A Few Laws of Getting Rich

There are 13 divorces among the 10 richest men in the world. Seven of the top ten have been divorced at least once.

Correlation isn’t causation, and that sample size is tiny. But a statistic that is so much worse than the national average, on a topic so fundamental to happiness, among a group whose lives are envied by so many, is interesting, isn’t it?

There are a million ways to get rich, most of which involve exploiting specific niches and one-off opportunities, to say nothing of luck. Universal rules about how to get rich are hard to come by.

But losing money, or losing happiness when you have money, or becoming a slave to your money – those stories tend to have common denominators. They are so common you can call them laws.

Measuring wealth is easy. You just count it up. Measuring some of the downsides of wealth is so much harder and more nuanced. They can be so nuanced and hard to measure that many people won’t even believe they exist. A downside to wealth? How could that possibly be?

Let me propose that the absurdity of talking about the downside of wealth is part of why wealth doesn’t tend to make people as happy as they thought it would.

When the benefits of money are so obvious but the downsides are so subtle, the downsides you didn’t anticipate can be more jarring than the benefits you expected.

I want more money, of course. Almost everyone does, albeit for different reasons.

This is not an anti-wealth list – just a collection of subtle downsides that are easy to ignore, and so common you may as well call them the only true laws of getting rich.

1. Most of what makes you happy in life has nothing to do with money, and realizing that once you have money can be a painful admission.

Will Smith wrote in his biography that when he was poor and depressed, he could dream about a future when he had more money, and that money making his problems go away.

Once he was rich, that optimism was gone.

He had all the money he could ever need and he was still depressed, his life was still filled with problems.

Rick Rubin once echoed something similar:

It’s hard to get really depressed until your dreams come true. Once your dreams come true and you realize you feel the same way you did before then you get a feeling of hopelessness.

Happiness is complicated, but if you simplify it into things like a loving family, health, friendship, eight hours of sleep, well-balanced children, and being part of something bigger than yourself, you realize how limited money’s role can be. It’s not that it has no role; just smaller than you may have assumed.

Think of it this way: Would you rather make $100,000 a year with a spouse who loves you, children who admire you, good friends, good health, and a clear conscience, or make $1,000,000 and have none of those things? It’s so obvious.

Of course you can be poor and miserable or rich and happy. But only the rich are aware of how tenuous that relationship can be. Gaining money probably didn’t fix your marriage, it didn’t make your friends like you more, it didn’t make you more fulfilled. So what used to be comforting optimism about what money could do for you is replaced by the stark reality of what it can’t.

Sometimes the dream is what feels good, and once you’ve hit it the dream is gone and you actually become depressed. Malcolm Forbes: By the time we’ve made it, we’ve had it.

2. What you think is admiration of your success may actually be envy.

The rapper Drake once said, “People like you more when you are working towards something, not when you have it.”

It can be hard to tell when that transition takes place, and it’s common for a rich person to think they are being admired when they are actually envied.

Author Robert Greene once wrote:

Never be so foolish as to believe that you are stirring up admiration by flaunting the qualities that raise you above others. By making others aware of their inferior position, you are only stirring up unhappy admiration, or envy, that will gnaw away at them until they undermine you in ways you cannot foresee.

This is especially true when what made you rich was some form of advertising your success in a way that made others want to help and support you. When admiration turns to envy, that support dwindles, and people’s tolerance for your errors shrinks. If a no-name journalist wrote a book obliquely defending Sam Bankman-Fried, no one would care – they may have actually congratulated the author. But since Michael Lewis did, the pitchforks came out.

Thoreau said, “Envy is the tax which all distinctions must pay.”

3. The richer you become, the less likely people around you are to tell you when you’re wrong, crazy, mean, or oblivious.

Matt Damon says, “You retard socially and emotionally the moment you become famous. Your experience of the world is never the same.”

The same may be true – and far more common – for those who become wealthy. No one ever treats you the same. And the worst part is that you may not even know it.

Artist Damien Hirst once said:

They all love you. The bank loves you, and the accountants love you, because they’re taking your money. Every year you get more and more people as well. One guy is taking 10 per cent and then it’s another guy taking 10 per cent and another guy taking 10 per cent and it’s all a big party. The people who give you the overdraft are your best mates as well, smiling at you and telling you that you’re amazing so you keep doing it.

Sometimes people take advantage of you intentionally, prying some benefit out of you. Other times they take you seriously when they shouldn’t. A big problem with bubbles is the reflexive association between wealth and wisdom, so a bunch of crazy ideas are taken seriously because a temporarily rich person said it.

Buffett once explained:

I was at my best at giving financial advice when I was twenty-one years old and people weren’t listening to me. I could have gotten up there and said the most brilliant things and not very much attention would have been paid to me. And now can say the dumbest things in the world and a fair number of people will think there’s some great hidden meaning to it or something.

4. Sometimes what made you successful was worry and anxiety, and you can’t let go of that when you’re rich.

I think what many people really want from money is the ability to stop thinking about money. To have enough money that they can stop thinking about it and focus on other stuff. It’s this weird relationship: They become obsessed with making money with the hope that someday they can ignore it altogether.

That obsession is fueled by stress and anxiety. It often shows up as career ambition, aggressive investing, and Type-A motivation.

Then, once they become rich, they realize they can’t let go of that stress. It’s become ingrained in their identity.

They work 80 hours a week because they want to eventually never have to work at all. But once they have enough money to retire, they can’t cut back because they don’t know how to do anything else in life but work.

