The Art of Spending: 5 Takeaways from Morgan Housel’s New Book

Many of us spend our lives trying to earn, save and invest. But when it comes to happiness, bestselling author Morgan Housel argues that the biggest question isn’t how much money we have, it’s how we use it.

With The Art of Spending Money, Housel follows his hit The Psychology of Money with another simple, yet powerful message: money should be a tool for living a better life. Here are five lessons from his new book that you could consider applying to your personal spending habits to help you build a healthier relationship with your money.

1. Using money to buy freedom
Wealth is not about luxury, writes Housel, it’s about control. It’s a tool that can buy you time, allow you to make choices, such as where and how you want to live, and potentially provide peace of mind. Forget to use money as a tool and you end up being used by your dollars instead.

For example, if you’re working 80-hour weeks for a lifestyle you can’t enjoy, you’re not really free. The goal isn’t to earn endlessly, but to use what you make to buy time, calm and flexibility – the things that make life feel rich.

2. Comparison is a losing game
Housel says that not only is comparison ‘is the thief of joy,’ one of the main ways we waste both money and peace of mind. Spending in order to impress others rarely leads to happiness, Housel says, and it’s a theme he comes back to repeatedly. Using money for social status is fruitless, he explains, because there’s always something more to strive toward.

Social media may make it harder not to compare ourselves to others, but Housel notes that most people aren’t paying nearly as much attention to us as we think. Part of the reason we feel the need for more is because of our addiction to the temporary dopamine rush that accompanies buying something. True contentment, though, comes when you define your own metrics of success, rather than what others notice.

3. Aligning spending with your identity
Housel writes about the importance of extracting your identity from your wealth. He himself identifies as being a dad, son, husband and friend, and says he uses money to enhance those facets of himself. Spending, he writes, can be most fulfilling when it reflects who you are or who you aspire to be, not how you want to be perceived by others. You might consider aligning your money with your values, such as generosity, creativity, connection or something else.

And, if the “stuff” you spend money on makes you happy, it’s likely because of what comes along with it. For example, if you love top-tier vintage wine, it’s likely because you’re buying those bottles to share with friends or family during a social gathering, not to show off a stocked cellar.

4. Finding balance
While some people spend money in hopes of gaining status, others might get stuck in an ultra-frugal mode, where they’re afraid to spend even when they can afford to. Housel argues that hoarding money for its own sake can become another trap. No one is going to give you a prize for aging with the highest account balance.

He suggests thinking about spending in terms of minimizing future regret. What will you wish you’d done when you look back decades from now? Often, it’s the memories you failed to make, not the money you didn’t save, that stand out most in the end. So, take that upgrade to first class on an overseas flight or splurge on dinner at a Michelin-starred restaurant. He repeats in the book that the point of saving is to spend well, not to never spend at all.

5. Acknowledging your luck
Housel’s final lesson is that money isn’t only about effort; circumstance matters too. Luck – where you were born, who you meet, the era you grew up in – plays a significant role in your financial story. Of course, that doesn’t mean you haven’t worked hard to achieve success, it just means that there’s more to it than that.

Try to recognize the subtle role randomness plays in where you are today, he says, and let that truth keep you humble in your success, grateful for what you have and generous with your money. That thinking can also keep you moving forward when you face adversity and prevent being judgmental of others when you don’t know their entire story.

As nice as it might be to read a book that tells you exactly what to spend your money on, The Art of Spending instead suggests how to discern between unconscious and intentional spending. Housel seems to want us to walk away with the understanding that the best use of money is to live a life that feels like wealth and that doesn’t just look rich.

“Don’t be proud of your consumption,” he writes. “Be proud of what you’ve built. The family you’ve built, the friends you’ve found, the memories you have, the wisdom you’ve accumulated… the people, not the stuff, are what’s actually meaningful.”