Pivot Podcast Episode Summary: "Prof G Markets: The Art of Spending Money"

Introduction

In this episode of Pivot, titled "Prof G Markets: The Art of Spending Money," tech journalist Kara Swisher and NYU Professor Scott Galloway delve into the intricate dynamics of personal and professional spending. Hosted by Kara Swisher and featuring insightful contributions from Scott Galloway, the conversation explores the best and worst purchases, the psychology behind spending, and the impact of generosity and philanthropy in one's financial life.

Discussing the Best and Worst Purchases

Scott Galloway kicks off the discussion by reflecting on his most regrettable and rewarding purchases. He candidly shares his experiences with buying cars during his youth and later investing in homes, offering a transparent look into his financial journey.

• Worst Purchase: Cars

  Scott recounts his early years in California, emphasizing how owning a car was essential for social life and perceived status. However, he labels this as his "worst purchase" due to the significant financial strain it caused.

  [02:41] Scott Galloway: "The worst purchase I ever made was a car. My first cars were the worst purchases, hands down."

• BMW Purchase: A Mixed Reflection

  Reflecting on his decision to purchase a BMW with his bonus from Morgan Stanley, Scott acknowledges the impulsiveness but also recognizes the social signaling aspect of the purchase.

  [06:54] Scott Galloway: "I think it's difficult to lecture someone your age on to not occasionally buy cool shit and do cool things. Your 20s come and go. You want to signal attractiveness."

• Best Purchase: Homes

  Contrasting his car purchases, Scott highlights buying homes as his most beneficial investments, both financially and emotionally. He shares how homeownership represented a commitment to his family and provided long-term value.

  [14:09] Scott Galloway: "Probably the best purchases, both financially and emotionally for me were homes."

Categories of Spending: Essentials and Indulgences

Scott and Ed explore various categories of spending, distinguishing between discretionary and non-discretionary expenditures. Scott emphasizes the importance of aligning spending with personal values and financial security.

• Essential Spending: Homes and Travel

  Scott underscores his preference for spending on homes and travel, viewing them as investments in experiences and quality of life.

  [16:59] Scott Galloway: "I spend a crazy amount of money on travel. And next door, in the next room is my friend Augusto... we go out and we go to the best place."

• Discretionary Spending: Generosity and Experiences

  Highlighting his generous nature, Scott discusses how spending money on others—be it friends, family, or employees—brings him joy and fulfillment.

  [25:46] Scott Galloway: "I'm generous, and I'm a father. I recognize the finite nature of life. I'm spending a lot of money on experiences."

Holiday Spending and Gift-Giving

The conversation shifts to the complexities of holiday spending, particularly during Christmas. Scott shares his minimalist approach to gift-giving, focusing on meaningful gestures over material abundance.

• Strategic Gift-Giving

  Scott explains his method of delegating holiday shopping to his partner, ensuring that gifts are both meaningful and strategically beneficial for employees.

  [42:43] Scott Galloway: "If I spend $1,000 on a gift or gifts for employees, it's worth more than $1,000... it's pre-tax income."

• Personal Reflections on Gifts

  Emphasizing quality over quantity, Scott prefers giving gifts that hold sentimental value rather than extravagant items.

  [40:17] Scott Galloway: "The gifts I like for me, I want meaningful gifts. I want my sons to write me a note or they'll get me a book that was meaningful for me."

Financial Challenges and Lifestyle Adjustments

Scott reflects on the challenges he faced during economic downturns, such as the 2008 recession, and how these experiences shaped his approach to spending and financial security.

• Facing Financial Downturns

  Sharing his personal experience of selling his loft in 2008 due to financial strain, Scott illustrates the emotional and practical impacts of economic instability.

  [50:07] Scott Galloway: "It was very disappointing. I loved it. It was kind of just humiliating to be... I was single at that point, but it still felt really fucking humiliating."

• Lifestyle Arbitrage

  Scott advises leveraging lifestyle arbitrage—reducing living expenses by relocating or making strategic financial decisions—to enhance economic security.

  [58:21] Scott Galloway: "A lifestyle arbitrage is... in a world of remote work, where could I move? Don't be a snobbery."

Philanthropy and Generosity

Philanthropy emerges as a central theme, with Scott discussing his commitment to giving back and the psychological rewards of generosity. He emphasizes the significance of using wealth to make meaningful contributions to society.

• Commitment to Giving

  Scott shares his philosophy of spending or giving away excess wealth once financial security is achieved, highlighting the importance of impactful philanthropy.

