Wolf Review(The Art of Spending-Simple Choices for a Richer Life by Morgan Housel)

(Contents)

The Art of Spending Money by New York Times Best Seller, Morgan Housel, is another popular title following his highly successful book, The Psychology of Money. The author’s new book starts with the recollection of his teenage years. In one occasion, he was working for a high-end furniture fair. Many affluent people came, given the fair was targeting those who can pay for such fine home furnishings. He overheard a gentleman who spent $21,000 on an armchair that gave him no pleasure. He was complaining about how uncomfortable the chair sat. That encounter struck him; having money is good, but the wisdom in spending that money plays an important part in making one happy. Why did the man spend $21,000 on a chair he disliked? That puzzled him greatly.

In the first chapter, All Behavior Makes Sense With Enough Information. Through the eyes of the third party, we always know how best the person should spend their money. We are always guided by our own personal experience and circumstances when we spend. The author was quick to point out some valuable points. For instance, don’t let anyone tell you what you should or shouldn’t spend money on. There is no “right” to spend your own money. One has to figure out what makes them happy or fulfilling. He cited a person who came from rags to riches buying a trophy Lamborghini, declaring he had arrived at the upper echelons of society. With another person who has everything, declaring Lamborghini is a waste of money. Both reasons to spend or not to spend were largely correct given the circumstances.

Be careful judging how other people spend their money. If one criticises others for their spending, tunnel vision might develop when the “only” correct way is your way. That might prevent one from being more introspective about their own spending. In a way, we prevent ourselves from growing wiser. A healthy financial philosophy is respecting others’ spending behaviour. All spending behaviour makes sense with enough information.

In the chapter, Can I have your Attention? The author cited people’s desire to gain respect and attention by spending money on a flashy car. The attention is fast, but not durable. People might notice the Ferrari, much less on the driver. Long lasting respect comes from being a good father, a good husband , a successful entrepreneur or being a successful pianist. Some of my favourite chapters,  Quiet Compounding and The Finer Things are worthy read too. There is also a fascinating story about Kevin Costner right at the end. I encourage the readers to find out.

Spending more money on vacations creates lasting memories with your family. Spending more on superficial things only attracts envy. “Show off the inside of the house, not the outside.” Buying a better sofa or furniture benefits family and friends. The golden rule applies: Don’t spend money on things we don’t need with money we don’t have, to impress people we don’t care. 

The happiest people are those who are contented with life. If one’s expectations grow faster than their income, one will never be happy. The author gives examples of his grandmother who lived a full life on a meagre social security check. She was just happy sitting in her garden and reading books from the library. She is by far happier than many billionaires he met. The author’s formula for measuring wealth is what you have minus what you want. 

Can you still remember the first time you bought a treat for yourself after receiving your first paycheque? That cheap milkshake tasted doubly good. The pleasure of spending money is the sweetest when one puts in effort and time to earn that paycheque. A good life is having everything you need and some of what you want. The reader will be able to get a grasp on the power of contrast that makes ordinary things feel incredible and extraordinary things feel bland. 

The author has caveats about money. Money is a powerful tool that shapes human behaviour and morality. If you don’t use money wisely, the money will use you, leaving a path of financial destruction without mercy and empathy. Money, like fire, is a good servant, but a bad master. Let the money build a life for you, not the other way round. Readers will be able to understand the risk and regret to their choices. The best advice given by the author is to “minimise future regrets.” 

To summarise the main point of the book, readers have to come to a decision whether to “horse trade” their spending on superficial things or having more control over their lives. Saving like a squirrel gives one the ability to have more freedom and time, but one will be missing out living a full life. A balanced approach is needed. Wealth without independence is a unique form of poverty. I strongly recommend this book to readers who want a better understanding of how money works and its implications of not spending it well. The book goes on Lone Wolf Investor highly recommended list for the easy-to-understand spending concepts. God bless.💰 

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