Amanda: They say knowledge is knowing a tomato is a fruit, wisdom is knowing not to put a tomato in fruit salad. Could you be misusing your financial fruits? We believe too many people are doing just that.
Hi. I'm Amanda, and welcome to the Wealth Wisdom Financial Podcast, Episode 101: the difference between knowledge and wisdom with money.
Brandon: Hey, and I'm Brandon. And have you ever met someone who has had a wealth of information, but seems to lack common sense? Perhaps they could win a trivia night, hands down, but they can't seem to hold a job. I'm sure we've all met people who seem to have knowledge, but no wisdom. Today we'll explore if that could be happening to you with your financial life and how to gain more wealth wisdom along the way. [00:57.4]
Are you sick and tired of hearing the same old conventional financial advice? We feel you. We're fed up with those same old truisms that fall flat when you get into the unique opportunities and challenges of specific situations. This show is all about bringing you historic wisdom around wealth-building with practical insights on how to apply it to your journey. When conventional financial thinking doesn't get you where you want to go, you need wealth wisdom. Let's master wealth-building together.
Brandon: On this topic of the difference between wisdom and knowledge, the common response we've found is something like knowledge is knowing what to do. Wisdom is doing it or wisdom is applied knowledge. Yet the difference between wisdom and knowledge is so much deeper.
Amanda: We've got some examples. We're going to play a game who is wiser. Okay, I'm going to give you two people. Tell me who is wiser, okay? Person No. 1, the person who doesn't know how a car engine works, but drives every day, or Person No. 2 that knows how the engine works, but doesn't have a driver's license, which one is wiser? [02:13.5]
Brandon: I mean, that's hard to say. One has more knowledge and one has more experience.
Amanda: Okay, let's play it again. What would you say in this? Person A lived thousands when people did not know what a combustion engine even was, or Person B that knows the combustion engine, has a driver's license and drives every day.
Brandon: What do you mean? Which one is wiser?
Amanda: Yeah. Which one is wiser?
Brandon: I don't know. That's a hard one. Maybe to go deeper than common answer, we start by considering this quotation of Lao Tzu and he says, “In pursuit of knowledge, every day something is gained. In pursuit of wisdom, every day something is dropped.” Might it be that wisdom might be easier the less you know, not the more you know? Do you think it was easier to be wise before the invention of the search engine and the smartphone or after? Those are things that I think about with the combustion engine guy, people. [03:16.6]
Amanda: Yeah, knowledge seems to be very different than wisdom, but we're getting a little too philosophical. Let's break this down. I hope you agree by our examples that increasing knowledge does not increase wisdom and increasing wisdom doesn't necessarily mean increasing knowledge. Those who are wise might not actually know very much. Wisdom and knowledge are not causational. They're not correlational. They're different things.
This is actually more in line with Socrates who is quoted as saying the only true wisdom consists of knowing that you don't know anything, or knowing that you know nothing. But at the same time, I mean, sure, Socrates might have been wise in making that statement, but he's also quoted as saying, “The only good is knowledge and the only evil is ignorance,” so he was all about learning and increasing knowledge. In fact, we have a whole method of learning from him that's called the Socratic Method. So, which are we to pursue, wisdom or knowledge? Do we pursue wisdom by lacking knowledge or pursue …? Which is it? [04:18.8]
Brandon: So, which is it? Is it wisdom is knowing that you know nothing or is it wisdom is pursuing knowledge? I'm getting confused here.
Amanda: Yeah, this gives me an idea, Brandon. Could it be that knowledge is looking for the right answer whereas wisdom is looking for the right questions?
Brandon: Certainly, we get progress by questioning how things are done. There are game-changing products and services like Netflix and Pixar, and Uber. They all exist because people started with the questions, not the answers.
Amanda: I've got a great case study here and a great example of where the pursuit of more wisdom led to an increase in knowledge as well and it started with a child's “why” question, which sometimes can get annoying, but there's a really cool lesson about wisdom in this one. [05:15.1]
A child's “why” led to the development of the Polaroid camera. It was on a family vacation in the 1940s that this guy, Edwin Land, who is a Harvard alumnus and physicist, he was out with his three-year-old daughter and she asked him why she couldn't immediately see the photograph that he took of them on vacation. Edwin knew that producing instant photography was impossible. You had to develop the film in a dark room, but instead of relying on his knowledge, he continued to think about this question that his daughter had posed, and four years later, he had created the first black-and-white instant camera and it hit the market, and created, who knows, countless amounts of value in the world. [06:04.2]
Brandon: Yeah, so out of the mouth of babes, right? Edwin had studied physics at Harvard, but it was the wisdom of his daughter's question that showed him a new way to use his knowledge.
Amanda: And it was his wisdom to listen to her question and not just brush it off. What I also love about this story is that it shows us great insight into why wisdom is so lacking these days. Our parents, our schools, our employers, they all teach us not to question things and to go along with the way it is. Questioning conventional wisdom could even get you a time out as a kid, a detention at school, or fired or at least not promoted at the workplace.
