
Welcome to The Lawyer Millionaire, the podcast dedicated to offering financial planning insights for ambitious law firm owners. On this episode, we analyze crucial lessons from Morgan Housel’s book, “The Psychology of Money.” Our aim is to help you understand your financial mindset better, make informed decisions, and build a prosperous law practice.
The Intrigue of Financial Decisions
At the heart of financial planning lies a perplexing question: Why do intelligent people often make questionable financial decisions? Darren Wurz, host of The Lawyer Millionaire podcast, delves into this discourse using Morgan Housel’s insights from “The Psychology of Money.”
Lesson 1: Financial Decisions Aren’t Crazy
In the first chapter of Housel’s book, the premise is simple yet profound: no one is irrational when it comes to money. Every financial decision is fundamentally influenced by one’s experiences, making logical sense to the decision-maker even if it appears irrational to others.
Darren shares a personal account of his father’s investment during the tech bubble of the 1990s. This experience profoundly shaped his risk tolerance, making him more risk-averse compared to his family members who have a propensity for taking financial risks. Housel’s argument that personal experiences significantly shape financial decisions is poignantly illustrated here.
Critical Insight: Acknowledging that everyone’s financial decisions are influenced by personal experiences fosters empathetic and effective communication in financial planning.
Lesson 2: The Dual Facets of Luck and Risk
The second chapter of “The Psychology of Money” delves into the interconnected nature of luck and risk. These elements, though opposite, both revolve around probabilities and play essential roles in financial outcomes.
Darren recounts the serendipitous circumstances that contributed to Bill Gates’ success. Gates attended one of the few schools equipped with a computer in 1968, a pivotal factor in his journey. This narrative underscores the importance of humility and cautions against using outliers as models for success. A broader, more consistent approach to identifying success patterns is crucial.
Critical Insight: Understanding the role of luck in financial successes instills humility and guards against risky decisions based on exceptional outliers. Prioritize mainstream, proven strategies.
Lesson 3: Defining ‘Enough’
Housel’s third chapter, “Never Enough,” scrutinizes why even the wealthy sometimes make irrational financial decisions—they have not defined what constitutes ‘enough.’ The incessant movement of goalposts can result in burnout and poor choices.
Darren underscores the significance of clearly defining ‘enough’ using the cautionary tale of Rajat Gupta, a successful investor whose insatiable greed led to insider trading, imprisonment, and the collapse of his career. Darren contrasts this with his father’s disciplined approach to maintaining a modest lifestyle, which enabled early retirement.
Critical Insight: Knowing your ‘enough’ is pivotal to preventing the hazards of endless pursuit and detrimental comparisons. It’s a critical component in sustainable financial planning.
Reflective Queries for Better Financial Planning
- Financial Roots: What is your earliest money-related memory and how does it shape your current financial decisions?
- Evaluating Risk and Luck: What risks have you taken that succeeded, and to what extent was luck a factor?
- Defining Success: If your financial goals were met tomorrow, would you find fulfillment? What would follow?
Aligning Financial Goals with Personal Fulfillment
Grasping the psychology behind financial decisions transcends the mere accumulation of wealth; it encompasses creating a life filled with purpose and satisfaction. Darren encourages continued learning and community engagement through the Lawyer Millionaire Book Club. Join to gain nuanced insights, share your experiences, and refine your financial strategies.
Resources:
- Schedule a Call with Darren
- Wurz Financial Services
- The Lawyer Millionaire: The Complete Guide for Attorneys on Maximizing Wealth, Minimizing Taxes, and Retiring with Confidence by Darren Wurz
- LinkedIn: Darren P. Wurz
- Join The Lawyer Millionaire Founders Network and Book Club for Free
- Book – The Psychology of Money: Timeless lessons on wealth, greed, and happiness
Transcript:
Darren Wurz [00:00:00]:
Why do smart people make questionable financial decisions? The answer might surprise you. Welcome to the Lawyer Millionaire where we deliver financial planning insights for ambitious law firm owners so you can enjoy more time, more abundance, and less stress, even if you’re still growing your practice. Today I’m so excited because we’re going to explore three key lessons from Morgan Housel’s the Psychology of Money to help you better understand your financial mindset, make smarter choices, and build a practice that thrives.
Intro [00:00:37]:
We are on a mission to help lawyers and law firm owners maximize wealth and achieve financial independence. Welcome to the Lawyer Millionaire with Darren Wurz from Wurz Financial Services.
