I love movies. Not the artsy types that win awards; I most enjoy the big, expensive popcorn blockbusters that take you away to a different time and place. However, as our income and wealth has grown we've maintained a few of our “cheapskate” habits from when we were poor. One of these is we see almost all of our movies at the “dollar theater,” a second-run theater where the entire family can see a show for less than the cost of a month of Netflix. We rarely make exceptions and when we do it usually involves either hobbits or lightsabers. So it has been quite a surprise for me to see a film in the “fancy theater” not just once, but twice. The film? The Greatest Showman, a musical chronicling the life of P.T. Barnum (admittedly with some artistic license) alternatively titled “Wolverine Can Sing?!….and Dance?!” The show is a beautiful visual and auditory spectacular rivaling a Broadway show, but for those who pay attention, it is also a masterpiece of personal finance. Today, we'll examine eleven financial lessons from The Greatest Showman. Be aware this blog post contains spoilers, but if you haven't seen the show by the time this post runs, you deserve to miss out on any surprises. Knowing the entire plot couldn't “spoil” this show anyway.
# 11 Money Comes From Work
Early in the movie and life, we see Barnum as the son of a tailor and then an orphan, stealing bread on the street. How does he escape this very hungry, unpleasant life? He starts selling newspapers out of the trash can. Then he takes an opportunity to work on the railroad. This is unpleasant, exhausting, dangerous work that takes you far away from familiar surroundings. As Thomas Edison said, “Opportunity is missed by most because it is dressed in overalls and looks like work.” Barnum took advantage of the opportunity. Later he tries to support his young family by working in the accounting department of a shipping company where he continues to try to rise through the ranks through his merit. Even as he transitions to show business, you see him putting in countless hours to become successful. If you teach nothing else to your children about money, teach them that money comes from work.
# 10 Take Joy in Being Poor
Charity Barnum, who came from the upper class and married her childhood sweetheart long before he had any real money or success, learned to take joy in being poor. Birthday presents for the kids were free, they couldn't afford ballet shoes much less ballet lessons, and their first little apartment had no furniture. Most physicians can relate. Over a decade in college, medical school, and residency requires us to find joy without spending money. Those lessons can be successfully carried throughout our lives, especially when applied during the 2-5 year “Live Like a Resident” period immediately after completion of your training.
# 9 Banks Only Lend Money To Those Who Have It
At one point, Barnum goes to the bank to borrow money to buy a wax museum, a hare-brained entrepreneurial scheme. Another bank customer walks out unhappy muttering how banks only lend money to those who already have it. Barnum subsequently obtains his needed loan by using the titles to a dozen ships as collateral. Of course, he never actually owned those ships, which were currently at the bottom of the ocean anyway. The lesson to learn from this episode isn't so much that dishonesty is sometimes rewarded, but that banks are for-profit institutions. So while the federal government will loan you money just because you get accepted to medical school, don't expect to be able to refinance those student loans or get a mortgage if you're a “bad bet.” Even if you dedicate your life to the healing of the sick and injured, you don't get a pass on math.
# 8 Buy Stuff When You Can Afford It
As Barnum takes the advice of his children to put something “alive” and “not stuffed” into his wax museum (converting the museum to a “circus,” a word borrowed from his greatest critic), he finally hits it big and the money starts rolling in. He goes and buys his dream house, where he played with his future wife as a child. Lesson to be learned? When you have money, it's okay to spend it on your dreams. But don't buy consumption items BEFORE you have the money. It's one thing to borrow money on a dental practice that is likely to double your income, it's entirely different to borrow it on a “doctor house” when you have a negative net worth.
# 7 Get Equity
At one point in the movie, Barnum brings on Phillip Carlyle as a partner. Carlyle, while perhaps lacking Barnum's pizzazz, certainly has a better mind for business. He doesn't go work for Barnum for peanuts, he wants to be cut in on the action. He wants equity. Likewise, those who become wealthy own stuff. Their own business. Real estate. The businesses of others (in the form of shares of stock.) It is far harder to build wealth working for a W-2 paycheck and investing only in savings accounts and bonds.
# 6 Negotiate
When Carlyle is convinced to join Barnum's attempt to reach “the carriage trade” instead of the peanut-eaters, he did something that few physicians do – He negotiated. Carlyle began at 18%, Barnum at 7%, and they eventually reached an agreement at 10%. In life, you don't get what you deserve, you get what you negotiate. Don't be afraid to do so and remember that the time to negotiate is when you have something the other party needs, i.e. in the beginning. Always try to negotiate from a position of strength.
