The Art of Spending Money: Simple Choices for a Richer Life

by Morgan Housel

From the bestselling author of The Psychology of Money and Same as Ever, lessons on harnessing the power of money to live a happier life

Can money buy happiness? Yes. Can spending it make you happier? Absolutely. Yet, many of us struggle to unlock its full potential—either by spending on things that don't bring as much joy as they should or by avoiding investments that would truly enhance our mental well-being.

In The Art of Spending Money, award-winning author Morgan Housel offers a refreshingly practical approach to managing wealth while finding deeper meaning and contentment. Instead of cookie-cutter financial advice, Housel provides you with psychological tools to navigate your personal relationship between money and optimizing for happiness. Discover why people often mistake envy for admiration, how to align your expectations with your income, and ways to invest in future happiness while avoiding regret. Learn about the dangers of social debt and embrace the radical idea that the fastest way to build wealth is by going slow.

The Art of Spending Money delves into the complexities that surround money—envy, social aspirations, identity, and insecurity—crucial aspects often missed in traditional financial books. Armed with new insights into money and wealth, you’ll learn to sidestep common spending traps, make smarter investing choices, and wield money to its fullest potential to enhance your enjoyment of life.

Genres: Finance, Nonfiction, Self Help, Money, Personal Finance, Psychology, Business

272 pages, Paperback

First published October 1, 2025

About the author

Morgan Housel is a partner at The Collaborative Fund. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He lives in Seattle with his wife and two kids.

Reviews

[Milan · Rating 4 out of 5]

Every two years Morgan Housel comes out with a new book which has title taken from one of his articles. His last book was okay but this one goes a bit deeper. Apart from seeing the psychological side of money which he is really good at, it’s good to see Morgan becoming a little philosophical. He says you can use money to build a better life. But the most important thing that money can provide is independence. That is not how most people look at it.

Most of us are at not good at knowing what we want from the money that we have earned. We use it as a benchmark of status and success. And that puts us in a trap which he calls ‘social debt’.

A few points from the book:

• Desiring less can have the same impact on your well-being as gaining more money.
• What makes one person happy can make another person miserable. Spend money on what you like, not what others are buying.
• There are two ways to use money: One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others.
• If you’re not careful with money, it will use you and often without you even knowing it.
• Money itself doesn’t buy happiness, but it can help you find independence and purpose – both can help you live a happier life.
• Having no FOMO (fear of missing out) is a very important financial skill.
• Enduring happiness is found in contentment, so the happiest people with money are those, who have found a way to stop thinking about it.
• Our spending has little to do with numbers and a lot to do with psychology, envy, social aspirations, identity and insecurities.
• Every little bit of savings and every little bit of money saved takes you closer to independence.
• All behavior makes sense with enough information.

If your expectations grow faster than your income, you will never be happy with your money. You might think you want a nicer car and a bigger house, but what you actually want is respect and admiration from other people. We value the attention money brings us more than anything else.

[Anita Pomerantz · Rating 5 out of 5]

This book would be a great gift idea for people graduating college. It has a lot of common sense in it, but sometimes common sense is best laid out in a nice, logical fashion so you can really THINK about it more consciously.

Some might say his prescriptions are too simple, but I really liked how he lays out the psychology behind our spending patterns and points out the extremes and how to best avoid them.

Very, very good and a fast/easy read. I think any age group benefits, but the younger you are when you actually think about money, the better.

[Ferhat Elmas · Rating 1 out of 5]

Housel has exhausted his depth. What once felt fresh in The Psychology of Money now reads like an echo chamber; mimetic desire dressed up as wisdom and Charlie Munger’s inversion reframed as novelty. The book offers little in structure or progression; it’s a collection of agreeable truisms that circle the same psychological terrain.

For a work that claims to redefine spending, it avoids the hard questions: no exploration of macro forces shaping consumption, no critical framework for evaluating return on life investments, no reckoning with negative externalities or systemic incentives. The result is pleasant but intellectually thin, a self-help sermon for the financially comfortable.

Will be read, for sure but not thought-provoking at all.

