Hello, everybody. It's Sam and Sydney from Financial Samurai. And in this episode, I want to talk about merit, and whether merit is going downhill and whether we should still work as hard as possible to try to get ahead. Because in 2023, I'm going to try to take it easier because you know, bear market return on effort is lower.

It's been a long road since the start of the pandemic, and I'm just burned out and I just want to coast. What are your thoughts about merit, Sydney, and whether we should work as hard as possible to get ahead? Well, it's funny because you are burnt out, which I totally understand because you had a really, really tough year.

I felt like the second half of 2022 was was disappointing for myself. So I set higher expectations in my own goals for this year. So I plan on working more and at least in the first half of the year. So I'm coming from a different perspective. But I do think that merit is important.

For me personally, when I'm making progress, that's when I feel the happiest. Right? Well, you wouldn't want to just be like handed a promotion or a raise. Just be let's say let's say your boss, you know, really liked you because I don't know you're pretty or you grew up in the same neighborhood as your boss and Sydney, Sydney deserves a raise in promotion without being here as long as Fred.

How would you feel about that? Everything. I think everyone is selfish for themselves. If they could get something like that easily, then perhaps sure, why not? But I was in a situation where I was working really hard. And I had some colleagues who were working, you know, I would say decently hard as well.

One guy what I felt like was slacking off a lot. And he and another colleague of mine got promoted ahead of me during a round where I was fully expecting to get promoted. And there were some politics going on in the firm at the time that were perhaps the main reason why it didn't work out that round for me.

But that was a really hard time in my life that just I was I was so upset. Right. And so basically, your hard work didn't pay off. Merit was not rewarded. Not at that point in time. And it was tough. So the great thing about not getting paid and promoted that year was you finally listened to my thoughts and advice on, hey, maybe you can negotiate a severance and be free.

Because before this Passover of your promotion, I was way more skeptical. You were super skeptical. And why were you skeptical even though I did it myself? I guess I felt like this my scenario was different. I was happier at the time. I didn't feel like I wanted to get out until that happened.

And I was I was upset enough that I knew I needed something to change or a lot of things to change. So I definitely became really motivated to turn things around in a way that would benefit myself. Right. So I would say in conclusion, not in conclusion, in conclusion to your story, Merit, I think most people simply want to get rewarded for the work they put in.

Yeah, I yeah, anybody who's working hard wants to get wants to get not just rewarded for that, but recognize, yeah, that's what I was looking for. Right. And on the flip side, I actually don't know anybody who is happy to get rewarded based on their identity or because their connections or whatever.

I just feel that, you know, you feel deep down, you'll feel guilty, you'll feel undeserved. You'll feel actually not worthy like an imposter, as some people, I think really are, you know, I play tennis at my club, and there are some very wealthy people. And some of them, because their parents made tons and tons of money, are on this kind of career life walkabout, where they have they're always starting a business, they're the CEO of some business.

But this business doesn't go anywhere. It's almost almost like a front to, you know, give them something to do or to give them some status or to give them something of their own, because they were never able to get anywhere on their own, because their parents hooked them up with their parents.

So one of the things that I think about regarding merit is, you know, I think, to be able to instill in our kids, a strong work ethic, grit and determination is wonderful, because it'll enable them to struggle forward and get things they want on their own. Yeah, for sure.

So one of the reasons why I want to talk about merit is because back in my old high school, school district, the Fairfax County School District in Virginia, northern Virginia, Thomas Jefferson, also known as TJ, also consistently one of the top ranked high schools in the country, was found out to have hidden from 1200 students supposedly over the past five years, that they had achieved national merit, commended awards.

So commended awards are students who score in the top 4% of all PSA t test takers in their state. And when asked the TJ administrators why they didn't notify these students, they said they didn't want to hurt the other students feelings. Also, they wanted to really push for equal outcomes for students.

They hired a consultant supposedly for $455,000 over a nine month period to specifically push the agenda of equal outcomes for students. Now, what are your thoughts on that? I was shocked when I heard that, especially at a high school level. I can understand, you know, wanting equality for students if you're in preschool, because children at that age are way more vulnerable.

