The great investor Warren Buffet once said, “Few aspects of human existence are more emotion-laden than our relationship to money.” You might hear of friends or colleagues who hit it big in crypto or real estate and think you ought to do the same. But that’s just your emotions (and need to fit in) talking.
Unfortunately, we can’t stop having emotions, and we’re simply hardwired to want to conform to social norms. So what can we do if we want to get a handle on our finances?
In today’s episode, Dylan talks about the importance of working in concert with our emotions, how social norms force us to make suboptimal financial decisions, and the most effective approach to wealth building.
- [04:40] Why human beings are social creatures
- [10:17] How social conventions force us to make suboptimal choices with money
- [14:11] Why even sports champions are not immune to conformity
- [20:10] The price of conforming to social norms
- [22:22] The most effective approach to wealth building
[00:00:00] Intro: Forget the civilized path. It’s time to break the chains of debt and dependency, take control of our financial lives, and live free. This is the Fiscally Savage Podcast.
[00:00:15] Dylan Bain: Hello and welcome to Fiscally Savage. I’m your host, Dylan Bain. And today, I want to tell you about when I was in grade school. See, when I was in grade school, we would go out for recess to the parking lot behind the school because we didn’t really have a whole lot going on and the other boys would play football. We would play two-hand touch football in the parking lot of the school, and most of them also had the like premier jacket for their favorite sports team. It was a starter jacket, specifically a pullover starter jacket. Now, I really wanted to be able to play football with these boys, so I always asked and I was always picked last. And I looked around and it was always me and a couple other guys who didn’t have the starter jacket. So I begged my parents to give me a starter jacket like anything. Please, please, please. I just — that’s like the only thing I want. And so for Christmas, I got it. It was a Green Bay Packer pullover starter jacket. It was perfect. It was exactly what I needed to fit in with these other boys, and I was certain that this time I was gonna be picked for the football teams that formed at recess. And nothing happened. Like literally, I walked into school the next day and I was so ready for the people to be like, Wow! That’s an amazing coat, and to like take my rightful place among the social hierarchy of my middle school. But nothing happened. And so I was undeterred. I was — I went and I had the same hairstyle as everybody and I listened to the same music, even though I didn’t like it. And then, I did everything, everything. I copied everything that they did, and it just didn’t matter. I just wasn’t going to fit in.
[00:02:06] Now, ladies and gentlemen, I tell that story because money is emotional. When we’re dealing with our money, we’re building net worth, our emotions are what are gonna make the difference in our money stories, our money actions, and the amount of wealth we are able to build in our lifetime, which will then affect the legacy that we leave. It’s important for us to understand that on so many different levels, your emotions around money and how the emotions are driving the car are actually more important than your saving strategy, your investing strategy, even up to and including necessarily the line items in your budget. Because how our emotions are playing this game and how we are working in concert with them is gonna be the determining factor at the end of the day. But our emotions don’t exist in a vacuum. Of course, a lot of our emotions are influenced by the different inputs that we have in our day-to-day lives, whether it’s listening to podcast, radio, TV, whatever, right? Like you can watch a segment of news on your favorite propaganda machine and they’re going to then like point at you and tell you that you’re under attack and you’re gonna feel bad, right? Like that’s part of the job. The media has an agenda. That agenda is to make money. Nothing makes money like fear and outrage. But why is it that if that person on the screen is trying to tell me that I’m under threat, then I actually feel like I’m under threat? Like what’s going on? Or more to the point, if you look around, why is it that so many of the suburbs look cookie-cutter, grocery stores start looking exactly the same? What was with the success of McDonald’s? I mean, like stop and think about that.
[00:03:41] I remember watching this World War II movie where this guy had, you know, was pitching this idea, that after the war, he was gonna go home and he was gonna start a burger chain, so that you could go to Philadelphia or Chicago or St. Louis and you could get the exact same burger and the exact same fries. And people laughed at him. They thought this was dumb because, you know, if you’re going to Chicago, you want Chicago’s take on a burger and if you’re going to St. Louis, you want St. Louis’ take on a burger that is inexplicitly somehow inferior to the Chicago version. But you get the idea here, right? Like it seems like on some levels humans dig conformity, like and especially here in America, like we live in this ultra-materialistic, ultra-individualistic frontier society; this idea that like somehow we’re all these, you know, rugged individuals and yet we’re all driving around in the same type of cars that also somehow line up to our political affiliations and we can tell a lot about you by the type of shoes you wear.