[SusanTalksBooks · Rating 5 out of 5]

*** 11/5/25 *** Just finished this new Oct 2025 release thanks to the LA Public Library, and recommend it as a quick read for anyone in their 30s+ and especially nearing or in retirement, to give some concrete frameworks to think about your philosophies about spending money.

One thing I didn't realize is that many, many retirees have labeled themselves as 'savers,' and have a very hard time changing that mindset in their older years. It is apparently one of the biggest questions that comes up with financial planners - how do I spend this money I saved over my lifetime. Housel definitely recommends saving and investing for future financial security, but he recommends against labeling yourself a saver (or anything really), as it becomes a dominant mindset.

One key message is that most financial decisions are intrinsic (what brings you joy) or externally focused (status). Author Housel gives many concrete examples of how you'll never win the status game, and how there is a 'net worth curve' that shows there is a happy zone in the middle - people on either end either struggle for life's necessities or struggle with money managing their lives (wealthy, not just rich). There are some great quotes throughout the book that I enjoyed.

Elite experiences (great wine, meals, travel, clothes, etc.) have the most value only in contrast to the rest of the time. When they become 'standard lifestyle' elements, there is no contrast and they no longer stand out as special experiences.

He also writes a lot about spending real time and effort determining what brings you a sense of "richness" and to experiment until you figure it out. Learn how to use your money as a tool to accomplish what you want to do in life. Many of us have not been taught this lesson, and have to try different things to see what feels right.

I love that he also talked about many mis-guided efforts to raise children in families with sufficient net worth who are not entitled. There is an art that he describes well about raising children and being in a family that is financially comfortable, living without debt, but values certain characteristics: education, service, kindness, a good attitude, etc. So hard to do, but so important.

Definitely recommend! 5-stars.

[CatReader · Rating 4 out of 5]

Morgan Housel is a finance writer; I previously read and strongly resonated with his 2020 book The Psychology of Money. 2025's The Art of Spending Money carries forward many of the same ideas and philosophies of his previous works, focusing on an eminently sensible take on spending vs. saving money. I think Housel is astute when he portrays the Financial Independence, Retire Early (FIRE) crowd as not necessarily the group to aspire to, but rather the ideological opposite of the "live for today and don't worry about (much less save for) tomorrow" crowd -- because as he also discusses, all behaviors make sense given enough context. Worldview and time horizon expand with greater access to money, resources, knowledge, etc., so in some sense both groups are behaving logically and proportionally to their worldviews.

I spent much of my time listening to this book thinking about my own philosophies around money, going through sequential phases:

- scarcity (growing up in a blue collar household with extremely frugal parents)
- fear and anxiety (worrying through my 20s earning $20K/year through 8 years of graduate school)
- guilt (finally having attained the median US income in my early 30s, but feeling guilty at now having a small amount of disposable income)
- security and happiness (earning a lot more, reaching many financial milestones, decades of delayed gratification finally paying off)

I appreciate how Housel doesn't eschew all 'trivial' spending or espouse the 'money can't buy happiness' belief - everything has caveats, and I agree with him that it's fine to spend 'frivolously' on select areas of your life that bring you joy and pleasure while maintaining balance and frugality in others. For instance, I still drive around a nearly 20-year-old beater car and own a house moderately below my means largely furnished with Ikea particleboard furniture and hand-me-downs, and both are totally fine for me; I do, however, enjoy indulging my penchants for crafting supplies, makeup and Lululemon. I could care less what others think of my lifestyle as it's not performative for them. I recognize that guilt and fear have been powerful motivators for me in the past, so I give myself permission to spend money guilt-free and fear-free on things and experiences that bring me joy, as long as I stick to an accounting system I've followed for around 6 years keeping track of these purchases against consistent positive habits I've done to 'earn' that money, like consistently exercising, doing household chores, completing a few hours of professional development outside my job duties each week, and (you may or may not be surprised to learn) meeting my reading goals.

In any case, I'd recommend The Psychology of Money first as an introduction to Housel's philosophies, and then this book, as well as the others below, if you find the concepts resonant.