You know, they're not developed enough to handle competition, I guess you could say. But at the high school level, it's just it's terrible. I feel so bad for the students and their parents to have found out about that and to have lost out on opportunity and scholarship money. It's it's really, really upsetting.

It is pretty upsetting. And I'm just trying to imagine if our kids were in high school, they worked really hard. They did well on a test or SAT or whatever it is. And then it was hidden from us. I guess on the one hand, if we saw the score, we'd be like, okay, that was a pretty good score.

If it's over 1200 1300 out of 1600. Surely they must have achieved something. But on the other hand, to just have it hidden from us before college applications, and the fact that it's a public school, right? It's a public school, and they spent $450,000 on a consultant to give them this type of advice.

Yeah, that's terrible. I mean, think think how how that money could have been so much better utilized. And so many students could have been unaffected by such negative advice. It's it's really, really shocking. Well, here in San Francisco, I think it was like the East Bay, some East Bay Public School District spent $40,000 for eight hours of consulting from the Stanford professor to talk about how we should eliminate algebra from eighth grade.

And so everybody starts at the same in ninth grades to give them an equal footing. Oh, yeah, I remember that too. Yes, ridiculous. So it's interesting how we're really trying to mold our children to be the same. And this is kind of what I realized. After homeschooling our son for 18 months, we taught him a lot.

We you know, we spent all day with him, right? And then, you know, we'd sit down and teach him Mandarin, math, whatever. And then what we realized when he finally started attending preschool, and now kindergarten, is that he had learned all this stuff two years ago. Yeah. And so we either have to keep on supplementing his education, or we can just kick back and just have him learn as everybody else learns.

Because it's not like, you know, if I learn math better than you, like, it's just not in my nature to just let the school handle everything. They do a phenomenal job, no doubt. But I'm not going to make him held back if he's interested and able to learn something new.

So I, you know, maybe someone might call me to agro, but I give him a math worksheets, you know, at home, you know, on occasion to like earn video time, for example, like, he's like, Mommy, I want to watch iPad. I'm like, Okay, well, let's earn it. Let's do some math worksheets.

And sometimes he's like, but then other times, he's like, Okay, and we'll sit down together and we'll do, we'll do some subtraction and addition and things like that, that are way more advanced than kindergarten, but he's able to do it. And he's learning. So why not? Well, I mean, the counter argument is, you know, other students might feel left out, they might feel dumb, or not as smart.

And we don't want to hurt little ones feelings. Yeah. Well, what we're doing at home doesn't impact other kids. I think we're getting a little sidetracked. But no, no, we're not. Because this hurting other people's feelings starts at a young age. And then we have to decide when to stop protecting other people's feelings.

And let them go into the real world and get beat up every single day. I think I think what they're doing at the high school level is really sad. It's way too late to be trying to make students feel equal. They're teenagers for goodness sake, they're applying to college.

And yet they're trying to the war has begun build skills to help them get jobs. It's, it's really Yeah, it's ridiculous. Well, it is interesting because other countries like let's say, China and India, they don't have this type of equality for equal outcomes for all. It's like super cutthroat, the college entrance exam.

Yeah, it's like upper outdo or die. And you can see how their hunger and our declining hunger might eventually enable them to overtake America, right. But hopefully at that time, then we'll turn into Europe, where you know, we might have 20 30% unemployment. But supposedly, you know, the top 10 happiest countries in the world are always from Europe.

And they're living, they're not working as hard work life balance, good healthcare system. And I'm trying to I'm trying to look at the positive side of things, because I've seen the future. And the way things are going, I think America could eventually turn into Europe. But they're happier than us.

They're more chill. They've got a big social network. Yeah, they don't innovate and create, you know, the next iPhone or whatever. But well, I wouldn't I wouldn't put a blanket, you know, statement like that over all of Europe. But I mean, culturally, they do have a lot of differences than we know how we are in the US now.

It's work to live in Europe. Whereas in America, it might be more live to work at the margin. And so I in 2023 want to work to live. Actually, I don't want to work. I just really fade and just enjoy life and enjoy the wealth that we build that we spend 20 plus years building.

