The Diary Of A CEO with Steven Bartlett
Financial Expert: Passive Income Is A Scam! Post-Traumatic Broke Syndrome Is Controlling Millions!
06 Oct 2025
Chapter 1: What is the relationship between spending money and happiness?
people talk a lot about passive income which is not a thing look there's two ways to get wealthier and passive income is not part of that equation but what's really important for people is how we should spend money because i've written about money and finance and investing for 20 years and i can tell you the correlation between how much you spend and how happy you are it can exist but it is not as simple as you think
Morgan Housel is the legendary financial guru revealing that everything we've been told about saving and spending money could be our biggest downfall. And here's why. If you're unhappy with your life, it is a very easy assumption to make that if you had more money, a bigger house, a better car, whatever it might be, things would be better. And it's a lie we tell ourselves, of course.
Because here's the truth, so much of spending is a psychological itch that you're trying to scratch. And that manifests in so many different ways. For example, life is a competition. It doesn't matter how well I'm doing, it matters how well I'm doing relative to you. And the most tangible way to do that is the material stuff.
I was reading some funny stats. They say that if you win the lottery, the probability of your neighbor going bankrupt increases.
It's an amazing statistic. So be careful who you socialize with because you're going to anchor to them as a baseline level of success and happiness.
So is it wrong to buy a Rolex?
Absolutely not. But when it's controlling your personality, it's no different than any other addiction where it's forcing you to do things that you otherwise don't want to do. What about people who don't seem to spend anything? It's just as dangerous. Like there's something called post-traumatic broke syndrome. And I'll talk about that.
But I guarantee you that everyone can spend money in a way that's going to make them happier.
So if I wanted to make a framework to know how to spend my money, where do I start? But also, based on everything you know about money, if I want to get complete financial freedom, what's the five things that I should be thinking about
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Chapter 2: How does social comparison affect our spending habits?
So it begs the question, why would someone like you, who sells tens of millions of copies of their books when they write about something... and really, really cares about the art of writing, commit themselves to writing a book about the art of spending when you could have written anything that you wanted to and it would have been a success?
So I've written about money and finance and investing for 20 years and almost never had I myself said, what is my spending philosophy? I can tell you how I invest. I can tell you how I save. I can tell you why I do those things. If five years ago, if you said, Morgan, tell me your philosophy about spending in your own life, I'd be like, I don't really know.
And as I looked into it, there are literally tens of thousands of books on how to invest, how to grow your money, how to get rich, how to help your career. That topic is endless. There is virtually no book out there written about spending money. And I think the reason why is because we don't, I think we intuitively think nothing needs to be said because the answer should be obvious.
More is better. Fancier is better. That's the end of the topic. But if you know particularly wealthier people, I mean, it affects everybody, but particularly wealthier people, you know, it's not that simple. that the correlation between how much you spend and how happy you are, it can exist. Everyone can spend money in a way that's gonna make them happier, but it is not as simple as you think.
And as I started digging into it in my own life of when have I been envious of other people, of their material possessions? Why was I envious? When have I been jealous? Why was I jealous? What kind of spending made me happy? What left me completely flat? It's a much more complicated topic than it seems at the surface.
You know, another title for the book could have been the psychology of spending money, because that's what this is. So it's a look at the psychology of greed and envy and social aspiration and like climbing the social ladder, who you're trying to impress, whether those people are paying any attention to you. That's what this book is.
So for someone like me who wants to improve my relationship with spending, I guess the question, yeah, I guess the first question is, understanding the art of spending money, simple choices for a rich, what is it going to do for me? How is it going to make my life better to understand this? Why does it matter to the person that's listening right now?
I think it is a very easy assumption to make if you're unhappy with your life, that if you had more money, those problems would go away. Sometimes it can be true. It's not automatically false. It's just easier to assume that that's true than it actually is. And so I guarantee you that every single person listening to this right now has some degree of that.
If I had a little bit more money, my problems would go away, even if they don't necessarily know it or not. So much of spending is a psychological exercise. There's an itch that you're trying to scratch, and that manifests in so many different ways. And so I've often thought of money, look, is money the root of society, the core of society?
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Chapter 3: What is post-traumatic broke syndrome?
I understand your aspirations. I understand your self-confidence. I understand what you think of other people. You can learn a lot about that.
It's kind of like a reflection of your trauma.
Yes. And it manifests in very different ways. There's a great financial writer named Tiffany Alishay. And she grew up very, very poor. And now she's extremely successful. And she calls it post-traumatic broke syndrome. Even though she has a lot of money right now, She I don't want to put words in her mouth.
My understanding is like she's she's afraid to spend it because she's the feeling in her head is I will never go back to that. I can't ever go back to that poor person post-traumatic broke. And so it can manifest in very different, sometimes opposite ways. And so the point is not like if you grew up poor, you're going to want to display it. But the point is that it's a psychological itch.