[00:04:40] And that’s because humans are social creatures. Like at the end of the day, we’re social creatures — the fact that the human animal gives birth to a child that is completely dependent on its parents for a minimum of 12 years. Like in modern society, we say like, you know, it’s an 18-year commitment, but it’s really not like in an evolutionary sense. Like this is I think on some levels why we have so much fighting between parents and teenagers because if you go back a couple hundred years, you know, a 15-year-old male is considered an adult. Like they have a job, they’re working in theory, and all these other things. The fact that human beings’ reproductive cycle relies on a support network is proof positive that we are in fact social creatures because babies would not survive without the society around. Mothers only under the most heroic of efforts could actually birth a child and then bring it to full maturity without outside help. I mean, this is why we had the tribal structures that we did and why we have the societies we do. And that’s why news media places are so good at making you feel afraid because they’re tapping into that. This is a primal fear. At the end of the day, the idea that we want to conform to a group is a primal fear inside of us because individualism only exists in the context of large industrially supported infrastructure.
[00:06:06] Like even if you go to the American mythos of the rugged frontier man who lived out in the cabin in the woods — he was a fur trapper, you know, with his coonskin cap — and he comes down and he’s all grizzled. Well, where did he come down from? Well, his cabin in the woods. And why did he come down? ‘Cause he was going to town. And why was he going to town? Because he was selling his furs. Well, why was he selling his furs? Because he was buying more metal traps and ammunition and supplies because that rugged frontier man, his livelihood is dependent on the town. The industrially produced goods that he’s buying in that town are what enable him to live in the cabin in the woods by himself in the first place. He is dependent on that town. If for some reason he became ostracized, then well then that town stops selling to him and he dies. Human beings in no context have ever lived out by themselves. They’ve always had a tribe of people around them because eventually, that rugged frontier trapper dude is going to run into a group of humans who are gonna be like, Wow! It’s one dude. When he falls asleep, let’s take his stuff. And that’s what they’re gonna do. So he needs somebody to stay awake when he’s asleep. I mean, that’s how we organize ourselves. We’re social creatures. I mean, even the American cowboy traveled in groups. Like the idea that the cowboy was driving a herd by himself? No, that’s not true at all. Like if you actually look at history, the cowboys themselves were considered the what we think of cowboys or actually the cattle guards and the people who were actually controlling the cows were nothing like what our current conception is. So what you would have is you’d have all these cows in one area and then have to go from the place that they were grazed to the railroad depot again with the industrial supports in order to sell them, in order to make money that then supported the ranch in the first place. And so what you would do is you’d get a bunch of cattle hands who would then drive the herd and manage it, then you’d have cattle guards because, well, you know, people would like to steal your cattle ’cause that represented wealth on the hoof, and so then you had your border guards, which are what we consider to be the cowboy today. Like when we think about cowboys, that’s what you’re thinking about. And then of course, all of that, there’s a, you know, guy with the wagon who’s cooking all the food for all these people, and blah, blah, blah, blah, blah. And you see how this works. Even the icon of American individualism relied on a group and an entire system that supported their livelihood because they wouldn’t even exist if the railroads didn’t.
[00:08:29] And so this brings us to the idea that like the iconic cowboy, the frontier men, the God-fearing churchgoer, the suburban yuppie, the urban hippie, this kombucha dude, right? Like this is why people make fun of like things like man buns and hipster beard, and I guess I’m dating myself with that reference. But it’s an indication of an in-group, and if you don’t conform to the in-group, then you are part of the out-group. It’s the separation of us versus them. Dress, speech, religion, food, even up to the car you drive are parts of us as humans playing out our social nature as beings because our emotions are so tied to the idea that we have to conform because if we don’t, it means ostracization and it means death. So stop and think about this for a second.