# 5 When You've Won the Game, Stop Playing
Even after Barnum became successful, he continued to chase after fame and fortune. It was Never Enough. He continued to take the ridiculous business risks that initially led to his success. He put his house and entire business at risk in order to finance a tour around the country with European opera singer Jenny Lind. When that didn't work out, the house was foreclosed on and the business was destroyed. As William Bernstein has famously said:
“When you've won the game, stop playing.”
As Jonathan Clements has said:
“Saving enough money for retirement, and then turning those savings into a reliable stream of retirement income, together constitute our life's great financial task.”
Don't forget the object of the game.
# 4 Diversify
Barnum bet his entire fortune and future on one tour of one singer, Jenny Lind. When it turned out she had entirely different goals, he lost everything, including his family. Diversify your investments and your income streams. Make your financial failure require the failure of dozens, hundreds, even thousands of other people, businesses, and economies. Invest in multiple asset classes and multiple assets in multiple countries. Diversification protects you from what you don't know.
# 3 Insure Against Catastrophe
Barnum returned from the Lind tour to discover his circus had burnt to the ground. If Carlyle hadn't bailed him out (another great lesson to save money and to get your cut early and often if your employer/partner isn't particularly financially savvy), that would have been the end. All for lack of a little bit of property insurance. You don't need to insure your iPhone, but you'd better insure anything you can't afford to replace such as your home, your business, your health, your life, and your ability to earn an income. Insure against financial catastrophe.
# 2 Do Something You're Passionate About
Life is too short to spend it doing something you don't love. Barnum loved entrepreneurism and show business. Hopefully, you love medicine or law or whatever your profession might be. But if you've lost the passion you initially had for your profession, start transitioning toward something you do love. It's good to have work, but it's wonderful to have work you love. Those who love their work never work a day in their lives.
# 1 Happiness Doesn't Come From Fame and Fortune
I saw the sun begin to dim and felt that winter wind blow cold. A man learns who is there for him when the glitter fades and the walls won't hold….I drank champagne with kings and queens, the politicians praised my name. But those are someone else's dreams, the pitfalls of the man I became. For years and years I chased their cheers, the crazy speed of always needing more. But when I stop and see you here I remember who all this was for. From now on these eyes will not be blinded by the lights. From now on what's waited til tomorrow starts tonight. Tonight. Let this promise in me start like an anthem in my heart. From now on.
Happiness doesn't come from fame and fortune. Don't lose sight of what is really going to make you happy. Your happiness and your financial position won't be lasting if you don't take care of what matters most to you. Nobody ever says on their deathbed, “I wish I had spent more time at work.”
What do you think? Have you seen the film? What financial lessons did you learn from it? Comment below!
Great post! I also loved the movie. Even my hard to impress daughter enjoyed it. What I got out of it was not to be afraid of failure. He failed multiple times and always picked himself up and started over again. He learned from the failure and went on to success.
I haven’t seen it yet, but the alternative title “Wolverine Can Sing?!….and Dance?!” really does make me want to haha.
Solid post with solid advice.
I really like your advice on switching it up if your career is not something you are passionate about, though I think Clements argues in his book How to Think About Money that he would really encourage people to get a well-paying job that they can deal with as a bare minimum.
Only so many of us could be lucky enough to love what we do and make solid money while we are doing it. I know that’s the case for me, and I never forget how fortunate I am to work in a field that I love (Anesthesiology) and to make good money.
And since you mentioned the”Stop playing the game once you’ve won” mentality. What does that look like in terms of an asset allocation? 50/50? 60/40? I know that this likely depends on a few factors, but am curious to know your thoughts.
You’re right, it depends on a few factors so impossible to dictate an asset allocation. But less aggressive than what you had before anyway. It applies to other risks too- like leverage risk.
One could probably argue that #5 for you at this point could mean quitting your day job (and eliminate any malpractice risks) and sell some or all of WCI.
At a certain point, you have to ask yourself what you want to do the rest of your life if money isn’t a concern.
If we are giving advice to the kids, the lesson that stands out to me, among others, is to get equity. I watch time and again as young engineers give up a solid job, income, and potential advancement to go for the start-up. Of course that can make sense, if they get equity. But too many of them misunderstand how a start up generates wealth; that is, for the owners.