But you have you you have the experience and the the success that you have already accomplished. So I think your attitude is okay at this stage in your life, because you've done so much already. But to teach high schoolers that they should just coast and you know, no matter how hard they work, they're not going to, you know, get any farther than someone else is is just it's really disheartening.

It is disheartening. If they know that no matter how hard they work, it might not be for anything because life is hard and the job market is so competitive out there. If they're not ready for the real world, they're gonna get a beat down. Yep. So let's look at some ways we can survive this declining merit based performance society.

Ultimately, my hope is that we do more to serve the financially disadvantaged people across all people, because it really is the lack of resources, whether it's time with your parents or financial resources to study to spend time to take risks. I see this very clearly now that I'm 45 years old, and I've been through this arc of my life.

Those without as many financial resources are at a great disadvantage. And these are the people I think we need to help more. And this is one of the main reasons why I record on Financial Samurai and write on Financial Samurai to help bring further financial education, knowledge and wisdom to anybody who wants to listen and to read.

Now let's go through seven ways to thrive in this changing society. So one, I think it's important we have to understand our gatekeepers. If you're not yet financially independent, you will have to succumb to the gatekeeper who decides whether you get in get paid, get promoted and so forth.

TJ, if you look at the racial makeup of the student body is about 72% Asian 20% white, two and a half percent Hispanic 1.7% black and 4.7% other. So in other words, it's a minority majority population. And so you would think the TJ administration would reflect somewhat its student body, very logical assumption.

However, if you look at the administration, it is looks like it's like 70% white and 30% black. So there's no representation of Asian folks in the TJ administration. And what we know from historical past elections, if you look at President Obama's election and against Mitt Romney, people vote based on racial makeup, regardless of a lot of the policies.

It's very interesting. Just look at the data. And people will naturally fight for their own kind and suddenly fight against or at least not stick up for people of different backgrounds. So I think it's really important that you understand your gatekeepers before you decide to join any institution. Look at who the bosses are, look at who the administrators are.

Know that if you have no representation, you are probably consciously or subconsciously going to get excluded from opportunity. Please be aware. The second tip, once you understand the gatekeepers is to learn how to assimilate with the gatekeepers. Very interesting. So when I was working in finance, all my bosses in the beginning half of my career were English.

So the head of the desk in New York was from England. The head of the desk in Hong Kong was from England. The head of the desk in London was from England. And they had their network of English men. And then there was a power struggle. And the head of the Asian business was Korean, really good guy.

And then suddenly the head of the New York desk was Korean. And then the head of all these other desks were Korean. Ah, is that bias? No. Look here in San Francisco, the mayor of San Francisco, London Breed is black. Now, the district attorney is black. And the police commissioner is black.

So we have these biases. And you if you want to get ahead, you need to learn how to assimilate with your gatekeepers. If your boss's favorite sport is pickleball, you too should learn all the rules of pickleball and become a pickleball fanatic. If your boss believes in saving the whales, then you too might want to learn about the literature on how whales are slowly becoming extinct.

And what you can do to help save the whales. This is the game folks. If merit isn't going to be rewarded as tightly as in the past, you need to cozy up to the powers that are the people who control everything and get on their good graces. Three, have a concurrent backup plan.

You know, you could be the best employee, the best student, whatever it is, you're doing something and you know, you're cozying up to everybody. You're assimilating well. However, unless you're a relative or a close friend, you never really know for sure whether you're a part of their crowd. You know what they say publicly versus behind closed doors can be very, very different things.

Just asked ex Clippers owner Don Sterling about what he was saying about his players on a recorded phone call or a recorded conversation. So you can never fully count on the gatekeeper to accept you based on merit. This is why I have this philosophy where the new three legged stool for retirement is to count on you you and you don't count on anybody else to defend you or take care of you.

It's great if they do, but don't count on it. So I need you folks to really think about your side hustles. If you have a day job, or your x factor find something you can do on the side that you enjoy that you can generate wealth and income from.

Because one day you might get let go you might get pushed out from a power struggle, you might not get promoted and paid. Be around long enough, bad things and good things will happen. Number four, become an entrepreneur. One of the main reasons why I left my banking job in 2012 was because there was a breakdown between performance and pay.