Brandon: Might we be more wise to replace brainstorming with maybe question-storming where we are asking lots of questions? [06:57.4]
Amanda: Yeah, I wonder how much knowledge would increase at home, at work, or in school, if we tried to think of new questions to ask rather than just trying to increase our understanding of how things work and, yeah, all that.
Now, on the flip side, we also don't want people to think that wisdom is all just questioning, though. That's when you do things like go fast and break things and you don't consider the consequences, particularly on the most vulnerable.
To us, as we were trying to think of what is our definition of wisdom, we wanted to include something about how wisdom is seeing the true impact of the questions that are being asked. Wisdom is making sure the right questions have the opportunity to be asked and deeply considered, like Edwin showed wisdom by listening to and thoughtfully considering his daughter's question. He might not have done that with every single question that she asked, but that kind of discernment to know there's something behind this question, “Let me keep exploring it,” shows, I think, is a good part of wisdom, too. [07:58.6]
Brandon: At the end of the day, we came up with three key differences between wisdom and knowledge. We'll share them and then apply them to money, because, again, this is a financial podcast, right?
Amanda: Yeah, so we drew straws and Brandon got the straw that he's going to share what knowledge is and then I get to share what wisdom is, not saying that I'm more wise than Brandon. It's just how it rolled out.
Brandon: I didn't even remember drawing straws. Knowledge is seeking the right answer.
Amanda: Wisdom is seeking to ask the right questions. For example, knowledge is knowing a million things when you could be wrong about “the” most important thing, whereas knowing the questions to ask to find “the” most important piece of information.
Brandon: Knowledge is a display of power.
Amanda: Wisdom is acknowledging the limits of power. Knowledge would be like Edwin Land telling his three-year-old that she's bananas and stop asking silly questions. Wisdom is recognizing that even three-year-olds can bring powerful ideas into the world. [09:05.0]
Brandon: Interesting. Another one is knowledge is competitive.
Amanda: Wisdom is abundance. Knowledge exists in a man-eat-man world of spelling bees and teachers’ pets. Wisdom sees that everyone has something to bring to the table and invites everyone to share their gift.
Brandon: Now, how do we apply this with money? Knowledge is seeking the, quote-unquote, “right way to do things” based on financial theories and philosophies.
Amanda: Yeah, nothing wrong with that, right? Learn financial theories and philosophies. Wisdom, though, is seeking the questions that will help you make money work for you as life changes.
Brandon: Knowledge is learning more and more so you can try to time the market or beat others who know less than you.
Amanda: Wisdom is building a financial strategy that works, especially when you feel powerless.
Brandon: Knowledge is knowing there's only so much money out there, so you've got to work hard to get your share. [10:05.4]
Amanda: Wisdom is believing there's enough money for everyone and that you'll get more by helping others get more of what they want.
Brandon: So, there you have it. Our case for how being knowledgeable about money is drastically different from being wise with money. They are two different things. Go back and check out the episodes on the podcast released in January 2019 for the tale of two grandmas. You might see a difference between those two grandmas. One was knowledgeable. One was wise. One followed the conventional financial thinking of her day. The other grandma practiced time-tested strategies. Take a listen and see what you think is more wise, and then that's again in January 2019, way back in the archives.
Amanda: Yeah, we'll put a link in the show notes. You don't have to scroll back that far. We'll conclude today by coding another amazing person from history, Albert Einstein, who famously said, “Wisdom is not a product of schooling, but of the lifelong attempt to acquire it.” Love that. Wisdom is not a product of schooling, but of the lifelong attempt to acquire it. [11:15.2]
There's no limit to wisdom. However, you can certainly gain degrees of it along the way. Our question to you today is how do you go about gaining wealth wisdom to add to your financial knowledge? And we believe it all starts with finding good questions.
Brandon: As you're learning new information or coming up with fresh ideas, it's difficult to decide what to carry through with and when, so we've developed a filter to use when deciding how to move forward towards your goals and dreams, financial or otherwise. It's a free gift for you waiting at STILLMethod.com, so go download it today and start connecting with your STILL center for an intentional financial life. Again, find our wisdom-building questions at STILLMethod.com. [12:06.3]
Amanda: Before you go get that list of powerful questions, and before Brandon and I start doing some question-storming, hit that subscribe buttons so that you don't miss the upcoming episodes. Next time we're going to share how to defeat confusion. When you've encountered too much financial knowledge and too little wealth wisdom, it's really easy to get confused, so we're going to share our age-old remedy for finding clarity in the midst of an industry that benefits from keeping you confused.
Brandon: Yeah, you know what they say. If you are confused, you lose. Until next time, keep building your financial confidence. We hope you live long and profit in your financial journey.
The topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting or investment advice. On such matters, please consult a professional who knows your specific situation.
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