Summary of Scott Galloway's The Algebra of Wealth
The key to wealth is to focus your human capital!
I enjoy reviewing key books on wealth management. Many books in this field only discuss how to preserve wealth, not how to create it. Galloway’s book is different. He offers valuable advice for young people on building wealth. He later turns to more traditional investment advice, meaning this book is also excellent for those planning retirement.
I finished the book in January and started writing a summary. Then, Galloway released his own excellent summary, so I decided to use his with my commentary. I was distracted by the tariff market turmoil, but now is the right time to share this.
In my financial planning segment at the University of Missouri, I used this chart of the wealth life cycle with students:
We talk of life unfolding in three stages: education, career, and retirement. In education, we enhance our earning potential. In our careers, we innovate and create wealth from our human capital. We then convert our human capital to financial capital by saving part of our income. I encourage my students to think of “financial independence” instead of retirement.
Most people believe wealth comes from investments or financial capital. Galloway and I agree wealth is mostly created from your human capital. This is the power of your creativity, innovation, and work ethic.
Concentrating your human capital is a key to wealth creation. I tell my students that their human capital should be “undiversified” as they should focus on where they excel. This concentrated effort builds earning power.
Like me, Galloway emphasizes "focus" in your human capital. He advises against following your passion and instead suggests specializing where you are most talented. This is sound advice! Specialize in what you’re good at and invest all your time and effort there. As you save your earnings over time, you diversify your financial capital to protect it.
Young people, developing skills is more important than picking stocks to afford a nicer house!
Here is Scott Galloway’s formula for the Algebra of Wealth:
Wealth=Focus + (Stoicism * Time * Diversification)
Below is the summary that Scott Galloway created.
Making money and being rich are two different things.
Rich is having passive income greater than your burn.
The Algebra of Wealth:
Wealth = Focus + (Stoicism x Time x Diversification)
This is the formula.
Follow it, and you'll have financial security.
Focus
People mistake a lack of focus for a lack of talent.
The truth? Focus is the strongest predictor of success.
• Talent over passion. Master what the market values—passion will follow.
• Relationships matter. The right partner makes you richer in every way.
• Pick the right wave. The industry you choose matters more than your talent.
Stoicism
Financial freedom isn't about how much you earn—it's about how much you save.
Stoicism is resisting impulse, thinking long-term, and understanding that wealth is what you keep, not what you make.
Success is easier when others want you to win. The wealthiest people I know aren't just smart—they're kind.
Time
Time is the fire in which we burn. Waste money, and you can earn it back. Waste time, and it's gone forever.
Compounding is the eighth wonder of the world. What you invest today, even if it's small, will grow into something massive.
Start investing now.
Diversification
Diversification is your kevlar. Investing across different industries, assets, and opportunities protects you from losing it all on a single bet.
Wealth isn't about being right all the time—it's about not getting wiped out when you're wrong. You don't need to be a hero.
You just need to stay in the game.
It’s Not Sexy
Getting rich is boring. It's not about timing the market, chasing trends, or making a quick buck.
It's about focus. It's about discipline. It's about letting time and diversification do the work.
The formula is simple, but most people don't have the patience to follow it.
How do you get rich?
Slowly.
Focus on what matters. Be a stoic in the face of temptation. Use time to your advantage. Diversify your bets.
That's the Algebra of Wealth.