  [60:04] Scott Galloway: "Once you hit your number, anything above that, I would do one of two things. I would either spend it or I would give it away."

• Emotional Rewards of Generosity

  He elaborates on how generosity enriches his life, creating a sense of purpose and fulfillment beyond personal wealth accumulation.

  [25:46] Scott Galloway: "I have friends who are really wealthy... being generous with their money makes me feel strong. It makes me feel nice."

Psychological Aspects of Spending

The episode delves into the psychological motivations behind spending, revealing how personal experiences and values shape financial behaviors.

• Generosity Rooted in Personal History

  Scott attributes his generous nature to his father's frugality during the Depression era, vowing to break the cycle of financial stinginess.

  [25:46] Scott Galloway: "I'm generous with everything but my time. ... I just don't want to be my dad. He was awful with money, just awful."

• Spending as a Reflection of Self

  Both hosts discuss how spending patterns serve as a reflection of one's identity and values, with Scott acknowledging both positive and negative aspects of his spending habits.

  [64:17] Scott Galloway: "I'm an atheist. I'm generous, and I'm a father... I spend a lot of money on experiences. ... I spend too much money on nightlife and alcohol."

Handling Social Spending Pressures

Ed presents hypothetical scenarios involving social spending pressures, such as expensive dinners and bachelor parties, prompting Scott to offer practical advice.

• Expensive Dinners with Friends

  Scott advises transparent communication and equitable sharing of expenses among friends to mitigate financial strain during social outings.

  [34:43] Scott Galloway: "Generally, you should split the bill... unless someone went crazy."

• Bachelor Parties and Social Obligations

  When faced with the financial burden of a friend's extravagant bachelor party, Scott recommends discussing the strain openly and seeking compromises to maintain the friendship without excessive spending.

  [55:21] Scott Galloway: "If he's a really close friend, you should be able to say to him, boss, this is a strain for us."

Children and Budgeting

The discussion turns to the substantial costs associated with raising children and how financial planning evolves with parenthood.

• Planning for Children’s Expenses

  Scott shares strategies for managing the financial impact of children, including relocating to reduce living costs and investing savings wisely to ensure economic stability.

  [57:05] Scott Galloway: "We immediately cut our burn... we took about 150, 200 grand a year, and we put it into stocks for 10 years from 2010 to 2020."

• Balancing Financial Security with Parenthood

  Emphasizing the importance of timing and financial readiness, Scott advocates for establishing economic security before expanding one's family to alleviate stress.

  [57:05] Scott Galloway: "Having kids when you're younger, if you don't have dual income, would be really financially stressful."

Philanthropy as Essential

Concluding the episode, Scott underscores the essential role of philanthropy in his life, advocating for generous financial practices and societal contributions.

• Philanthropic Commitments

  Scott narrates his decision to prioritize spending and giving over hoarding wealth, highlighting the fulfillment derived from supporting charitable causes and investing in others' well-being.

  [60:04] Scott Galloway: "I'm an atheist... I made a conscious decision that I would change my approach to money. Once you hit your number... spend it or give it away."

• Impact of Giving on Personal Fulfillment

  He articulates how philanthropy not only benefits recipients but also enhances his own sense of purpose and happiness, reinforcing the psychological rewards of generous spending.

  [60:04] Scott Galloway: "It feels really good. It makes me feel strong. It makes me feel nice."

Conclusion

In this insightful episode of Pivot, Scott Galloway and Kara Swisher explore the multifaceted nature of spending money, intertwining personal anecdotes with strategic financial advice. The conversation highlights the balance between responsible spending, generosity, and the psychological underpinnings of financial decisions. Through candid reflections and practical recommendations, listeners gain a deeper understanding of how spending habits can shape one's identity, relationships, and societal impact.

Notable Quotes

• “The worst purchase I ever made was a car.” – Scott Galloway [02:41]

• “Probably the best purchases... were homes.” – Scott Galloway [14:09]

• “I'm generous... I spend too much money on nightlife and alcohol.” – Scott Galloway [64:17]

• “Once you hit your number, anything above that, I would do one of two things. I would either spend it or I would give it away.” – Scott Galloway [60:04]

Final Thoughts

This episode provides a comprehensive exploration of spending behaviors, offering listeners valuable insights into managing finances while maintaining personal and emotional well-being. Scott Galloway's honest and reflective approach serves as a compelling guide for anyone looking to navigate the complexities of money management in both personal and professional spheres.