Darren Wurz [00:00:52]:
Hey, everybody, Darren Wirtz, your host here. I’m excited that you’re joining us today because we are kicking off our 2025 money moves book tour. Get excited, get with it. And in this year, 2025, we have kicked off our Lawyer Millionaire Book club. And I’m also going to be hitting the road visiting a lot of different places with my own book, the Lawyer Millionaire. But also part of this book tour is to bring you you some incredible books as well. And you can join the Lawyer Millionaire Book Club and be a part of all this excitement and this discussion. But we’re also going to be discussing these books together on the show.
Darren Wurz [00:01:33]:
So really, really excited to do this with you. So let’s set the stage here. The year is 1999. I’m 11 years old, so not to date myself, but anyway, there it is. I’m riding to school in the morning. My dad is driving me to school. He’s packed my lunch. We’re riding in the family van on our way to school, middle school, and he’s telling me excitedly about this stock that he owns and how much it is just exploding in value.
Darren Wurz [00:02:11]:
And I’m listening to him talk about this. I’m listening to how the stock price is just going higher and higher every single day. And he’s asking me, what should I do about this? This is so exciting. And, you know, to give you a little bit of background, my dad had invested in my uncle’s company, a Canadian healthcare technology company called Texas. And Texas was just killing it, as was everything in the 1990s. I mean, this was the 90s, right? This was the tech boom, the tech bubble. Everything was going nuts. It was the Internet was coming public and all these new dot com stocks were exploding and popping up everywhere and things were just euphoric.
Darren Wurz [00:03:01]:
Well, if you’ve been around, you know how the story ends. Fast forward a couple of years. The stock I Don’t have the exact numbers offhand, but I believe it had gone up to somewhere around $30, $35 a share. It dropped down to a dollar less than a dollar a share. And to wrap your mind around that, I mean, if you owned many, many shares of that, that’s like your investment going to almost nothing. And so many people experienced this, so many people experienced this during what was called the dot com bubble and the tech bubble bursting. There was this euphoria, these companies that were built on just a bunch of hot air and excitement that were fueling this rush to buy stocks in the public. And when many of these companies were found out to be nothing more than just names without any profit to them, a lot of that euphoria vanished and it wiped out a tremendous amount of wealth during that time frame.
Darren Wurz [00:04:15]:
Now many companies that were caught up in this were actually very great, profitable companies. Companies like Amazon and Microsoft, you know, things that have gone on to becoming incredibly successful. And my own, my own uncle’s company was a very successful company as well. But for the moment there was panic and there was loss. And you know, as a kid, as a middle schooler, listening to those stories and seeing the creation of wealth and then the almost instantaneous evaporation of wealth was very formative. And so I have realized this about myself as I’ve become more self aware is that I actually have a more risk averse nature. My dad and my brother are probably more risk seeking and tend to be more risk tolerant in their investments. I tend to be a little bit more risk averse.
Darren Wurz [00:05:27]:
And I’ve often wondered why that is. And it really wasn’t until reading Morgan Housel’s book the Psychology of Money and reflecting on that that I really understood that, that that experience had such a dramatic impact on my life. Now why do I tell that story? I tell that story because it highlights how our personal experiences can have such a powerful impact on the decisions that we make. So I know this about myself. I know that I tend to be more risk averse. I know that I tend to be always looking for the next bear market. Pessimism really attracts me for some reason. You know, the stories about, you know, the pundits who come on in our forecasting, you know, the market’s going to crash in 2025, right? Those tend to capture my attention and I think it’s because I have this slightly more pessimistic bias.
Darren Wurz [00:06:30]:
You know, not only did I grow up during the tech bubble bursting, but then several years later while I was in, you know, A young adult, I experienced the great financial crisis and that was a part of my upbringing as well. So we had two of the, the worst bear markets in financial history were part of my formative years. So forgive me if I tend to be very, very quick to perceive risk and danger. And this is, I have to watch out for this because it affects the way I invest. I’m not investing as optimistically as I should. You know, when panics happen, when things happen in the marketplace, I tend to be more lean into the side of doom and gloom and I need to understand, I need to realize the opportunity that exists in those moments as well and not be afraid to lean in. That’s been a very big lesson for me to learn. So today we’re going to dive into the first three chapters of Morgan Housel’s book, the Psychology of Money.