Further reading:
The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas Stanley and William Danko
How to Think About Money by Jonathan Clements
The Sum of Small Things: A Theory of the Aspirational Class by Elizabeth Currid-Halkett
Meet the Frugalwoods: Achieving Financial Independence Through Simple Living by Elizabeth Willard Thames

My statistics:
Book 351 for 2025
Book 2277 cumulatively

[Jami Adarsh · Rating 5 out of 5]

To me its a book to read once in every few years , 90% of the book we already knew but the contextualisation along with brilliant storytelling makes the book very convincing. I tried to read it slow with 2 chapters a day and reflected with my current practice there was lot of things i am doings inconsistent to the principals and served as a good guide for reflection. Some interesting quotes i liked:
1. If your expectations grow faster than your income, you will never be happy with your money.
2. So much of success in life is finding the delicate balance of when optimism turns into greed and pessimism turns into fear.
3. The joy of spending can diminish as income rises because there’s less struggle, sacrifice, and sweat represented in purchases.
4. The value of anything is its ability to help you live the life you want.
5. If I move $500 into my savings account, I view that as having purchased $500 of independence. It has almost no different meaning to me than if I had purchased a $500 television—the money is ‘spent’ in either scenario, just spent on different things that offer different value.
6. What seems irrational to you might make perfect sense to someone else, given their goals, experiences, and insecurities.
7. Flexibility is one of the most important things you can buy.
8. All behavior makes sense with enough information.
9. They wanted to have more money so they could become happier. But money could buy them everything except the ability to not be obsessed with money, which led to constant anxiety, which led to unhappiness.
10. You think you want nice stuff, but what you really want is respect, admiration, and attention.
11. The best use of money is to leverage who you are, not to define who you are.
12. Wealth is what you don’t see: the cars you didn’t buy, the house you didn’t upgrade to—money you didn’t spend.

[Sarah Jensen · Rating 4 out of 5]

Book Review: The Art of Spending Money: Simple Choices for a Richer Life by Morgan Housel
Rating: ★★★★☆ (4.5/5)

Overview
Morgan Housel, bestselling author of The Psychology of Money, returns with The Art of Spending Money, a thought-provoking exploration of how spending habits shape financial well-being and personal fulfillment. Unlike traditional finance books fixated on accumulation, Housel shifts the lens to the often-overlooked psychology behind spending, arguing that true wealth lies not in net worth but in the alignment of money with values and life goals. Blending behavioral economics, historical anecdotes, and pragmatic advice, this book is a manifesto for intentional living through mindful consumption.

Strengths
Reframes the Purpose of Money
Housel challenges the dogma of frugality-for-frugality’s-sake, advocating instead for spending as a tool to “buy freedom” and reduce regret. His concept of “frugality inertia”—the tendency to underspend even when financially secure��resonates deeply in a culture obsessed with hoarding wealth. The book excels in dissecting how societal norms and personal biases distort spending decisions, offering readers a framework to evaluate trade-offs (e.g., luxury vs. longevity, status vs. security).

Behavioral Insights Anchored in Real Stories
Drawing from historical figures, corporate case studies, and everyday individuals, Housel illustrates how spending choices reflect deeper psychological patterns. A standout chapter analyzes how post-war generational trauma influenced Baby Boomers’ risk aversion, contrasting it with Millennials’ experiential spending—a nuanced take absent from most financial guides.

Actionable Simplicity
True to its subtitle, the book distills complex financial principles into “simple choices.” Strategies like the “100-Hour Rule” (spending on what you’ll use for 100+ hours annually) and the “Regret Minimization Framework” empower readers to cut through decision paralysis. Housel’s emphasis on enoughness—defining personal thresholds for “rich” versus “wealthy”—is particularly liberating.

Accessible and Engaging Prose
Housel’s signature storytelling style—concise, witty, and devoid of jargon—makes sophisticated concepts digestible. The book avoids prescriptive advice, instead prompting self-reflection through questions like, “What can money not buy you?”

Weaknesses
Limited Diversity in Case Studies
While rich in historical examples, the book leans heavily on Western (particularly American) contexts. Cross-cultural perspectives on spending, such as communal vs. individualistic financial values, would have added depth.

Underdeveloped Critique of Consumerism
Though Housel advocates mindful spending, he stops short of interrogating systemic drivers of overconsumption (e.g., advertising, planned obsolescence). A chapter linking personal habits to macroeconomic critiques would have strengthened the thesis.