Instead of complaining, I devised a way out and that way out was negotiating a severance package. The thing is, in work, the higher you go, the more political it becomes. It's not so much how smart you are, how well you do your job, it's really who you know. And this networking is so important, but it's so painful to do sometimes for many, many people.

And if you haven't built up your support network from those in charge, your chances of ascending to the top are slim to none. So entrepreneurship, solopreneurship is one of the best ways to find that tight correlation with performance and pay. Because as an entrepreneur, if you don't do the work, nothing happens.

If you don't hustle, market, write, create, produce, nothing happens. And so when something does happen, it is one of the most wonderful addicting feelings you'll ever have. You know, the first dollar you make as an entrepreneur, I think it's equal to like $10 you make working for someone else, because you created something from nothing.

Bypassing the gatekeepers is one of the reasons why so many restaurants, convenience stores, and other small businesses like laundromats are owned by minorities. You know, they might not have the communication skills or the English skills or the college pedigree, whatever it is, but they bypass the gatekeepers by starting their own business, taking that leap of faith.

All right, number five. This is an easy one. Actually, maybe it's not easy. Maintain long term friendships. They say friendships change every five, six, seven years. And the reason why is because we're all selfish. We're busy with ourselves. And we don't put the effort to keep the connections alive.

We don't send gifts, we don't send text messages or phone calls and just catch up to say what's up without any agenda. As a 45 year old, many, actually most of my friends have over 20 years of experience now. So some, actually, all of them have ascended in their careers, right?

Managing directors, doctors, department heads, CEOs of companies. These folks have just become more wealthy and more powerful over time. And because I've maintained some friendships with some of them, I can definitely do a better job. If I need help, they will be able to help me. And that's just life.

People want to help those who they like. And so if you can maintain your friendships, as your friends get wealthier and more powerful, life becomes easier for you. And maybe life will become easier for your children as well. All right, six, develop a thoughtful personality. If you're always thinking about helping someone first without asking for anything in return, you're going to build these credits, these lifelong credits that you hopefully will never use.

But one day, if you face a problem, which we all will face, you will have a tremendous number of credits, tremendous number of people and friends who will want to help you out. Having high emotional intelligence, having a thoughtful personality is huge. Because at the end of the day, we just want to help people who we like.

And we tend not to help people who just come in here, you know, for transactional purposes, you know, someone on LinkedIn's like, Hey, how's it going? Can you buy this? Or can you do that? It's just so annoying. I'm not on LinkedIn very much. Because as soon as I get on, it's just like, help me do me do this, that it's like, ah, I can't I can't take it.

So it behooves all of us to be a little bit more thoughtful, to be a little bit more empathetic to try to understand where the other side is coming from. And maybe to preempt their ask their needs and see if you can help them in any way possible. And then finally, the final way to overcome this declining merit based society could be my favorite way.

I was talking to my dad about this. And that is to get so rich. Merit doesn't really matter. And so so far, these six strategies earlier, are all for those who are not yet rich, you could be rich, but not not really not yet rich. However, there is a point where you have so much money, that this this debate about war on merit, or whatever it is, doesn't really matter anymore.

You have enough money where you can do as you please, your children can do as they please, they can't get into college, you can buy their way into college. I was talking to a Harvard alum who was on the, what is it called the admissions council for years. And I asked him, how much do you think it would take to buy your kids way into Harvard now, right with decent scores.

And he said $10 million. And I said, What was that figure in the 80s? And he said $1 million. So you see inflation is screwing us. It's screwing us 10 million to buy our kids way into private schools. I mean, no wonder why so many public schools are rising in the rankings, because it's very hard to buy your way into private public schools.

But private schools, you can just do whatever you want. It's a private school, right? You accept money, quid pro quo, name a building, whatever it is. So I think that minimum amount of money, where merit doesn't really bother you as much anymore, is when you have at least 1 million in liquid assets, because that 1 million can generate 30,000 to $50,000 a year in passive income, low risk.

And if you want more luxuries, or you live in a more expensive area, shoot for 3 million in liquid assets, right? Because 3 million will generate 90,000 to 150,000 a year in passive income. And 3 million because of inflation is my definition of being a real millionaire. So it's quite aligned.