Darren Wurz [00:07:39]:
And I want to introduce these three chapters to you because there’s some really powerful lessons in here for us to learn as individuals and that can help us not only be better business owners, better law firm owners, but also be more financially successful. Period, end of story. And that’s really what it’s all about, isn’t it? Okay, so let’s start with the first chapter. The first chapter of Morgan Housel’s book is no one’s Crazy. And I started this segment with that story because of this exact thing. His argument in the first chapter is no one is crazy about money. Everyone’s financial decisions are simply shaped by their unique experiences. And what might seem extremely irrational to one person might actually make perfect sense to another.
Darren Wurz [00:08:29]:
What someone else does with their money might seem crazy to you, but to them it makes sense. People do do some crazy things with money, but no one is truly crazy. They’re just responding to their own unique experiences. We all see this all the time. One of the biggest ways for me that this shows up in dealing with clients is the decision to pay off your house, right? Rationally, if you’re mortgage rate is very low, let’s say 3%, let’s say you refinanced during, you know, when, when rates were very low and you, you got in on one of these really low rate mortgages, let’s say you have a 3%, 30 year mortgage, you’ve got the money in the bank to pay it off. And I’ve seen people pay off mortgages at very low interest rates. And I’m thinking to myself, gosh, why? It’s like free money. The rational me is thinking this doesn’t make financial sense, but it might make emotional Sense, and that might be more valuable.
Darren Wurz [00:09:38]:
So there’s some really important lessons here, right? We need to be empathetic when we’re dealing with people. We need to understand where they’re coming from. And we need to understand how each of us are shaped by our experiences and how our financial decisions might play out not just in our lives, but also in our business, too. You know, because you may take different steps in your business based on the experiences that you have. You may be prone to more risk in your business because of experiences that you face, and those may put your business in jeopardy. Or you might not be taking enough risk as an entrepreneur. You might be playing it too safe, and that might be because of experiences that you’ve had. So we need to understand.
Darren Wurz [00:10:25]:
We need to understand this, that we all come from unique places. That’s really powerful. The second chapter of Morgan Housel’s book is titled Luck and Risk. And I love this. It just ties in beautifully with that first chapter and with my first story, right? Luck and Risk. And he talks about how luck and risk are two sides of the same coin. They’re really the same concept, just defined differently. Luck is good things and risk is bad things.
Darren Wurz [00:10:56]:
But both deal with probabilities, very small probabilities. And he talks about how success and failure can. How are they attributed? You know what I mean? Success and failure can be attributed to effort, to skill, but oftentimes there is a role that luck and risk are playing that we don’t realize. And there’s a couple really great stories that Morgan tells in this chapter on luck and risk. He talks about Bill Gates. Bill Gates, obviously, one of the most tremendous stories of success of modern history, right? Founder of Microsoft, self made billionaire, one of the world’s largest, most prolific philanthropists known to man, right? But let me give you the backstory. Bill Gates just so happened to attend one of the only schools in the entire world that had a computer in 1968. Do you know how rare it was for schools to have computers in 1968? Almost no school had a computer in 1968.
Darren Wurz [00:12:15]:
Number one, because they were just massive. Number two, you know, these were not laptops. These computers took up entire rooms, right? They were punch card driven. Many of you may not have any clue what that looks like. I don’t even really know myself. Anyway, they were. They were enormous machines and they also work tremendously expensive. But there was one guy at Bill Gates School who thought it was important for the school to have a computer.
Darren Wurz [00:12:44]:
So the school had a computer. And that was a Pivotal transformative event for Bill Gates. Because young Bill Gates was exposed to this technology. He just so happened to be in the right place at the right time that he was exposed to this technology, which would lead him than to go on to change the world and think about how much the world has changed because of the impact of Bill Gates and the other students that were involved in computers as well, you know, his friends, you know, that just illustrates to me how lucky sometimes people get. And so there are some really powerful stories here. I mean, really powerful lessons to learn here. Number one, stay humble. You know, as successful as you might become, always recognize that there’s a role of luck that plays in there.
Darren Wurz [00:13:51]:
There is luck in there, there’s risk in there too. But luck has a lot to do with success. Now my dad has always said that luck is when preparation meets opportunity. So it’s not just. It wasn’t anybody that was going to become Bill Gates, it needed to be Bill Gates. But the combination of factors is just, it’s just mind boggling, isn’t it? That’s so crazy. I think it is. Anyway, the other thing, I think there’s a very important lesson for us about being careful about outliers.
