Imagine that [in a world and time without COVID] you are waiting outside to be seated at a really nice restaurant.
As you pass the time, your attention is grabbed by the roar of an engine. You look up and see a beautiful red Ferrari pull up to the parking.
Normally you are not impressed with cars, but this one is an artful blend of classic design with a modern edge. It is that perfect hot red.
In spite of yourself, you start dreaming about owning such a vehicle.
Surely, if you owned a car like that, you would be the centre of attention when you pulled up. Every eye would be on you, and the car would command feelings of respect and admiration. Everyone would know that you are something special.
So here is the thing, in all this, most people pay attention to the car.
No one looks at the driver, maybe not at first.
But no one cares about the man [or woman] in the car.
The paradox of the man in the car is that you believe that if you were the man in the car people would notice and admire you, but you believe this while ignoring the man in the car.
Morgan Housel in this book The Psychology of Money by Morgan Housel, tells the paradox of the man in the car far much better as follows:
The best part of being a valet is getting to drive some of the coolest cars to ever touch pavement. Guests came in driving Ferraris, Lamborghinis, Rolls-Royces, the whole aristocratic fleet.
It was my dream to have one of these cars of my own, because [I thought] they sent such a strong signal to others that you made it. You’re smart. You’re rich. You have taste. You’re important. Look at me.
The irony is that I rarely if ever looked at them, the drivers.
When you see someone driving a nice car, you rarely think: “Wow, the guy driving that car is cool.”
Instead, you think: “Wow, if I had that car people would think I’m cool.”
Subconscious or not, this is how people think.
There is a paradox here: people tend to want wealth to signal to others that they should be liked and admired. But in reality those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use wealth as a benchmark for their own desire to be liked and admired.
The letter I wrote after my son was born said:
“You might think you want an expensive car, a fancy watch, and a huge house. But I’m telling you, you don’t. What you want is respect and admiration from other people, and you think having expensive stuff will bring it. It almost never does, especially from the people you want to respect and admire you.
What really got to is this sentence:
“What you want is respect and admiration from other people, and you think having expensive stuff will bring it.”
And then towards to the end of the chapter he concludes by saying:
My point here is not to abandon the pursuit of wealth. Or even fancy cars. I like both.
It’s a subtle recognition that people generally aspire to be respected and admired by others, and using money to buy fancy things may bring less of it than you imagine.
If respect and admiration are your goal, be careful how you seek it. Humility, kindness, and empathy will bring you more respect that horsepower ever will.
This sentence kicked me hard:
“Humility, kindness, and empathy will bring you more respect that horsepower ever will.”
So many money lessons to be learned from this book, lessons that have nothing to do with the hottest investment strategy or the next big prediction of 2022 for crypto or the stock market.
These are money lessons with a basis in things like human psychology, philosophy and sociology.
These behavioural tendencies around money impact the quality and quantity of the relationship we have with money.
No one is more impressed with your stuff than you are
Instead of putting your money towards buying status, you can earn status the old fashioned way, consistently showing up and serving the people in your sphere of influence.
Doing work that truly matters always matters.