And this is the other thing, the wealthier you get, the more I would say chill you get, because you just stop worrying as much about not having enough money, because money is a top three stressor in life. So this makes you more gregarious, more empathetic, kinder. I really believe, you know, the society is attacks rich people for being evil and mad and greedy.

But I think the richer you get, you become kinder, you want to help people, you're not as, you know, sheltered, or you're not as jealous or envious and protective of your things, you want to give more. So this is something that I've discovered over the past 25 years. So Sydney, what is your favorite strategy on how to still survive and thrive in this changing society that is discounting merit based performance and reward?

I think initially in your career, the first two that you have are really important. I remember when I first started working with one of my bosses, he kind of annoyed me and I just couldn't figure out how to connect with him. But then we started going out on team events, and I started to get to know him better.

And once I understood who he was, what he was interested in, we started to have better and better conversations. And by the end of my time at that job, he ended up being the most favorite boss of my entire career. And it was because I decided to take the initiative to build a relationship with him.

And it made all the difference in the world. Make that connection. It's just awesome. Yeah. So do you think hard work is still worth it? Because here's one of my dilemmas. You know, we're old now. Well, I'm old. You're not as old as me. I don't feel young. But our kids are only five and a half and three.

So we're kind of in this holding pattern based on schooling, where, you know, it's like 15 more years until we can, like, travel the world again and do that all the time and be completely free. So one of my fantasies or thoughts is, well, if there is a decline in merit-based reward, maybe we shouldn't try as hard.

Maybe schooling is not as important. Maybe we can just, you know, B's are fine. We don't have to stress that they don't get an A. And maybe we can just travel and see the country and just kind of be vagabonds and just be free spirit. I mean, I think a part of me would like that.

But I still have this ingrained part of my personality that goes back to merit, because it's how I grew up. It's how I built my career. And I want our kids to be able to experience the joys of hard work and the rewards that come from it. And I want them to be able to grow up and be independent and figure out what they love and want to do and how to make money from it and build a life that they love.

Yeah. You don't want them staying at home with us until they're 35? Until 35? No way. I want them to still want to come visit us and hang out, but live under the same roof at 35? No thanks. I don't know. I think I'll miss them. Of course we'll miss them, but we want to see them watch.

I think any parent wants that for their children. But what if we buy a really large enough house, like compound, where they have... It's not the same though. They have to experience what it's like to live on their own. On a sofa. To have the responsibility of paying rent, getting all their bills in on time, buying groceries, all of these things that are part of life.

They need to experience that. I still think I'll miss them. Of course we will. We might end up selling our house down the road and relocating to be closer to them. I think that'd be great. Maybe next door. They might not want that, but we'll see. I hope they will want to be around us when they're adults because it would just be so much fun.

It would be fun. I think in conclusion, hard work is worth it for your own self-pride. You feel great when you work hard and you feel great when there's reward. And obviously when there's no reward, you feel bummed out, but that doesn't mean you can't still try hard again.

The danger though is that you might not know when to shut it off. You might work so hard and you just run yourself into the ground and you don't stop and smell the pink jasmine flowers along the way. And then you look back on your life at 55, 65, 70, 80 and you kind of regret working all this hard for what?

For more money, for more status, more fame? I talk about this all the time on Financial Samurai. I think about what is the right calibration of work, fame, fortune. And I feel like we have enough money. Going on the book tour with Buy This, Not That for three months, it's fine.

Get on podcasts and video. It's fun. It's kind of thrilling, but it's kind of stressful. I had enough. I don't need to be on TV, all that. It's just not me. And maybe it's just a personality thing. So in conclusion again, I say hard work is worth it, but we have insurance policies in place just in case for them, our children, they get kicked to the ground and they cannot launch because of the gatekeepers.

And that insurance policy, rental property portfolio, small online business where we can teach them the ways. That's frankly one of the reasons why I keep on going just in case they don't get a fair chance, which I don't think they will. But that's just life. And we got to move forward from there.

All right, everyone, if you enjoyed this podcast, we'd love a fantastic five-star review. If you want to subscribe to our newsletter, it's at financialsamurai.com/news. And if you want to support our work, it's at financialsamurai.com/buythisnotthat. Take care. Thank you.