If you had a million points in your account but no time or flexibility to use them, are you actually wealthy?
In this hobby, we often measure success by the “points ego” – the size of our balances or the eye-popping retail price of our last first-class redemption. But there is a specific kind of anxiety that comes with hoarding miles while watching devaluations chip away at their value.
It’s the same trap Morgan Housel highlights in his great book, The Psychology of Money: valuing the number on the screen over the freedom the currency is supposed to buy. I recently read that book again and decided it’s time to stop talking about how to get “rich” in miles and points for a minute and start talking about what it means to be truly wealthy.
In the book, Housel argues that “The highest form of wealth is the ability to wake up every morning and say, ‘I can do whatever I want today.’ The ability to do what you want, when you want, with who you want, for as long as you want, is priceless”. What does that mean to be wealthy in miles and points? It’s not a big points balance. It’s not a specific first-class redemption or hotel suite posted on social media. At its core, true wealth is freedom.
Here are three lessons from the book through the lens of miles and points:
Optionality
If true wealth is freedom, optionality becomes almost infinite. Knowing that if I had to be almost anywhere in the world on short notice, I could do it, is a great feeling. It takes away a lot of pressure to make sure each redemption is perfect. Housel calls this freedom the “priceless” dividend.
The optionality I achieve through miles and points also means I don’t have to settle for just 1 trip per year. At the same cash cost I can now take 3-4 trips a year which gives much more flexibility and opportunity to experience different locations versus being forced to pick just one.
It’s not about the $20,000 flight you booked a year in advance; it’s about having the “f-you” points balance that allows you to book a last-minute flight home during a family emergency or a weather meltdown without looking at the price tag.
The Anti-Fragile Portfolio
True wealth is diversified. If all your “wealth” is sitting in one airline currency, you aren’t wealthy—you’re a hostage to their next devaluation which unfortunately, we see frequently. Our hedge to reduce risk in our “portfolio” of miles and points: transferrable currencies. This is the points version of a diversified index fund, protecting you purchasing power against the “inflation” of award charts.
With access to many different transfer partners, points from Chase, Amex, Citi, CapitalOne, Bilt, and now Rove, offer protection when a particular partner leaves a program or devalues overnight. Personally, I aim to keep around 500k points in these currencies at all times, ideally split across 3-4 currencies to access unique transfer partners like Alaska with Bilt, Hyatt with Chase or Bilt, or ANA with Amex. This setup keeps me poised to jump on a great deal when I find one.
The second aspect of an anti-fragile portfolio is on the earn side. Just like having a robust balance of different transferrable points is valuable, so too is the ability to earn strategically and grow or replenish those balances. Strategic new card applications can help grow specific balances (like my goal to earn a ton of Alaska miles last year), as can optimizing category bonuses and shopping portals like Rakuten (which is still offering a $50 sign-up bonus).
Reasonable beats Rational
Instead of trying to be strictly cold-heartedly rational, it is better to be “reasonable” in your financial planning, making decisions that you can actually stick to long-term. The great thing is that much like the “optimal” financial portfolio is highly personal, so is the “best strategy” for earning and using miles and points.
If your strategy requires 20 hours of manual searching a week just to save a few thousand points, you are trading your most valuable asset—time—for a marginal gain. The emergence of award search tools has made this tradeoff much more attractive.
Similarly, balancing a reasonable number of cards (both sign-ups and for spend) is an area where being reasonable can look different to different people. I am very comfortable opening 5 new cards per year, but that’s not for everyone. Some people aim for 25 which is too complex for me. The same thing goes for ongoing spend. I am totally fine carrying 5-7 different cards to makes sure I can always earn the maximum number of points, but my wife is not. For her we simplified and rotate between 3 core cards that cover her most common spending categories. Are we leaving a few thousand points per year on the table vs a 100% optimized, rational approach? Of course, but our sanity is worth more. It’s reasonable for us and what’s reasonable for you might be different – that’s ok!
What’s the biggest lesson you have applied from the world of finance into the miles and points game?
TL;DR: I’ve realized that being “points wealthy” isn’t about a massive balance or flashy first-class selfies; it’s about the freedom to go anywhere, anytime, without stress. By applying lessons from The Psychology of Money, I now prioritize optionality for my travel plans and maintain an anti-fragile portfolio of transferable points to hedge against devaluations. I’ve also embraced being reasonable over rational, choosing a strategy that preserves my time and sanity rather than obsessing over perfect optimization. Ultimately, true wealth is the ability to say “I can do whatever I want today” because of the freedom made possible by miles and points.
