish his work online, and it's really good. And he's amassed a big fan base, which has led to all of those great opportunities. So how can all of us network with others? Do excellent work. Once again, I want to say thank you so much for continuing to spread the message and telling a friend or two, hey, you should listen to this episode of The Learning Leader Show with Jack Raines.

48:45Ryan Hawk:I think he'll help you become a more effective leader because you continue to do that. And you also go to Spotify and Apple Podcasts and you subscribe to the show and you rate it, hopefully five stars, and you leave a thoughtful review by doing all of that. You are giving me the opportunity to do what I love on a daily basis. And for that, I will forever be grateful. Thank you so, so much. Talk to you soon. Can't wait.