I’m reading a fascinating book by Dr. Scott Galloway, Professor of Marketing at NYU’s School Stern of Business. Galloway hosts two podcasts, and a few years ago was named one of the world’s 50 best business school professors. He was also a successful (and at times unsuccessful, which is part of why the book is fascinating) entrepreneur. About once a page I’ll read something and say to myself, “Yep, I wish I’d known that too.”
It isn’t really a book about Retirement Planning per se, although much of his wisdom certainly pertains to that topic. Therefore, I thought it would be worthwhile sharing some of what I think are the highlights so far, and I’m only about two-thirds finished.
Who The Book Is Written For
Early in the book, Dr. Galloway states that so many articles and news highlights (I suppose lowlight would be more appropriate) are about those athletes, entrepreneurs, etc., who make millions of dollars but go broke; meanwhile, hundreds of thousands of public service employees, blue collar workers, etc., are disciplined, save, and become millionaires. Sorta-kinda under the radar. So what do they do that allows that to happen?
He also emphasizes that he wrote it to his 25-year old self, giving the advice he wished he had known with the strong emphasis to actually follow-through on it. Of course, that ship has sailed, but it is certainly valuable advice for any other 25-year old just starting their career. In other words, people who should be thinking about retirement planning but haven’t, yet.
Some Highlights
- He mentions that he hopes everyone has their business be successful and go public and become multi–millionaires, or for their hoop dreams to reach all the way to the NBA, or their lottery ticket to actually hit. But, in the likelihood that doesn’t happen, there is a path to economic security. It is simple, but isn’t easy: Save more than you spend, and start the saving habit as early as possible. Develop that muscle memory so that when you are old enough and affluent enough to actually have serious money TO save, the muscle memory kicks in and you do it automatically.
- What is the definition of rich? It’s passive income that is greater than your burn rate. As Galloway explains, your burn rate is what you need to live every month. Food, shelter, transportation, the basics. You can adjust it some, but not much. When you can get to the point where passive, (not earned, i.e. not a paycheck from your employer) income is greater than your burn rate, then you are rich. You are accumulating every month without doing anything to make it happen. And that is why the saving muscle is so important. He uses his 94-year old father as an example. His father gets Social Security, a Royal Navy pension, and owns some washing machines in a trailer park where he goes and collects $35 in quarters every day. His burn rate is $48,000 annually and his passive income is $52,000. He is rich.
- What are your advantages? This gets to the heart of the book. One of the fundamental advantages of being young is…..wait for it…….being young. “You’ve got another 60 years to let one dollar turn into 28, if you’re disciplined enough to put it aside.” Galloway uses himself as an example (as he does often in the book, much of the time highlighting what not to do): “I started at Morgan Stanley right out of UCLA, making $58,000 in 1987 which was a lot of money. I never had money growing up. I got a $35,000 bonus my first year. I immediately took my $35,000 bonus and……….” [I am pausing for effect here. This is a guy who has an MBA and works for a highly-respected financial management company. If anyone knows the value of saving and investing, it is Scott Galloway, MBA. Now to continue the story] “…..went out and bought a BMW.” “It’s like I tell these kids, you’ve got to resist this flaw in the species. And the flaw in our species is that—because for 99% of our 300,000 years on this planet, we haven’t lived past 35—it is impossible for us to imagine that at the age of 25, you’re going to be here another 80 years. You cannot wrap your head around it. And the other thing you can’t wrap your head around, and you’ve got to believe Scott Galloway when I tell you this, it is stunning how fast it will go.”
- I can’t emphasize that last sentence enough. It is stunning how fast it goes. It seems last year I was 48 years old. Ten years ago my daughter was born, or so it seems–the one who has had a successful career for twenty years now. THAT’s how fast it goes. Which in the most basic of terms, is why Retirement Planning is so critically important. You’re 35. Then you’re 62, and NOW what are you going to do???
- He details how he built two tech businesses, put all his money, time and effort into each of them, and lost it all when they both went bankrupt because he had never diversified his money. It all went into his business or into the tech sector. So diversification is a big talking point. As it is for me when I speak about retirement planning.
- One of the most, if not THE most important advantages you can maximize at a young age, is networking. For the most part you aren’t going to make a lot of money starting out, but building a network is critically important. Galloway explains, ” Google did a study, their product manager did a study. If they have a product management position open, within 24 hours, they get 200 CVs. They pick the 20 best, and they bring all 20 in. Eighty percent of the time, the one person they give the offer to is someone who has an internal champion that is that person’s friend.”
Find Your Talent, Not Your Passion
This might be the overriding premise of the book. Galloway describes how many times people are brought in for commencement addresses or to speak to the School of Business, and so many times the topic is to “Find Your Passion.”
“Anyone who tells you to follow your passion is already rich. It drives me crazy. At NYU we bring these people in to talk to the students; we bring in two types of people, really impressive, substantive people and billionaires. We’ve just decided billionaires have insight into life once their net worth gets three commas. And the guy telling you to follow your passion made his billions in iron ore smelting.
And my advice is ‘find your talent’ because a lot of young people will mistake their hobbies (i.e. passion) for their talent. ‘OK, you enjoy being a DJ. Are you one of the 20 or 30 best in the world?’ Because only the top 20 or 30 make crazy amounts of money. You can make a living if you’re in the top 0.1%. That’s not the top 20 or 30, that’s the top 1,700. But find something you’re really good at, and then you think you could be great at if you really invested 10,000 hours, and here’s the key part, in an industry that has a 90+ percent employment rate, and the good news is 98% of industries have a 90+ percent employment rate. There are 180,000 members of the SAG-AFTRA union. That is the union for actors and people in the creative. And by the way, it’s not easy to get into the union. These are the most talented creatives in the world, 180,000 of them. Last year, 87% didn’t qualify for health insurance because they made less than $23,000.”
“Mastery is the fuel of passion.”
Money is Color-Blind
This isn’t going to sit well with many in the NRPA and AAPRA hierarchy because diversity and JEDI have a specific definition that can’t be altered. And what Dr. Galloway (who is White) says next would alter that narrative.
Nevertheless:
” I didn’t grow up wanting to change the world or be a good person or save the whales or follow my passion. I wanted to be economically secure and take care of my mother. That was my only priority. I also think that when we talk about diversity, I think we need the diversity score— [this goes for] universities or elected officials—should be adversity. Specifically, I think we should have affirmative action based on color, but that color should be green, based on whether you had money or not.
People always say, ‘It must have been hard growing up without your father present.’ I’m like, No, what was hard was not having any money. It’s as if you have this ghost following you around telling you you’re not worthy. Everyone goes out after Little League, and your mom kind of shuttles you into the car, and we go home because we can’t afford to go where they’re going. And you start picking up on these little cues that you and your mom have failed.
And there’s just no getting around it—it’s humiliating.”
Galloway details how that childhood drove him to never be in a humiliating place again, and how his 60- and 80-hour workweeks after college were partly a result of his childhood and to insure he had money and could take care of his family and kids and mother.
The book has entered my all-time Top 10 books and I’m not even finished yet. Among many other attributes is, without it being the purpose, it emphasizes the importance of planning for your retirement, or at least your final third of life, whether that constitutes “retirement” in your vernacular or not.
As always, I’m available for questions and would be happy to chat with anyone about how they are planning for that next chapter. As always, thanks to Tennessee Recreation and Park Association, Kentucky Recreation and Park Society, and North Carolina Recreation and Park Association for allowing me to speak on this subject. Looking forward to the national conference and connecting with even more of you on this important topic.
