The Author of "Power of Habit" On Not Being Intimidated By Money

Wealthsimple is a whole new kind of investing service. This is the latest installment of our recurring series “Money Diaries,” where we ask interesting people to open up about the role money has played in their lives.

I have always enjoyed thinking about money. Even as a kid.

I grew up in Albuquerque. My dad was a trial lawyer, and I remember a lot of conversations around the dinner table being about questions of how you compensate certain types of injuries in the damage phase of a trial. He was trying out stuff from his cases on us, like whether he should ask a jury for half a million dollars or a million. For instance, if someone loses a limb in an accident, is a leg worth more than an arm? And even that has its component questions: For a professional soccer player, losing a leg would probably be worth more than losing an arm. And how do you go about figuring out how many dollars an arm or a leg is worth? Or the discussion would be: Which is worth more, a mother or a father killed in a workplace accident? If the mother has a five-year-old child when she dies in the accident, she’s theoretically worth more in dollar terms than if her daughter were 35. I think taking something that seems unquantifiable and finding real and practical ways of quantifying it was interesting to me early.

Money is a language the same way that Spanish is a language.

On top of that, I’ve always sold stuff. In second grade, I would buy stickers at this place called Pennysmiths. I would take the stickers home, put them in a photo album, and then sell them at school at a fairly significant markup. Then the school told me I had to stop selling stickers. So I started selling candy. Then they told me I had to stop selling candy, too. But it was a real discovery that if you took something that anyone could buy themselves and brought it to them, suddenly they’d be willing to pay a different price for it. And even way back then, profit itself was never the attractive part to me.It was the arbitrage that was interesting. It was learning to speak the language of money: what has a value, and where do we come up with that value.

We're constantly trying to arbitrage to maximize what is meaningful and minimize those things that aren't.

As I got older, I began to understand that money really is a language the same way that Spanish is a language. And people who learn how to be fluent in money have an advantage. A lot of people don’t think of money in those terms. They think of it as a thing in and of itself, that money is this tangible thing called dollars, but that's not right.A dollar is essentially a fungible stand-in for some other type of resource. Time is a resource. Energy is resource. A pension is a resource. Once you understand that a dollar is just stand-in for some other type of resource because we're trying to find some easy way to exchange one resource for another, then you begin to understand how money works. Again, it’s arbitrage. If you think about it, many of the questions we spend the most time thinking about are arbitrage questions: Does it make more sense for you to go to work and hire a nanny or to stay home with your kids? Should you catch up on your emails or spend half an hour talking to your wife? What has more value to you? At the root of that is actually one of the most important questions about what it means to be human—we're constantly trying to arbitrage to maximize those things that are meaningful and minimize those things that aren't. That’s at the root of all economic activity.

I had a different kind of path to becoming what I am today—a journalist and author. I went to Yale, and then I came back to New Mexico, and I started a company with my father in New Mexico that built medical-education campuses. That was a project, and once it was up and running and a little bit stabilized, I went to business school. We sold the company at the end of my first year of business school. Then, between my first and second years, I worked for a private equity group that specialized in real estate, mostly hotel and golf course deals. But I felt that job was less interesting to me than something else I had interest in: being a journalist. In private equity, every deal is unique and has its own problems, of course. But a big part of becoming more successful is learning to deal with the same problems faster and faster. To essentially make your work less interesting. In journalism, it's the opposite. You're basically encountering a different problem every single time. So I opted for the different problem every time choice. It was an arbitrage question. I was aware that people would say you couldn’t make a living at it.But there are people who say there's no money in all types of things. And it was interesting work. I will say, though, for a long time I took a financial hit by becoming a journalist. But since I have always been able to speak money, as a result, I felt that I would be able to make it sustainable for me.

I don’t experience a lot of anxiety about money. When people feel anxiety, it's usually about the unknown, because they're worried that they don't have enough for what's going to come next week or next month. Once a week, I update a spreadsheet that contains all of my financial information so I know down to the last dollar how much money I have in my accounts and how much I have in my investments and how much I have on my credit cards. Most people shy away from knowing that. People get scared about money. I don’t. My habits provide that reward. It makes me feel responsible to know where I am financially.

As told to Andrew Goldman exclusively for Wealthsimple. We make smart investing simple and affordable.

Wealthsimple uses technology and smart, friendly humans to help you grow and manage your money. Invest, save, trade, and even do your taxes in a better, simpler way.

Money Diaries

"I WAS WORKING AT A VEGAN BODEGA WHEN MY VIDEO WENT VIRAL."

Awkwafina Tells Us the Money Secrets of Viral Fame

subscribe

Get the best stories from our magazine every month

Sign up for our email newsletter

  • Money Diaries

    The Queen of the $3 Billion Eyebrow Empire

    Anastasia Soare arrived in America with, literally, zero dollars. She believed in hard work, and that people should care about the hair above their eyeballs. This is the story of her and her eyebrows.

  • Money Diaries

    Michael Katchen Believes Everyone Should Have the Same Starting Line

    The founder and CEO of Wealthsimple talks about the purpose of money, the importance of canoes, and how learning to be boring was one of the most important lessons in his financial life.

  • Get Started

    Get rich slow

    Powerful financial tools to help you grow and manage your money. Get started now.

    see-more cta
  • Money Diaries

    Welterweight Champ Errol Spence Will Keep Boxing Til He Starts Getting Hit

    A lot of boxers get paydays of millions of dollars and go broke after retirement. Spence — who says he will keep earning money until people really start landing punches on him — has different plans.

  • Money Diaries

    The Founder of StockX on Living the Sneaker Economy

    Josh Luber, the man behind the stock exchange of sneakers, explains how he helped found a market index for our most transient commodity: coolness.

` `

Meet Wealthsimple

Get rich slow

Powerful financial tools to help you grow and manage your money. Get started now.

Learn moreright arrow icon

Our best stories, once a month.

Sign up for our newsletter

The content on this site is produced by Wealthsimple Technologies Inc. and is for informational purposes only. The content is not intended to be investment advice or any other kind of professional advice. Before taking any action based on this content you should consult a professional. We do not endorse any third parties referenced on this site. When you invest, your money is at risk and it is possible that you may lose some or all of your investment. Past performance is not a guarantee of future results. Historical returns, hypothetical returns, expected returns and images included in this content are for illustrative purposes only. By using this website, you accept our (Terms of Use) and (Privacy Policy). Copyright 2020 Wealthsimple Technologies Inc.

;