[00:09:16] You might be sitting there thinking, Dylan, I mean, this isn’t that bad. Well, it actually is because even in my own life I see this a lot. For example, my wife always laughs every time I call and talk to my parents or my parents call and talk to me. And the reason she does that is because as soon as I’m talking to them or as soon as I find my way back to Wisconsin, my accent comes back. And I’m not gonna try to repeat it here, although I could. But why do I do that? Well, because I’m conforming to that group to show that, yeah, I’m still one of you. And when it comes to our money, these social conventions that we try to conform to actually force us to make suboptimal choices with money. There isn’t a good way to avoid doing this behavior if you don’t understand what it is, why we do it as humans, and what the outcome we’re actually looking for is. That is to say, whatever our in-group is, we’re gonna continue to repeat those patterns over and over and over again, expecting a different result unless we understand what it is that we’re doing.
[00:10:17] So let me give you an example. Parents who are trying to enforce their kids the idea of like, we can’t afford it. You gotta think about how you spend things, Billy. You can’t have that candy bar. You know? You’re just not thinking straight. Well, what are we doing? Well, we’re shaming the child. We’re telling them there’s not enough resources for their needs to be met, and therefore we’re now scaring them on a very deep, primal evolutionary level. Why are we doing that? Well, parents aren’t doing it because they hate their kids. Quite the opposite. They’re doing it because they actually love them intensely, and they’re doing it because they’re trying to set their child up with a mindset and a mentality, so that they can live a more successful life than they the parents are living currently — free of the same stressors that keep the parents up at night. Now, of course, the problem here is is that maybe that parent who’s now shaming the kid does not fully understand what they’re doing or why they’re doing it. They’re really just playing out a pattern that their parents picked up from their parents. So it’s really that kid’s great-grandparents who are driving the current situation. And if we examine what outcome we’re looking for — so in this case, we wanna help educate the child on how we can properly manage our money. We’re trying to help them make good decisions with their money because we love our kids. Well, okay. So now once I have that, I can backwards-engineer and say, okay, well, why am I doing it? What do I want? I want them to be really good with money. Why am I doing it? Because I really love them and I want them to have a safe and secure life. Okay. So now, what can I do to do that? Well, I can teach them good money habits. But children learn by one of three ways: what you do, what you do, or what you do. So pick whichever one works for you, and then do that thing. And it really is that simple at the end of the day. When we look at what we do — why do I want the pickup truck? Why do I want the Prius? Why is it that I, you know, only drink a certain type of beer? Why is it that I, in my case, really want that fried chicken sandwich? Well, there’s reasons for all of that and a lot of them have to do with social conventions we picked up along the way. You know, in the fried chicken sandwich category for me, it was always a special treat with my dad, and that was something I did when my mom was at work on the weekends. And so I have all these touchy feeling emotions around fried chicken sandwiches from a very specific, religiously orientated chicken shop. But you get the idea.
[00:12:36] And so when we start looking at it, we can see, oh, we’re making suboptimal decisions. Dylan should not be getting that fried chicken sandwich. The parents should not be shaming their kid. Or even just look at all the stories I’ve told on this podcast going back. You know, the fact that I couldn’t buy a pair of shoes, my wife thinking that I was trying to starve her and our children, and it goes on and on and on. And this is to say that when we start looking at this societally, this will start affecting our money decisions because we look at other people and go, oh, that guy’s successful because he did an Airbnb strategy. Oh, look, there’s a crypto millionaire. Oh my god, this guy’s into real estate. This guy picks stocks. He’s a day trader. Of course, it’ll work. Like we start trying to keep up with the Joneses without actually understanding the risk that we’re taking on, and we’re doing that not because it makes any logical sense, although I will be happy to be on the side of your logic brain is the in the passenger seat of the car, trying to argue with your emotions, who are driving the car about where to go, and when you finally arrive at whatever destination your emotions bring you to, your logic brain will do mental gymnastics in order to try to justify why that was what it wanted to do all along. That’s called justification, people. But if we actually stop to look at it and we let our logic brain and our emotional brain work together on a problem because we fully integrated both sides of those of ourselves, we’d see that maybe there’s better ways. Maybe there are more optimal situations. Maybe the way everyone else is doing it is not really the way we should be doing it if what we wanted was the most optimal solution.