Niche Appeal
Readers seeking technical investment advice or debt-management strategies may find the philosophical focus too abstract.

Thematic Contribution
Housel’s work bridges the gap between financial literacy and existential inquiry, positing that money’s highest purpose is to “buy time” and “preserve options.” By reframing spending as a series of value-based trade-offs—rather than a binary of “good” or “bad” choices—the book transcends conventional finance literature. Its core message—wealth is what you don’t see—echoes Stoic principles, offering a timely antidote to materialism in an age of hyper-consumption.

Conclusion
The Art of Spending Money is a masterclass in financial introspection, blending behavioral science with timeless wisdom. While not a comprehensive guide to personal finance, its unique focus on spending psychology fills a critical gap in the genre. Housel’s lessons linger long after the final page, challenging readers to measure riches not by account balances but by life well-lived.

Acknowledgments
Thank you to NetGalley and the author, Morgan Housel, for providing a review copy. This book is a testament to Housel’s ability to transform complex financial truths into actionable, life-affirming wisdom.

Final Verdict
★★★★☆ (4.5/5)—Essential reading for anyone seeking to align their wallet with their worldview. The Art of Spending Money proves that the simplest choices often yield the richest rewards.

Note: Housel’s prior work, including The Psychology of Money (with over 8 million copies sold), informs many themes here, but this volume stands alone as a fresh, spending-centric companion.

[GT · Rating 3 out of 5]

Housel is good at story telling, but things get so repetitive and simplified (perhaps to appeal a wider audience but that audience doesn’t include me).

[Matt Lillywhite · Rating 5 out of 5]

Thanks to Penguin for the advanced copy in exchange for an honest review. I shall update this soon with my thoughts. But the TLDR is that I LOVED it.

[Barry Clark · Rating 4 out of 5]

Most of the book was 3*. Most of the observations in the first half felt quite obvious and common sense, to the point that I was a bit disappointed in the book halfway through.

However a few of the chapters in the 2nd half were 5* with interesting viewpoints that I’d never thought of before and memorable stories. Nuggets here and there that have left me thinking about how I spend my time and money.

In hindsight after finishing the book, it’s best approached as a collection of essays. It’s fair to expect that most of the chapters will not be hits for you and you may not enjoy, but a few of the chapters could hit hard enough to make it a fantastic read.

[Stephen Miller · Rating 1 out of 5]

I was expecting a little more hard data as to why certain ways of spending money led to a richer, more fulfilling life. Unfortunately, the book relied a lot more on stories of famous people and anecdotes to try and support the author's thesis.

I was surprised how much of the book focused on what not to do. Useful in it's own right, but if you find yourself already following that kind of advice, this book will leave you wanting.

To be fair to the author, he begins by stating that everyone is different, and he can't tell you how to spend your money. Okay, fine, but anecdotes aside, what value does the book offer, based on the author's expertise?

I may just have been unlucky in that I subscribe to many of the tenets (of what not to do) already, so I didn't get much out of this book.

Ironically, the author notes that when it comes to experiences (including reading books), have "a wide funnel and a strict filter." Essentially try a lot of things to see what you get utility/enjoyment from, but if something isn't serving you in those ways, be prepared to abandon it quickly.

By that logic, I should have stopped reading this book much sooner, but alas, I'm something of a completist (and I paid for the book), so I felt compelled to finish it. Thankfully it was a quick read (which also spoke to the lack of value). My advice would be wait to borrow this from your local library (or take my copy!) rather that buy it and risk buyer's remorse.

[Chris Boutté · Rating 5 out of 5]

It’s annoying how good Morgan Housel's books are. Everyone needs to stop what they’re doing and read this book. This book is all about how to spend your money, but it’s more so teaching you about why we’re always trying to impress others with our purchases, rather than making ourselves happy. Morgan discusses how so many people spend their money on things they think will make them happy, and it just keeps them on a twisted, hedonic treadmill.

The other great thing about this book is Housel educates readers about what it’s like for lower-class people, and why they make poor spending decisions. This aspect of the book is super important because many privileged people don’t understand the psychology behind why low-income people don’t save or invest and why they make poor financial decisions.

