Morgan Housel

The biggest single point of failure with money is a sole reliance on a paycheck to fund short-term spending needs, with no savings to create a gap between what you think your expenses are and what they might be in the future.

You want to feel a gap between what you expected and what actually happened. And the expectation side of that equation is not only important, but it’s often more in your control than managing your circumstances.

Seinfeld asked if McKinsey is funny. No, the magazine said. “Then I don’t need them,” he said. “If you’re efficient, you’re doing it the wrong way. The right way is the hard way. The show was successful because I micromanaged it — every word, every line, every take, every edit, every casting.” If you’re efficient, you’re doing it the wrong way. That is so counterintuitive. But I think it perfectly highlights the danger of shortcuts.

There are two types of information: permanent and expiring. Permanent information is: “How do people behave when they encounter a risk they hadn’t fathomed?” Expiring information is: “How much profit did Microsoft earn in the second quarter of 2005?” Expiring knowledge catches more attention than it should, for two reasons. One, there’s a lot of it, eager to keep our short attention spans occupied. Two, we chase it down, anxious to squeeze insight out of it before it loses relevance. Permanent information is harder to notice because it’s buried in books rather than blasted in headlines. But its benefit is huge. It’s not just that permanent information never expires, letting you accumulate it. It also compounds over time, leveraging off what you’ve already learned. Expiring information tells you what happened; permanent information tells you why something happened and is likely to happen again. That “why” can translate and interact with stuff you know about other topics, which is where the compounding comes in.

Crazy doesn’t mean broken. Crazy is normal; beyond the point of crazy is normal.

The only way to be wealthy is to not spend the money that you do have. It’s not just the only way to accumulate wealth; it’s the very definition of wealth.