The smartest advice I ever got

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When I was a first-year assistant professor at the University of Chicago, my friend and department chair Jose Scheinkman relayed the advice Milton Friedman had given him 20 years earlier: "Don't save too much."

The logic was simple: An academic's salary rises steadily over time, as do outside opportunities (like writing popular books!). The right reason to save is so you can even out your consumption. When times are good, you should save, and when times are bad, borrow. Most likely I would never be that poor again, which meant I should be borrowing, not saving. I didn't follow the advice as fully as I should have, partly because my wife insisted we save - she is not quite as good an economist as Milton Friedman.

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