[Ilmezzelfo · Rating 3 out of 5]

It's very well written as usual from Morgan Housel. Comparatively The Psychology of Money left me with a lot to ponder and learn from. This one I feel could have been just a podcast talk, or a short essay.

[Dávid Pákozdi · Rating 2 out of 5]

Közhely puffogtatás 200 oldalon keresztül.
Azért 2 csillag 1 helyett, mert az elején volt egy jó gondolat.

[Zoe Ding · Rating 3 out of 5]

I decided to buy the book after listening to the author's latest interview on the Plain English podcast. I think the 1-hour podcast is such a good summary of this book to the point that the book itself is a bit unnecessarily long and repetitive.

[Tyson Reid · Rating 5 out of 5]

“A good life is everything you need and some of what you want. If you have everything you want, you appreciate none of what you have.”

This book is perspective shifting, and it changed me! I feel like while a lot of its concepts are well known and understood, he explains it all in a way that causes introspection and a desire to change. I loved this one.

[Pearl Angeli · Rating 5 out of 5]

5 Stars!



This book is life-changing. I couldn't agree more with everything that was said here, especially the part that emphasizes how money should not control your life. Rather, it should support you and help you get a better life. Most of us tend to view money as a way to show "status" and as proof to everyone that "we made it" or "we achieved it".

"People sometimes think they're buying something nice because it will make their life more pleasant, comfortable, interesting, or fulfilling. But unknowingly what they're paying for is a chance that other people will look at them, ideally in a positive light."

Reading this book was an awakening. I viewed money differently and I can't stop admiring the things that were taught here because they all make sense at the end of the day. The author's approach was very raw, honest, and human. It encourages readers to use money as a tool--- not to buy material things to brag, but to buy freedom.

"The highest use of money is to use it to control your time, granting freedom and independence, and living life the way you choose."

Morgan Housel doesn't sugarcoat uncomfortable truths about money habits. He delivers his insights clearly and honestly in a way that makes you pause, think, and push yourself to change your mindset. Yet despite being direct, this book never felt harsh or judgmental. For me, it is an eye-opener that if you are willing to accept the idea, you know you're headed to a better place.

This has been such a worthy read. After I finished it, I found myself fully enriched. It was like eating such a good meal that literally enriched my soul with so many realizations, so much hope, and so much positivity in life. I would definitely recommend this book to everyone!

[Ben Burkhart · Rating 5 out of 5]

I can never get enough of Morgan Housel’s storytelling. He has a rare ability to explain complex ideas through simple, often random stories pulled from different moments in history. That approach makes topics about money feel human and timeless rather than technical or preachy.

As a standalone book, The Art of Spending Money is excellent. It reinforces many of the ideas that matter most when it comes to money, behavior, and satisfaction. The writing is clear, thoughtful, and easy to move through, which is something Housel does better than almost anyone in this space.

The only downside is some overlap with his other work. If you have already read The Psychology of Money and Same as Ever, some themes will feel familiar, especially the idea of defining what “enough” means and how psychology shapes financial decisions. That said, even the repeated concepts are presented in a way that is still enjoyable and worth revisiting.

[Mary · Rating 5 out of 5]

"All behavior makes sense with enough information." Housel starts and ends his book with this claim and as you hear him out I ended up agreeing. He doesn't claim all behavior is moral or good or that you agree with the behavior but that with time spent learning information about the behavior, particularly spending habits, it makes sense. This book is easily one of the best financial books I've read in a long time. It's going on my sons highschool reading list. I truly think there is an art to spending money and there are areas and beliefs of my own that need closer examination.

[Ryan · Rating 5 out of 5]

Yet another excellent book by Mr. Housel. Incredibly readable and full of concise yet powerful wisdom.

[Eduardo Montiel · Rating 5 out of 5]

I actually think managing money becomes easier when you come to terms with how emotional it can be. Instead of a math problem to solve, you view it as an emotional problem to fulfill, within the confines of some budgetary boundaries.