Darren Wurz [00:14:29]:
Bill Gates is an outlier and yes, he has a lot to teach us about success. But be careful about who you allow to be your role models. Right. Rather than learning from the one, two or three extreme examples of success, what we should do is that we should look for the broader patterns. You know, not all of us are going to be Bill Gates. That’s the reality. Think about becoming president, right? There are so many people that are qualified to be president. And I know, I know we could get into a whole thing about qualifications to be president.
Darren Wurz [00:15:07]:
And are the people who we pick to be president really qualified? That’s not a political statement, it’s just what it is anyway. But in order to become president, you really have to get very lucky. You’ve got to be in the right family, go to the right school, have the right connections, be in the right moment of history at the right time. There are so many incredible factors that have to come into play in order for a person to become president, right? So yes, learn, you know, appreciate those stories of success and admire them, but don’t hinge everything on those. The more important thing is to look for the broad patterns of success. And this really carries over into investing. Okay, because it’s so easy to get lured in, it’s so easy to get drawn in to, you know, the guy who’s got the crypto Strategy that did 200% last year. Right.
Darren Wurz [00:16:15]:
Or the algorithm trading program that has returned, you know, 25% compound in interest over the last five years. Okay, okay, sure, you, you showed me something that happened, or you showed me something that hypothetically happened. But take all of that with a grain of salt because there are literally thousands and thousands of people trying to create algorithms that outperform the stock market. And out of those thousands and thousands of people that are trying, one or two are going to be successful and one or two strategies are going to work, but they’re not going to work forever because history doesn’t repeat itself the same catch that history does repeat itself, but not in the same way. History does not repeat itself the same way. So we have to be very careful about this as investors because it’s so easy to get drawn in. Right. The one guy, the one guy who predicted 2008.
Darren Wurz [00:17:25]:
Right. And made billions of dollars, is he just that smarter than everybody else? I mean, maybe. I mean, obviously there’s. Obviously there’s some intellect there. Yes. But I think a bigger part of it is it’s a combination of being smart but also getting extremely lucky. Extremely lucky. So be careful about following those examples and be more focused on following the broader, more common examples of success.
Darren Wurz [00:18:06]:
Luck and risk have so much to do with success and failure. And the other thing is, failure is not always deserved. Failure is not always deserved, folks. And so, you know, someone may have struggled for a long time and may not have hit their streak of success in running their business, but you know what? They just haven’t had that lucky break yet. Be empathetic towards that. Have some humility. And I see this a lot. I see this a lot in the entrepreneur world because you see these great examples of success, and they love to be arrogant.
Darren Wurz [00:18:49]:
There’s a lot of arrogance out there. I’ll just be honest with you, you know, and there needs to be a genuine appreciation of the fact that a lot of this is luck. A lot of making it big is luck. I mean, there is, don’t get me wrong, there is so much hard work involved, you know, but I could work as hard as Michael Jordan. I’ll never be Michael Jordan. Right. Michael Jordan was skilled, extremely skilled, also worked extremely hard, but also had some luck involved as well. So let’s, let’s all allow that to give us a dose of humility and be empathetic towards each other.
Darren Wurz [00:19:35]:
Okay. All right. In chapter three, and, and this really ties it all together really nicely. Chapter three of Morgan Housel’s book, Never Enough. And boy, this one’s going to dig at your heart. In chapter three, Housel talks about the goalposts keep moving. And I talk about this all the time. It’s this idea that chasing enough.
Darren Wurz [00:20:06]:
And the subtitle is why Rich People Do Crazy Things, Right? Because it’s never enough. Because there’s never enough money. One of the hardest things to do in life is to get the goalpost to stop moving. And that is the biggest trick in life, by the way, also is to get the goalposts to stop moving. You know, one of the biggest lies that we tell ourselves is that more money will make it better. And so many of us that are business owners, we’re constantly trying to grow, constantly trying to achieve more revenue, more profit, because we’re constantly chasing more. But chasing more without truly understanding what is your enough can lead to poor decisions, burnout, and even failure. I mean, picture the law firm owner who’s constantly chasing higher revenue, working 80 hours a week, has built his law practice up, is living comfortably, but is just buried, risking everything to keep building.
Darren Wurz [00:21:20]:
Yet they haven’t asked themselves, what am I actually working towards? In chapter three, Housel shares the story of Rajat Gupta, a successful investor. Very, very successful investor who was invited into some of the most elite circles of wealth that you can possibly be invited to. But his greed led him from to insider trading. And because of that, because he got caught with insider trading, he went to prison and he lost everything. The lesson is this. Know when enough is enough. Get the goalpost in life to stop moving. If you can do that, you can be happy.