It's not just I want the nice car because nice cars are better. There's a social signaling. You're signaling to others. You're signaling to yourself. It's a trophy for yourself of what you've overcome. The more I dug into it, the more it was so clear of like spending is not just on material stuff.
It's not just I want to buy this car or this house or these clothes or these jewelry because it's nice. It's I'm trying to send a signal to others or to myself of what I've overcome. One of the ways I thought about this in my own life was if I was on a deserted island with maybe just me and my family, nobody could see how we were living. Nobody can see your house. Nobody can see your car.
Nobody see your clothes. Nobody can see your jewelry. How would I live? For me, and I think most people in that exercise, you immediately gravitate away from status and towards utility. Like I would not want a Lamborghini. I probably want like a pickup truck. Something that has like more utility.
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Chapter 4: How can I create a framework for spending money wisely?
If nobody could see it, I would just want utility. I would not want an enormous house. I would want a house with a nice view because I'm not trying to show off to other people. I just want something that is calming and serene to myself. And so once you start seeing the stark difference between utility and status, Once you force yourself to see it, you're like, oh, it's everywhere.
Is something inherently wrong with status? Is it wrong to buy a Rolex? Absolutely not. Particularly at certain points of your life. Okay. So when is it good? When is it bad? When is it indifferent?
I don't know. It's hard to say what's good and bad in terms of a formula because everybody's different. But I would say this. My own personal desire... to show off materially happened when I was in my late teens, early twenties. And looking back, I didn't know this then, but the reason why is because I had nothing else to offer the world. I had no intelligence. I had no wisdom.
I didn't know how to love anyone. I had nothing else to offer friends, family, spouses, whatever it be. And so the last remaining lever, if you're trying to get attention and respect is, well, look, I have no intelligence to offer. I have no wisdom to offer. Maybe people will admire me for my car. That was why I wanted it.
And now that I hope today, 20 years later, I have a little bit more to offer to my wife, to my friends, to my family, to employers and customers, whatnot, then my desire for those things has gone down. Not to zero, but it's gone down. There's a great Warren Buffett quote where he says, success in life is when the people who you want to love you do love you.
And key to that is like, you have to ask the question, like, who do you want to love you? And for a lot of people, the quick knee jerk reaction is everybody. And so you want to have a nice car, nice clothes, nice jewelry, because you think everyone's going to stop and stare. When I drive this down the road, people are going to be stop and say, look at that guy. Look at her. That's amazing.
Like they're so successful. I admire them. I respect them. And by and large, that is almost never true because no one's thinking about you as much as you are. They're not paying attention to your car or your clothes or your house. They're busy worrying about themselves. Jimmy Carr, I think you've had on the show before. Is that right? Love Jimmy Carr. He said this a couple of weeks ago.
I heard it and it was one of those I had to stop and write it down because it was so profound. He said, in your 20s, people worry about what other people think of them. In your 30s, you say, I don't care what anybody thinks of me. And in your 40s, you finally realize the truth, which was nobody was thinking about you the whole time. They were busy worrying about themselves.
And look, that's not black and white. Of course, people think about you and look at you and sometimes judge you, but not nearly to the extent that we think. And that was why I get back to the exercise. If nobody was watching, how would I live? The truth is because virtually nobody is watching. except the people who I really love and admire.
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Chapter 5: How do wealth and status affect happiness?
But so what is it that the person on the left and right side of the spectrum are both doing that is the same here? So for anyone that can't see, I'll put it up on the screen, but it just shows the bottom axis says net worth. And it basically says that people with low net worth buy a Toyota. People with like in the middle, that sort of middle percentage buy Lamborghinis and Porsches and Jaguars.
And then people with extremely high net worths buy Toyotas. And obviously it's...
It's not it's not it's not exactly perfectly true. But I think people like a lot of comedy. You see it like it's funny because people are like, yes, that's true. That's how it works. I think a lot of it is like the richer you become, you realize that the big house and the fancy car didn't do anything for you. It didn't give you what you thought it was going to give you.
And then so you're like, look, I'm just going to go back to utility. Like status didn't do it for me, so I'm going to go back to utility. It can also be the case that if you're successful and rich, you can gain your admiration and your attention through the business that you built or the intelligence that you have or the friendship that you can offer others.
And therefore your desire to be like, look at my car, look at how cool my car is, just goes down from there.
The way I also interpret it is that When you don't have much money or when you don't have a huge financial understanding like my friend, you end up playing the really boring money games. Yeah. And when you have a huge financial understanding, you probably also spend a lot of time playing the boring money games. And by boring money games, I mean index funds. Yeah.
And the S&P 500 versus like crypto.
Yeah. I think you'll see that in investing that like the absolute lay person will invest in index funds.
Yeah.
