Exploring the average, status quo, and public vs private

Welcome to the Intentional Dollar weekly newsletter — great work taking this small step to move your money forward. I’m Logan, a Certified Financial Planner™, and I’m excited you’re here!

What’s inside?

• One tool to experiment with

• Two quotes from others

• Three questions to dig deeper

• Four lines of poetry for the point

_{One tool to experiment with:}

The Average:

Have you ever heard anyone say you’re the average of the five people you spend the most time with? 

It’s a curious thought. The notion that we become like the group we engage with makes sense. Habits, hobbies, and hairstyles fall to a mean. We look alike. We sound alike. We think alike. 

If your friends work out, you’ll work out. If your friends party, you’ll party. 

It’s true that we are likely friends with these people because they share our interests — we have common bonding ground. It’s also true that we discover new habits and identities through our social groups.

This dynamic creates four averaging states:

1. You’ve only ever been in a low average group, so you maintain low average. 

2. You step into a low average group, you fall to the low average. 

3. You’ve been in a high average group, you maintain high average.  

4. You join a high average group, you rise to the high average. 

This averaging idea is commonly brought up with respect to the people and friends we spend time with, but averaging applies more broadly than that. 

If the podcast you listen to talks about books, you’ll read books on average. If you eat bad food, you’ll have bad health on average.

Glance inside your peer group and inspect the money habits they harbor. You might notice an eerie truth. Your net worth, your debt levels, your spending patterns are similar to theirs. 

We conform to the norm, on balance.

Let’s assign our group a number out of 100 — 100 being top in this case. 

[60, 57, 64, 63, 59]

Here’s a group with five unique numbers that average out to 60.6. If you inject this group with a sixth individual that is a 100 — your average pulls to 67. 

In this instance a 100, becomes a 67. 

• One great number in a bad group still averages a bad number. 

• One bad number in a great group still averages a great number. 

We understand averages from homework, quizzes, and test scores in school, but we neglect to appreciate their applicability in the real world.  

In statistics, a 100 amongst 60s is an outlier. And outliers are subject to mean reversion. The 100 will slowly slip back toward the group’s average — 60. 

Don’t take this as a push to divorce all your friends and enmesh with a rich clan. However, investigate your average inputs. Not just the people you’re around, but the media you consume, the things you listen to, the books you read, the foods you eat — everything you do. In the aggregate, you become the average of these things. 

Charlie Munger viewed books as an opportunity to become friends with the “eminent dead.” There’s a library on your phone where these since-departed thinkers sit patiently waiting with their wit and their words — and you can make friends with them right now.

_{Two quotes on status quo:}

Going with the status quo leaves a lot of unquestioned assumptions, unattempted experiments, and unsatisfactory results.

_{Three questions on public vs private:}

1. Is there a disconnect between what I do privately and publicly — why?

2. Are my private funds telling a different story than my public purchases?

3. If no one saw what I spent money on, would I spend differently?

Which question stuck with you? Questions like these are spotlights for the mind. Reply to this email and let me know which one shined light on a previously dark cave.

_{Four lines of poetry for the point:}

Contact Me:

Content ideas, questions? Reply to this email or reach out to me at [email protected]