The Art of Spending Money Book Review

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Who is Morgan Housel?

Morgan Housel is the bestselling author of The Psychology of Money (that book is such is a good read) so I was excited to read his net book, The Art of Spending Money. He is financially independent and is a partner at the Collaborative Fund and lives in Seattle with his family.

He is a great writer and I always enjoy what he writes, he is great at story telling.

The Art of Spending Money Book Review

The Art of Spending Money: Simple Choices for a Richer Life by Morgan Housel is about spending money in a way that would actually make your life better. He talks a lot in the book about trying to impress others and social signalling so that people will admire you.

He does it in a very non judgmental way too, without being prescriptive about it. He says all behaviour makes sense with enough information. People have different life experiences and therefore have different behaviours when it comes to money.

People want ‘nice’ things brand names, jewelry, luxury cars, but what you are really after, is just respect, admiration, and attention.

“Happiness in life is the gap between expectations and circumstances”.

Having a large contrast makes you appreciate what you have. He says the best meal is one that you eat after not having eaten for a whole day. Ordinary things will feel incredible. Your clean sheets after not sleeping in your bed for a few weeks.

Morgan Housel also talks about something called social debt. This is why many lottery winners lose their earned money quickly. When your family, friends, acquaintances learn of how much money you received they all act to get a portion of that action. The best thing to be is to be wealthy and anonymous. People won’t ask you for things.

What I Liked About The Art of Spending MOney

There’s one chapter that he talks about how a high-end Toyota is a nicer car than an entry-level BMW because the Toyota has things that make driving more comfortable, like great seats, a moonroof, and a sound system, while a BMW just has the bragging rights.

The Toyota has utility whereas the BMW has status.

I really enjoyed that because we bought a used ‘high-end’ Toyota with the Platinum trim and the seats are incredibly comfortable. My son always asks if our car is fancy like a Tesla or like a BMW, and I think they are similar in price but it certainly doesn’t have the ‘status’ of a luxury car.

The author then talks about money and children. What do you do if you fly first class (you earned it) do you put your children in economy? The answer to this is don’t do that, best to just fly economy all together. If you fly business or first class all together your child may get accustomed to this lifestyle and when they grow up themselves and can’t afford this kind of lifestyle (unless you plan on giving them generational wealth) they will feel like a failure. He says to lead by example, not humiliation.

Finally, he says that if you are lucky, you should be more giving and nicer. He shares the story of Kevin Costner letting his author friend live with him when his friend was was down and out. He had enough though-after what felt like a long time of his friend staying with him. He didn’t read the book that his friend wrote during this time, and when he finally did (after some prodding by his friend Michael Blake), it was called Dances with Wolves and became a hit film.

What I Didn’t Like About The Art of Spending Money

Nothing! It was a great book. Maybe it could have been longer, I could have kept reading!!

Genymoney.ca’s Verdict

He says the best advice is not ‘save for the future’ but the only good advice is to minimize future regret, because that is applicable to you yourself. Everyone has a different life situation and what one might regret in the future if not done is different from another.

The emphasis is on listening to your inner scorecard rather than your outer scorecard and spending money on experiences rather than materialistic goods. In a few years those Cartier and Van Arpels bracelets and necklaces or that Trader Joes tote (even though it’s $3.99) will be a fad and that will just be tens of thousands of dollars sitting in your closet.

Minimize future regret. Don’t buy that stuff in the first place, unless you plan on wearing it for many years to come.

Have you read The Art of Spending Money? What did you think about it?