I take issue with #2 only because it can sometimes be difficult to find financial success in things you love. There can only be so many professional skateboarders and singers. The odds of being successful in those are low. But choosing something that has a high chance of success, with good to excellent income, and you don’t mind, but may not love, is probably the better option for most.
Too few physicians seem to be willing to start their own practice or buy-in to an existing practice. It is harder to get wealthy without ownership in something.
Very true observation today. It seems many if not most residents aspire to a regular W2 paycheck without partnership or equity ownership. Which is the way the government wants it.
Hugh Jackman is an amazing artist who can dance, sing, and even act. I saw him in The Boy From Oz about 15 years ago and had the pleasure of being picked to dance with him on Broadway. It was my wife’s 40th birthday and she too got to dance with Hugh and since then, I think she loves him more than me. We got a standing ovation at the end with the cast and free drinks at the bar after theatre.
Fun post highlighting your financial advice in the life of PT Barnum.
Great analysis. Man, you are “on” even when relaxing in a movie! I didn’t get as much out of it – mostly I gained calories from the buttered popcorn.
I expect there are some hidden lessons in there about the importance of thinking big (creating a ridiculously grand-scale production) and marketing (how to grab people’s attention, appeal to their interests, and pack them in the door). Those two jumped out at me – probably because they are two of my bigger weaknesses.
Great post, I look forward to using a Redbox promo code to rent it for 80 cents when it comes out!
Redbox- the last refuge of the frugal movielover.
Redbox is a great price and convenient. Getting gas, pick up a flick.
The problem with Redbox is you have to go return it.
I really loved this post. It’s nice to find out someone else loves to pull lessons out of movies. Almost every movie has a lesson, you just need to find it. You found so many. I especially loved the notion of realizing when you have won the game and scaling back your risk. Your goal not being to save as much as possible, but to save enough. My wife used that to get me to stop buying more real estate in 2007. We had enough to take care of us for the rest of our lives, there was no need to keep buying more. She was right. ten years later, the cash flow from our real estate had reached a point that it could sustain us for the rest of our lives. Establish your financial finish line and stop racing when you cross it.
Dr. Cory S. Fawcett
Prescription for Financial Success
This was a great movie. Did you see Wolverine in Les Mis also? Different set of lessons learned but still a nice theatrical performance on his part.
Quoting musical theater?! I take it back – maybe Gretzky will eventually pull off Shakespeare.
I heard great things about this movie from family members, but it’s also interesting to hear the financial lessons it can teach. I’ll probably be one to pick it up from Redbox as well.
PT Barnum has a book called “The Art of Money Getting” written in about 1880 (and available for free from Overdrive Kindle app) which sounds just like the White Coat Investor. Very practical advice well written. “Those who really desire to attain an independence, have only to set their minds upon it, and adopt the proper means, as they do in regard to any other object which they wish to accomplish, and the thing is easily done. But however easy it may be found to make money, I have no doubt many of my hearers will agree it is the most difficult thing in the world to keep it. … True economy consists in always making the income exceed the out-go.”
That and the story of the Tigress and sign This way to the Egress are my favorite parts.
He was an amazing showman.
A very interesting post about a movie I loved! I was expecting something about status. PT Barnum was raking in the dough but he wasn’t satisfied and it wasn’t money. He wanted to gain the admiration of the upper class so he could get respect at the ballet and so he got Jenny Lind. Carlyle had to rid himself of his desire to be treated upper class in order to be a part of the circus. None of the performers seemed to have any status, but once they got money and fame, it seemed they achieved some sort of self-esteem and status, even though they were shunned – at least people saw them.
It seems like chasing status was their biggest obstacles.
I watched Dr. Strange for the first time the other night. I picked up some financial lessons from that movie too:
– have disability insurance
– spend less than you make
– don’t text and drive
– don’t focus too much on your career at the exclusion of other things (like relationships)
I noticed that too on Dr. Strange (especially your first point!)
Be innovative and think of pragmatic options! When Barnum realized they did not have the money to rebuild their building lost in the fire ( Philip’s reinvested earnings were to be earmarked for Operating expenses) — Barnum had the brilliant idea to put up the original circus big top tent ( over land that sold cheaply at the time).
Great post, more poetic than the usual. I see some P.T. Barnum in you Dr. Dahle, the good traits of course : )
Posts like these inspire me to build a side hustle and transition out of medicine, not grow my medical practice. Funny how that works.