A lot of financial planners I’ve talked to say one of their biggest challenges is getting clients to spend money in retirement. Even an appropriate, conservative amount of money. Frugality and savings become such a big part of some people’s identity that they can’t ever switch gears.

I think for some people that’s actually fine. Watching money compound gives them more pleasure than they would get spending it.

But those whose ultimate goal is to stop thinking about money are stuck. Refusing to recognize that you’ve met your goal can be as bad as never meeting the goal to begin with.

5. There is no easy way to manage wealth and kids.

Charlie Munger was once asked by one of his rich friends if leaving his kids a bunch of money would ruin their drive and ambition.

“Of course it will,” Charlie said. “But you still have to do it.”

“Why?” the friend asked.

“Because if you don’t give them the money they’ll hate you,” Charlie said.

Like a lot of Munger advice, I think this interaction is designed to be memorable. It’s probably 80% true.

But by and large, he’s right. Those are the two options for the rich: Ruin their ambition with inheritance, or risk some form of strife by denying them an easy life.

Warren Buffett once said that he often hears rich people talk about how dangerous a welfare society is, creating a generation of moochers reliant on food stamps and unemployment benefits. But “these same people are leaving their kids a lifetime supply of food stamps and beyond” he said. “Instead of having a welfare officer, they have a trust fund officer. And instead of having food stamps, they have stocks and bonds that pay dividends.”

Of course there are exceptions. But most of the exceptions – rich kids who inherit money and it doesn’t impact their ambition – are because the kids are special, not because the parents necessarily made a smart decision. If 18-year-old Bill Gates inherited $1 billion, it wouldn’t have stopped his ambition. Same with Steve Jobs and Elon Musk. Mark Zuckerberg was offered $1 billion cash for Facebook when he was 22 and he didn’t blink, didn’t even consider it.

But those are the rare birds. Most people need to be driven by fear of not making it.

My friend Chris Davis grew up in a wealthy household – his grandfather is legendary investor Shelby Davis, who turned $50,000 into almost $1 billion – and was told when he was young that he wouldn’t see a penny of it because his family didn’t want to rob him of the opportunity of making it on his own.

Chris joked: “They could have robbed me just a little.”

It’s never easy.

6. Quick wealth is fragile wealth.

I love the idea that the speed in which you made your wealth is the halflife for how fast you can lose it. Double your money in a year? Don’t be surprised when you lose half of it just as quickly. Blitzscaling? Blitz failing.

Two things happen with quick, fragile wealth.

One is that money that comes easily tends to be spent easily. When money comes quickly, the emotional cost of blowing it on something frivolous is low. You are only careful with something when it’s dear to you. Spending quick money that you didn’t invest much time or energy into earning can feel like the equivalent of a one-night stand: impulsive and prone to regret. Old money wants a tax shelter, new money wants a Lambo.

The other is that the quicker the wealth was made, the higher the odds it came from luck that will revert just as fast.

Put those two together, and whenever you see a surge of quick wealth – crypto in 2021 was a good example – you know it’s going to end poorly, as luck converts to risk and conspicuous consumption converts to inconspicuous lifestyle debt.

7. Reputations have momentum in both directions because people want to associate with winners and avoid losers.

The more successful you are the more people want to be associated with you – which is great.

But that’s equally powerful in reverse.

Someone early in their career can screw up and recover quickly, moving onto the next company. A successful person or company has each flaw blared across the news, saturating the gossip channels of their network.

Lehman Brothers’ 2008 struggles made front-page national news; a small community bank could have been at its wits end with hardly a soul aware.

A company like Sears also fits this bucket: Everyone is aware how strained it is, so no one – customers, employees, investors, vendors – wants to be associated with it.

It’s like the saying, “The higher the monkey climbs on the pole, the more you can see its ass.”

8. Expectations can rise faster than income, so a higher income sends expectations spiraling out of control.

Wealth is relative. Luxury is relative. Both are just a comparison between what you have and what other people have.

A quirk I have seen many times is that some of the wealthiest people are the most prone to expectations spinning out of control, because they become hyper aware of how other rich people live.

In 1907, author William Dawson wrote about how the feeling of wealth is relative to what you’re accustomed to:

A man of education, accustomed to easy means, would suffer tortures unspeakable if he were made to live in a single room of a populous and squalid tenement, and had to subsist upon a wage at once niggardly and precarious. He would be tormented with that memory of happier things, which we are told is a ‘sorrow’s crown of sorrow.’

But the man who has known no other condition of life is unconscious of its misery. He has no standard of comparison. An environment which would drive a man of refinement to thoughts of suicide, does not produce so much as dissatisfaction in him. Hence there is far more happiness among the poor than we imagine.

To drive home his point: Dawson was himself fairly successful and accustomed to easy means by the standard of his day. But Dawson, who died in 1928, spent most of his life without electricity or air conditioning. He never had antibiotics, Advil, or a Polio vaccine. He never experienced reasonably accurate weather forecasts, or an interstate highway.

An average American today sent back in time to experience Dawson’s life would suffer the same “tortures unspeakable” he wrote about. But he didn’t have modern times to compare his life to, so it felt luxurious to him.

Everything good in life is just the gap between expectations and reality, and when your main frame of reference are other rich people trying to impress each other, that gap can close quickly.

9. No one is going to remember you in 100 years.

So you might as well focus on what’s going to make you happy now, instead of what money might buy you in the future.

There is a Scottish proverb: Be happy while you are living, for you are a long time dead.