This book changed how I think about spending money

Most money books are about making more money. This one is about something we all do way more often: spending it.

I finished Morgan Housel’s newest book recently, The Art of Spending Money, and had tons of highlights. But after going through all my notes, I realized the book isn’t really about money. It’s about contentment, freedom, and why some people seem happy with very little while others are never satisfied no matter how much they have.

Morgan Housel is one of my favorite authors. I’ve read all of his books. What I love about his writing is that he doesn’t tell you what stocks to buy or what budget to use. He focuses on the psychology behind money. The stories. The emotions. The decisions. You get to shape the rest.

Wanting less

“She had little, but wanted even less.”

A beautiful way that Morgan Housel described his grandmother’s relationship with money.

“Desiring less can have the same impact on your wellbeing as gaining more money.”

This is freeing no matter how fixed your income might be. No one really sells this idea because it’s not very profitable to.

“The best measure of wealth is what you have minus what you want.”

I like this metric because it’s an easy formula to remember if your brain is clawing to find one.

Housel also brings up renowned psychologist, Carl Jung’s answer to the following question:

“What do you consider to be more or less basic factors making for happiness in the human mind?”

Turns out it’s health, relationships, work, perceiving beauty, and meaning. Money can support these. The work part is described as “Reasonable standard of living and satisfactory work.”

The key word there is reasonable. You can of course want more, but chasing mountains of money isn’t directly one of the factors.

Which leads to the theme that runs through the rest of the book.

Money is freedom

“Wealth without independence is a unique form of poverty.”

This reminds me of something the famous comedian, Katt Williams, said on Theo Von’s podcast:

“Some people are so poor all they have is money.”

Of course this genius life observation comes from a comedian. When I was younger I thought money bought stuff. Now I know it buys options. Time. Flexibility. Control.

Housel writes:

“You spend every dollar in your bank account, whether you know it or not. Money you haven’t spent buys something intangible but valuable: freedom, independence, and being able to spend time in your own way. Every dollar of savings buys a claim check on the future. (And every dollar of debts you hold is a piece of your future that someone else controls.)”

He also says, “I spend frivolously on independence.” Most people spend extravagantly on possessions. Housel spends extravagantly on autonomy. That’s the trade worth making.

One danger of always chasing the next level is that you stop noticing when you’re already living the life you used to dream about.

Comparison

“A dentist or small business owner can feel wealthy in one town and poor in another.”

This reminds me of a concept from this book by Will Storr called The Status Game.

“The status detection system, therefore, works in contest mode. Researchers find our systems are activated most when we achieve relative reward rather than absolute rewards; we’re designed to feel best not when we get more, but when we get more than those around us.”

Morgan Housel quotes one of his favorite writers, Lawrence Yeo:

“The more you delve into who you are, the less you seek from others, and the dissolution of envy begins.”

Ask yourself before your next purchase: do I actually want this? Or have I just seen it enough times that I’ve convinced myself I do?

Mental flexibility

“An important question I love is: What have you experienced that I haven’t that makes you believe what you do? And would I believe the same if I experienced what you have?”

This question is central to the vibe of the book. It’s a great reminder to restrain judgement and practice empathy.

“Keep your identity small.”

The second you say “I am a...” you’ve built something you’ll eventually have to defend, even after it stops working for you. Same trap in entrepreneurship, investing, habits. Same trap in skill building. The people who keep compounding aren’t locked into one identity. They stay loose enough to update.

Housel calls this “mental liquidity.” Changing your mind when reality changes. Not staying trapped inside an old version of yourself.

“Anytime in life you say, “I am a…”—regardless of what it is you’ve formed an identity. And identities are so important that people will often go to absurd lengths to defend them.”

This is an important idea that was in Atomic Habits too, except it was used inversely. Picking an identity like “I’m a healthy person” makes it easier to stick to a habit like exercising or drinking more water.

Your mind starts searching for all the associations you believe about a “healthy person,” and you find ways to reinforce that identity. But this can go too far if you don’t question the assumptions baked into that label.

It’s like downloading software that will hack your brain.

Where this lands

“The best measure of wealth is what you have minus what you want.”

When I started this book I thought it was going to be about spending money. By the end I realized it’s about deciding what enough looks like.

If you don’t define enough for yourself, the world will define it for you. And the world’s answer is always more. More money. More status. More stuff. More comparison. More achievement.

Housel’s argument is simpler than that. Use money to support the life you want. Don’t spend your life serving money.

If these ideas resonated with you, make sure to subscribe to the Habit Chess Podcast on YouTube here.

In your corner,