[00:14:11] And I’m gonna use an example that I think is really poignant because even the best of the best are not immune to this. Champions — men who spend their time trying to be the best to win. That’s their sole focus. Even the greatest champions we’ve seen are not immune to this because you would think that a champion would do whatever it takes to win, right? And so I wanna recount to you what I think might have been the best game of basketball ever played on March 2nd, 1962. Wilt Chamberlain. Up against the New York Knicks in Hershey, Pennsylvania. By all accounts, it was supposed to be a regular ordinary basketball game. But on that day, Wilt Chamberlain showed up early and he had gone to the Penny Arcade, which had a shooting gallery, and he realized he couldn’t miss. He hit every target flawless. And that was his first clue that today was gonna be a special day. And on that game, Wilt Chamberlain scored more points himself personally than anybody else in the NBA had before or since. He scored 100 points in a single game. Now, I went and looked it up. Kobe Bryant holds the number two spot at 80 points or a 20-point difference. Wilt Chamberlain scored more points by himself than a lot of teams score in an entire game. And this is an incredible feat of probably one of the best basketball players to ever have lived. But what — that’s not the highlight of the story. My point in telling it though is that Wilt Chamberlain was a champion. And in fact, if Wilt Chamberlain had an Achilles’ heel on the basketball court because off the court he had some, you know, shenanigans, it was his ability to hit a free throw. And in the game of basketball, free throws are should be an easy point. There should be no reason you can’t sink that. But NBA players are notoriously bad at free throws. They leave tons of points off the board because they miss those shots. And Wilt Chamberlain, he was like one of the worst. In his first three seasons in the NBA, he had a sub-50% free throw percentage. So that was to say, if you could foul him all you wanted because it was a coin flip as to whether it would penalize you on the scoreboard. But on that night in Hershey, Pennsylvania, he made 28 out of 32 or 87.5%. In fact, that season, the 61-62 season was his best season of his entire career hitting free throws. He was typically a sub-50% shooter. Like some of his best seasons, excluding this one, were 51% .Other seasons were in the low forties and sometimes thirties. But this season was different because in this season, he made 61%. That’s an 11-point improvement over his next best season. Now, if I told you, Hey, I can give you an 11% better return out of the stock market, you’d do it, right? If I told you I could give you 11% more money out of your paycheck, you’d do it, right? And this is what Wilt Chamberlain eventually said “no” to because the next season, the adjustment he made for the 61-62 season, he stopped doing and never did for the rest of his career. What was the adjustment? He was shooting his free throws underhanded like Granny style. Like literally holding the ball down between his legs and underhandedly just tossing it in the bucket. Because it turns out, ladies and gentlemen, that’s actually the most statistically sure way to hit your free throws. It’s not even funny and it’s simple to learn and once you learn it, you don’t really need to continue to practice it very much. Just, you know, keep the wheels on. In fact, Rick Barry, who’s one of the best free-throw shooters to have ever been in the NBA with a 90% free-throw percentage, shot almost exclusively underhanded for his entire career at a time when the NBA average was 70% for the vast majority of players. It’s mind-blowing because we see nobody in the NBA who’s doing that now, even though every time we’ve tried it, all of the math, all of the studies, every time we brought in experts and they teach players how to do this, their free throw percentages go up. And if you actually looked at the last three seasons of the NBA and looked for games in which a higher free-throw percentage would’ve won you more games, what you see is that the typical NBA team would win 5% more games than they did if they had done this technique with their free throws. That is to say, it doesn’t happen all that often about one out of every 50, but that’s about one game every week in terms of this. And so like this should be a no-brainer, but nobody does it. And it’s also notable that while the NBA as a total whole has more or less stayed consistent in their free-throw percentage, the top players have gotten notably better because they’ve hired a bunch of expensive coaches and they spend an inordinate amount of time on it. Well, that should tell you something that in order to move this one statistic, there was one way that was super easy, pretty easy to learn, but it looked a little funny given how everyone else in the game plays. But they didn’t do it. They instead wasted a ton of time, energy, and money in order to get the same result they could have gotten faster and cheaper. And for the entire team, not just for your superstar. And why did Wilt Chamberlain stop doing it? And why did Shaq, another celebrated player who refused to use this technique despite his abysmal free-throw percentage, not use it? And they both said because it looks silly. That’s right, ladies and gentlemen, these champions whose sole job it is is to win basketball games gave up and left points on the table — easy attainable points — because they were afraid of looking silly. Just let that sink in. Take all the time you need. Pause the podcast if you need to and just mull that over.