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Chapter 6: What is the relationship between money and financial independence?
to satisfy the intelligence that I have. And there's a sweet spot where like for me, I'm just like, oh, index funds and compound interest. Like that's kind of as high as my intelligence goes here. But I think the truth is that that is the best position to be in. Smart enough to understand the basics, but not so smart that they become boring to you.
Because once they're boring to you, you're just like, ah, sweep those away. Let's try to pull some more levers here.
What is going on in the world at the moment, Morgan? It feels like people are more divided than ever before. And I feel like a lot of these subjects we talk about are somewhat interconnected. It feels like there's a rise in inequality. You probably know the numbers better than I do. I mean, there's a graph in front of you there, which shows, I think it's, is it wage growth? Yes.
Monthly wage growth going back for about 25 years.
And it appears to be going down.
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Chapter 7: How can we address wealth inequality?
Well, but this is growth. So in any given year, even if the growth is 2%, that's 2% higher than the previous year. So this is not wages over time. Now it is true that if you look over a 25-year period and you took the average American family, not everybody, but the median, that their wages adjusted for inflation have gone up.
Not up as much as people would want over 25 years, but that they are better off than they were 25 years ago. What is also true is that the average median family would probably disagree with that statement, even if it is true statistically for several reasons. One of which is their expectations have gone up over the last 25 years. The other is even if you're looking at average wages,
Average, and when we talk about these statistics, does not refer to any specific family. This is just a statistical number. Everyone spends their money differently. So if I told you, hey, average family, you're richer than you were in the year 2000. And they're like, yeah, but I'm trying to put my kids through college. And have you seen the price of college?
And yeah, that might be true because the price of TVs has gone down. But have you seen the price of rent and housing? Like at the individual level, these statistics don't really mean that much and never have. I think a lot of economists get into a problem with that when they're like, well, statistically, X, Y, and Z has happened.
But ignoring the psychology and the individuality of like what's happening actually on the ground in people's heads and how they spend their money, there's just endless amount of nuance there.
in here and so i think it's it's always been true that we live in a world where over long periods of time there's good economic growth we become wealthier would be that we have bigger better things we have more income we have better medicine it's equally true too that like there is always something legitimate to complain about and it's legitimate to complain about it's not just like oh you should be more grateful it's a real thing and
And so when I look at a graph like this, actually what, like if I was thinking just like with my math head, I'd be like, oh, there's been quite a bit of growth for the last 25 years. Like the growth has been gone up and down, but it's growth. You know, never in this chart is growth below zero.
I guess the question there is, are rich people getting richer and are the poor getting poorer?
It depends. I mean, it's at the end of our rich, are the rich getting richer? Yes. Are the poor getting poorer? No. Statistically, no.
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Chapter 8: What lessons about happiness and regret can we learn from life experiences?
Even adjusted for inflation?
I mean, it depends what period we're talking about here. There was about a 20 or 30 year period where the answer was unequivocally yes. There was an interesting trend over the last 10 years where in percentage terms, the group of wage earners who had the highest percentage growth were actually the low wage. That was true for two or three years after COVID, where if you were a minimum wage worker,
Those were, in percentage terms, great years for you for getting wages. It's tapered off. So the answer to your question is the rich are getting richer. The poor, I think, are treading water, by and large. There's always people who are doing differently than that. But when one group of society is getting richer, treading water feels like you're falling.
And the specifics of how people spend their money. So even if on average adjusted for inflation, their wages are flat. But if your rent skyrocketed or you're trying to send your kids through college or you have a long commute and you got to put gas in your tank, the individual level things can feel very, very different from what the statistics show.
And what role do you think this sort of wealth inequality that is widening between the very, very top and everybody else is playing in everything that we're seeing play out at the moment? Because in the UK, it's almost like we're on the verge of riots, it seems. And I think last month, there was millions of people in London protesting against it.
immigrants coming over on boats and society becoming more multicultural i'm so fascinated by this subject because you know earlier on we said that unless you have immigration in the western world you have population decline and what's when population decline sucks because you have what's the biggest problem right now throughout a lot of the world at least one of the biggest perceived problems is immigration
And the same is playing out in the United States. If I go on X, although I know what X is, it's people. Maybe it's just my algorithm, but it's people attacking immigrants and immigration and people that are brown and black and whatever else it might be. I'm wondering how all of this is intertwined and if it is connected at all, in your view.
I think... As an amateur student of history, across cultures, all over the place, all through history, what you want to avoid more than anything in society is when probably a third of the population wakes up every morning and says, this isn't working.
That's the point at which it's going to collapse from there is when enough people wake up in the morning and just have this feeling of like, whatever this is, it's not working out for me. You want to avoid that part. And so like, look, I tend to be a free markets guy. I'm a capitalist. I think people should be able to become very wealthy, et cetera, et cetera.
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