Darren Wurz [00:22:11]:
So many of us are trapped in our businesses. We’re trapped in the chase because we have expanded our lifestyles in such a way that we constantly need more. Define your enough. What level of income, growth or success will allow you to feel fulfilled? Now, you know, I’ll circle it back to my dad. My dad has done a great job of this. He retired at 55. He said, I’ve had enough. I have everything that I could ever need and want.
Darren Wurz [00:22:45]:
He figured out the place, the level at which he was happy. He didn’t expand his life beyond that level. And I remember, you know, I’ve learned so much from my dad, the conversations about buying a bigger house. When I was a kid, my parents lived in the same house from when I was age, the age of, I think three or four. And they still have that house. They’ve had that house for 30 plus years. Right? And yes, they could have afforded a bigger house yes, there were conversations about buying a bigger house, about expanding the lifestyle, but. But they never did.
Darren Wurz [00:23:22]:
And because they were able to find their enough, because they were able to get the goalposts to stop moving, they were able to have abundantly more than they needed, and they were able to retire. Focus on what’s sustainable rather than just the endless pursuit. What really makes you happy? Recognize that comparing yourself to others can lead to unnecessary stress and poor decisions. Boy, we compare ourselves to others a lot. And guess what? You know what? There will always be someone to compare yourself to. There’s always going to be someone with more money. You know, someone made a comment to me that they wouldn’t take advice from me because I wasn’t as financially successful as them. And I thought to myself, you know, that’s an interesting thing to say because there, boy, there are sure a lot of financially successful people and there are a ton of people who are more financially successful than me or you.
Darren Wurz [00:24:27]:
There will always be someone who’s more financially successful than you. I mean, let’s define financial success, right? Is it money or is it happiness? Right, let’s define that. But if it’s money, unless you are Elon Musk and you are the world’s richest man, there is always someone higher than you. So this game of comparing ourselves to others just doesn’t work. So my challenge for you today, Figure out what’s enough for you. Let’s review. No one’s crazy. We all are shaped by the experiences that we’ve had.
Darren Wurz [00:25:08]:
Allow that to give you empathy for others. Recognize that luck and risk play an incredible role in our journey. The role of chance. Chance plays an incredible role in our journey. Let that give you humility, but also allow that to help you plan for the unexpected and recognize when enough is enough. Define what success and enough look like for you and avoid the trap of endless comparison. I want you to reflect on some questions. What’s your earliest memory about money? And how does that maybe influence you today? What risks have you taken that paid off and how much was due to luck? And finally, if you were to hit your financial goals tomorrow, would you be happy? What would you do next? If you hit that 10x goal, would you be done or would you want more? Know what’s truly important in life.
Darren Wurz [00:26:17]:
My biggest takeaway from today is that our decisions are deeply personal and shaped by our unique experiences. By understanding the role of psychology, luck and you’d’re enough. You can make intentional choices about your life that align with your goals. This isn’t just about money folks. This is about the life that you want. Building wealth isn’t just about making more money. It’s about creating the life that feels abundant and fulfilling to you. Whether that’s taking control of your firm’s financial future or finding clarity in your personal goals, understanding your mindset is a critical first step if you’re ready to align your financial decisions with your true, deepest desires.
Darren Wurz [00:27:10]:
We would love to help you. Jump on a call with me and I will show you our three step process to creating a financial plan that gives you peace. And if you enjoyed today’s episode, I invite you to join in the conversation. Join the Lawyer Millionaire Book Club. It’s free and open to all law firm owners. Just go to community.lawyermillionaire.com the link is in the show notes and I look forward to seeing you there. Well, this has been the Lawyer Millionaire podcast. I’m your host, Darren Wirtz.
Darren Wurz [00:27:42]:
Thank you so much for joining me on this journey to expand your business, maximize your profits and secure your financial future. I can’t wait to connect with you again next time. Until then, take care and keep pushing forward.
Outro [00:28:00]:
Thank you for listening to the Lawyer Millionaire. Click the Follow button below to be notified when new episodes become available. This content has been made available for informational and educational purposes only. This content is not intended to represent investing or tax advice. Always seek the advice of a qualified investment or tax advisor with any questions you may have regarding your own financial circumstances.