The Basics of Financial Security + Can American Small Business Compete Again?

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**SPEAKER_3** (1:11)
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**Scott Galloway** (1:47)
Welcome to Office Hours with Prof G. This is the part of the show where we answer your question about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question for next time, you can send a voice recording to officehoursatprofgmedia.com again, that's officehoursatprofgmedia.com, or post your question on the Scott Galloway subreddit, and we just might feature it on our next episode. Our first question comes from a listener who emailed us. Hi Scott, I feel like the basics of financial planning, adequate life insurance, disability insurance, wills, et cetera, go entirely unaddressed, even though the implications of getting it wrong can be disastrous. Thinking of a young upper middle class family, what's a checklist of non-investing to-dos to best set your family up for success no matter what life brings?
I'm not sure I'm going to be able to read you a checklist. I just think there's some basics. I'm going to talk a little bit about the algebra of wealth, and that is focus. What do I mean by that? Find something you're good at. Don't fall into this notion of pretending that your passion is everything. People mistake their hobbies for their passions. Find something you're really good at, and devote the thousands of hours, and the grit, and the camaraderie, and the kindness such that you become great at it. The accoutrements of being great at something, relevance, camaraderie, prestige, money are all wonderful. Focus, find something you're good at, and try to become great at it too. Live below your means. I call it Stoicism, but it's living below your means. Figure out a way to get money out of your hands before you even touch it. Automated savings, tax advantage vehicles, just every month. Like you're a millionaire or you're worth three or five million dollars if you start saving a hundred bucks a month at the age of 21, right? And then by the time you're in your 30s, you got to save 600, and then if you wait till your 40s, you got to save six or eight thousand a month. So starting early, right? Living below your means. Being rich, the way to wealth isn't making a lot of money, it's making more than you spend. My father died a near millionaire, and he never made more than or he was making $48,000 a year, but he spent 46 or 45 and he was investing and saving money even when he died. So living below your means. And then letting time take over, compound starting early, get in stocks, get in things early, low cost index funds, don't try and be a hero. Maybe take 20 or 30 percent of your income and have some fun, find some companies, look for asymmetric upside, and figure out that you can't find it. And then diversification. As soon as you get to a certain point of assets, make sure that you're diversified across not only asset classes but geographies. In terms of the other stuff, okay, until you have some economic security, try and find reasonable health insurance. That can bankrupt you. I think health insurance is a transfer of wealth from the poor to the rich. I don't have health insurance because I don't need it, because I can survive a health shock. You probably cannot. I'm probably a believer if you're young at going with minimum coverage or the high deductible because the reality is the insurance industry is basically a scam that transfers money from young healthy people who basically never go to the doctor unless they're pregnant, to old people who go to the doctor several times a week or a month.