[00:20:10] That’s insanity, but it’s only insanity to the logic side of the brain because on the emotional side of the brain, we play this game all day ’cause our money works the same way. How many of us are keeping up with the Joneses, and then in the end we start regretting it? How many of us have made purchases that we didn’t want? How many of us have aligned stock portfolios because we were trying to mirror somebody else, or more to the point, we didn’t invest because we were afraid of screwing it up and then looking silly? How many of us do that? Lord knows I do. And if I’m gonna be entirely honest with myself like, you know, I drive a Nissan Sentra. It’s a paid-off Nissan Sentra. It’s very nice. I take good care of it. I’ll drive that car a lot. But if I had my druthers, if money didn’t matter, if I didn’t know what I know already, oh, man. I’d want the pickup truck. Why? Because all my friends have pickup trucks. And it always looks funny when we go to the gun range and there’s all these pickup trucks and then my Sentra. But when it comes right down to it is I’ve made a different choice. And I can look at all of these other people and say, well, I can keep up with the Joneses knowing what they’re paying for those trucks or I can just have my paid-off Sentra.
[00:21:17] The other thing that we see is that we see people with outlandish successes. Like these are the Bitcoin millionaires or the people who hit it big in the real estate and they crow about it. In fact, they never shut up about it. They go on YouTube channels and podcasts and they just talk about all this amazing success they had with just starting the business and all they had to do was stay consistent. You know, of course, ignoring all of the places in which that fails, the massive amount of risk, and the fact that at the end of the day, a lot of those big swings, if you make it, it’s either because you’re lucky or you had an outsized effort. You know, an outsized effort that we may not be willing to put. If you think about going back to these champions, this is what they did with their lives. They didn’t have a whole lot of other happiness because everything else got cut out in order to win unless, of course, their free-throw percentage had to be a little higher and the only way to do it was to be, you know, throwing an underhand. We tend to believe that everyone else has it figured out. We tend to be overly concerned that we aren’t conforming. We tend to believe that the only way to get rich is because that other guy over there who is always talking about it is doing that thing.
[00:22:22] And so when we’re looking at building net worth, we tend to go run over that person and go, how did you it? You know what? Here’s the thing. If somebody gives me a strategy, the first question I ask was: how many people on average are successful doing this exact same thing? And what I’ve found over time and over my clients coming into the coaching practice and me helping them along is that the ones who are the most successful rarely talk about it and it’s boring. Because it isn’t the big swings or the flashy thing that actually makes the difference. It’s the slow and steady. A big swing can get you from point A to point B really fast. But a slow, steady, methodical approach where you’re actually just, you know, you’ve created the process, you love the process, and you’re working the process, creates an inevitability in your life. By the time you start to see the real gains, you have created an inevitability that you’re going to be successful, and you didn’t do it with the big swings or the flashy thing. The method that we teach in my coaching practice is this very thing: slow, steady, statistically likely. It’s not sexy. It’s not the thing that you’re gonna go and talk to your friends about at a cocktail party or brag about on a first date. The method works, math is solid, and it creates an inevitability.
[00:23:40] And I kind of understand how this works because when I started to realize back in grade school that this jacket was not gonna make me popular and neither was the hair or the jeans or the shoes or the music or really anything else, I kind of just let it go and started doing things that I liked because I liked them and that was all I was gonna do. I wasn’t mad at the social rejection. Scared, sure — unsure, unsteady, all those things. But I wasn’t mad. I wasn’t vengeful. I wasn’t, well, I don’t care about anything. I was much more of the like I’m just gonna do this ’cause it’s fun because they’re never gonna like me anyway. And that was my attitude. But what I found was paradoxically that as I cared less and less about keeping up with all of my classmates and what they were wearing and what they were doing and spent more and more of my time doing the things that I enjoyed that focused on me that fed and nourished me, the more in demand I became and the more successful I was in the jobs that I was starting to seek as a teenager, the different places I was trying to go, getting that cute girl’s number in the corner, and so on. As I became more authentically myself and more separated from the need to constantly be clawing at conformity for social approval, the more social approval I found myself receiving.
[00:25:16] Outro: Thanks for listening. If you like what we do here, please hit that subscribe button. Leave us a rating and review. And share the content with somebody who would benefit from the message. You can follow us on Instagram, Facebook, and Twitter, all @fiscallysavage. And head over to fiscallysavage.com to get our free tools, suggested reading, and everything else you need to take control of your financial life and live free.