The Algebra of Wealth: A Simple Formula for Financial Security

by Scott Galloway

Economic security is just a means to an end. Specifically, the time and resources to focus on relationships without economic stress.

Wealth is a means to an end: economic security. Put another way, wealth is the absence of economic anxiety. Freed of the pressure to earn, we can choose how we live. Our relationships with others aren’t shadowed by the stress of money.

This is the first lesson in this book: economic security isn’t a function of what you earn but what you keep and knowing how much is enough for you. As

Wealth used to be a better seat. Now it’s an upgrade to a better life.

The key to happiness is our expectations, and unrealistic expectations guarantee unrealized happiness.

What kills you is stress, and much of this stress is a function of not having economic security. Work without economic stress evolves from necessity to purpose.

Stoicism is about living an intentional, temperate life in and out of work. It’s about saving money, for sure, but also developing strong character and connecting with a community. This stuff matters.

Focus is primarily about earning an income. As I discuss, income alone won’t make you wealthy, but it’s the necessary first step. And you’re going to need a decent amount of it. So we’ll help you plan and navigate a career and maximize the income it generates.

Time is your most important asset. It starts and ends with an understanding of the most powerful force in the universe: compound interest. We’ll share how to make it work for you. Time is the real currency, the one as...

Diversification is our take on the traditional personal finance questions, a road map for making sound investment decisions and for being an educated...

Economic security doesn’t derive from an intellectual exercise; it’s the result of a pattern of behavior.

Character and behavior exist in a self-reinforcing cycle. Just as our actions reflect our character, our character is ultimately the product of our actions.

Stoics regard the development of one’s character as the highest virtue,

“The easiest way to make a dollar is to save a dollar”

Capitalism harnesses the ingenuity and energy of an entire society toward a singular purpose—to persuade you to spend money.

action. The gap between your intentions and your actions is a decent forward-looking indicator of your future success, emotionally and financially.

The Stoics identified the four virtues: courage, wisdom, justice, and temperance.

“Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.”

The key is to train our habits proactively, such that our reactive, automatic response to stimuli matches the response we’d choose if we could take the time to make the choice.

“Your identity emerges out of your habits.”

Working hard by itself is just burning energy into the capitalist void. Get strong so that you can provide for others. Gain power so you can do justice. Working for work’s sake is economic masturbation.

Money is the ink in your pen, but it’s not your story. It can write new chapters and make some brighter, but the narrative arc is up to you.

“There is no enjoying the possession of anything valuable unless one has someone to share it with.”

You are never more vulnerable to a huge mistake than after a big win, when you begin to believe the falsehood that your success is all about you. Yes, you’re brilliant and hardworking, but greatness is in the agency of others, and timing (and other features of luck) is everything.

What I have found is that the most important attribute is, as Winston Churchill said, “a willingness to move through failure without losing your sense of enthusiasm.”

Nothing Is Ever as Good or as Bad as It Seems

You shouldn’t. You don’t need to respond to every slight, every small injustice.

The Stoic approach to anger is to cultivate indifference. We can’t control what others do, but we can control our response.

power is a drug that downplays costs and magnifies rewards.

As you build up your career, build a kitchen cabinet of people who can elevate you but also ensure you’re grounded (see above: be honest with you). These should be people you trust, people who have your best interests in mind, and people who aren’t afraid to tell you when you’re being an ass. Your kitchen cabinet will be who you turn to when you need career advice, second opinions on both business and personal decisions, and generally people to bounce ideas off of.

As with so much science, philosophy got there first. Two thousand years ago, Seneca wrote: “Associate with people who are likely to improve you. Welcome those who you are capable of improving. The process is a mutual one: men learn as they teach.”

Stoic philosopher Epictetus put it this way: “Above all, keep a close watch on this—that you are never so tied to your former acquaintances and friends that you are pulled down to their level. If you don’t, you’ll be ruined. . . . You must choose whether to be loved by these friends and remain the same person, or to become a better person at the cost of those friends . . . if you try to have it both ways you will neither make progress nor keep what you once had.”

Or we can choose a path, deliberately, with foresight and flexibility. We can be conscious. We can focus.

Working hard is horsepower. It moves the object of your career forward. Without focus, you could just burn fuel spinning in place.

Just as balance is something you should seek over the course of your life, not your day, most successful couples find balance jointly, not independently.

If someone tells you to follow your passion, it means they’re already rich.

Your mission is to find something you’re good at and apply the thousands of hours of grit and sacrifice necessary to become great at it. As you get there, the feeling of growth and your increasing mastery of your craft, along with the economic rewards, recognition, and camaraderie, will make you passionate about whatever “it” is.

For most of us the kind of passion that guides us, a lodestar-on-the-horizon kind of passion, is not a birthright. It’s something we find through hard work.

“Follow your passion” is Latin for “Prepare to be exploited.”

In contrast with passion, talent is observable and testable; it can be more readily converted to a high-earning career, and it gets better the more you exploit it.

Talent is anything you can do that others can’t or won’t.

What roles do others ask you to take on? Where have you had success, where have you struggled? It’s important to look below the surface at these experiences for deeper talents that are transferable to your career. Ask why these experiences have played out the way they have.

Achieve economic security and follow your passion on weekends.

Your job, your profession, and your industry are all different.

What you actually do (and the talents it leverages) sits at the juncture of industry, domain, employer, geography, and other factors.

Market dynamics trump individual performance. (I realize how awful that sounds.) Someone of average talent at Google has done better over the past decade than someone great at General Motors.

Another macro consideration is to look for ways to leverage other people’s investments.

passion careers are a trap. The more appealing an industry appears from the outside, the less rewarding it probably is as a career.

Our economy benefits from the mythologizing of entrepreneurship as we need people to pull the future forward in ways that challenge orthodoxy and disrupt legacy businesses. But the stories we tell ourselves about entrepreneurship are based almost entirely on the sliver of ventures that became phenomenally successful.

It pays well, even extremely well, though it’s not a path to extreme wealth, because it’s cursed with the same problem as any business where you’re selling your time: difficult to scale.