Shoot, Sorry – I Left My Wallet at Home

Scott Galloway believes financial security is just a means to an end, specifically “the time and resources to focus on relationships without economic stress.” In The Algebra of Wealth, the NYU Stern School of Business professor instructs that this is an achievable goal with one measly string attached: it. happens. slowly. Fans of the prince of all media know well his direct nature and the matter-of-fact style that cuts through typical noise, and this book is no different. Making it plain, Galloway says to focus our time to increase income streams and diversify our investments to strategically build long-term wealth. That may sound obvious, but how can a refresher on the basics of money management from a brilliant thinker be a bad thing? Like Bill Perkins did in his mind-blowing Die With Zero, Galloway admonishes that we don’t need to maximize the upside of our investments. Money is merely a tool, a utility meant to be enjoyed. Make a plan, take calculated risks, learn lessons. Wash, rinse, repeat.

The book is built around this handy formula: WEALTH = FOCUS + (STOICISM x TIME x DIVERSIFICATION). As noted, focus is on income which is the launch pad toward wealth. Stoicism involves saving money while developing a strong character and community ties. Time is defined as “your most important asset” when coupled with the eighth wonder of the world, compound interest. And diversification is what the author terms a road map for educated participants in the financial marketplace. Sound complicated? It might, but like any mountain it can be broken down into molehills. For example, income is to be divided into three buckets that cover day-to-day consumption, intermediate spending, and long-term investments. The first (a Netflix account, your shoe addiction) and third (something called “retirement”) are kinda cake, right? It’s the middle bucket that’s tricky, requiring written goals and the discipline to steer chunks of money into the bank account(s) for big ticket purchases from autos to tuition to vacations and every other unknown unknown caulked in the crevices between.

Now it wouldn’t be a Prof G joint without something spicy woven in. The man’s core role is to capture and keep the attention of sleepy undergrads and other continuing ed students, so he’s gotta rankle on some level. My personal favorite is to ditch the losers in your life. Galloway says it far gentler than that, and the broader point is to hang around wealthy people and mimic them, but let’s lighten things up and have a bit of fun, ya? He writes, “…you have no obligation to associate with someone just because you happened to be thrown in with them in high school or at your first job.” Amen, brother. A thought: replace one woe-is-me alligator-armed weasel with a go-getter with a healthy view of making, growing, and enjoying money. Lest you think the author is a heartless jerk, allow me to disabuse you of the notion – he’s a real softy, wrapping the book up with beautiful commentary on his late mother and one of his sons. He tells the reader to “embrace the wisdom to recognize time will go faster than you think.” Preach, Professor. Preach.

If you have anything to say about this – or book recommendations – kindly post below (rather than emailing me) to spark conversation. Thank you!