An insightful study on spending habits and timeless lessons on money and happiness. This book is a gem, offering sobering and sane personal finance advice on achieving contentment from financial stability. There are so many books on investments but few on the wisdom of spending money:

A lot of financial planners will tell you that one of their biggest challenges is getting clients to spend money in retirement. Even an appropriate, conservative amount of money. Frugality and saving become such a big part of some people’s identity that they can’t ever switch gears. I call it frugality inertia. It’s what happens when a lifetime of good saving and investing habits can’t be transitioned to a reasonable spending phase.

As a financial planner and portfolio manager, I try to include personal finance concepts and wisdom from books like this in my presentations to help further enlighten clients on the benefits of the “soft” side of money management.

Sadly, the personal finance industry is dominated by an unbounded desire for wealth accumulation and high investment returns. Without the complementing behavioral finance advice, it seems that wealth management has become more of an accounting hobby industry than one that actual provides actual financial advice.

I’m a firm believer in indexing via long-term investment plans that help clients sleep well at night. After all, there is no need to risk what you have and need for what you don’t have and don’t need. Helping clients discuss their financial goals, risk tolerance, spending habits, other assets in their net worth, relationship with their children, family governance goals, etc… seems to be a more worthwhile use of time than simply discussing economic outlooks and reviewing investment returns.

A good financial advisor in my book is part psychologist, part portfolio manager. The former is a criminally underrated skill that helps clients maintain emotionally resilient throughout periods of market turmoil (prospect theory: a loss hurts twice as much as equivalent gain) and focused on their long-term financial goals.

4.5/5. November 2025 (Published in 2025. A must read, at only over 200 pages you can read it one sitting. I also recommend The Psychology of Money and Same as Ever by Housel, he’s one of my favorite authors.)

NOTES

Money is less about numbers and more about stories—stories we tell ourselves about what matters, what makes us happy, and how we measure success.

Enduring happiness is found in contentment, so those happiest with money tend to be those who have found a way to stop thinking about it.

The software engineer Billy Markus says, “People are not rational. They are rationalizing. Once you understand this simple fact, all the oddest human behavior will suddenly make way more sense.”

“Emotions are not built into your brain at birth. They are built by your brain as you need them.” The important thing is that emotions are learned. They are a product of the culture and environment we are raised in.

1. Don’t let anyone tell you what you should or shouldn’t spend money on. There is no “right” way. You have to figure out what makes you happy and fulfilled.

“Personal finance is more personal than it is finance,” says financial advisor Tim Maurer. It’s one of the smartest money quotes I’ve ever heard.

2. Be careful judging how other people spend their money.

A healthy financial philosophy is having respect for others’ experiences, an appreciation of your own, and an understanding that all behavior makes sense with enough information.

I’ve written letters to both of my kids hoping to pass along a few financial lessons I’ve learned in life. Something I wrote to both of them is that you might think you want a nicer car and a bigger house, but I’m telling you, you don’t. What you actually want is respect and admiration from other people, and you think that having nice stuff will bring it.

We view nice stuff as the ticket to what we actually desire: attention. This is not a modern realization. It has little to do with social media or people becoming more materialistic. It’s a deeply human reaction. We value the attention money brings us more than we value the comfort and convenience of stuff that money can buy.

The three most important variables when seeking different ways to get people’s attention—a prerequisite for them to respect and admire you—are: How effective is it, how durable is it, and who’s paying attention?

If you gain your respect and admiration for who you are rather than what you own, your desire to spend more money on flashy things plunges.

The author C. S. Lewis once defined this feeling so well in an essay called “The Inner Ring.” Life, he described, is often viewed as a series of social rings, and people’s desire is to break into the next level, the more exclusive ring. If you’re outside of a ring, nothing seems better than the thought of being on the inside. But once you’re on the inside of one ring, you realize you’re not nearly as happy as you thought you’d be, and you shift your attention to the next ring, where nirvana seems to reside.

“pride can be felt two ways: intrinsically, when you’re authentically proud of yourself; and extrinsically, when another’s opinions tell you how you should feel, what psychologists call hubristic pride.” So much modern spending is an attempt to foster the latter.

The higher my desire for fancy stuff, the less real value I have to offer for things that actually make me happy. It’s a simple idea that keeps my priorities in view. Whose respect and admiration do I want? Mostly my family’s and close friends’.

Another important point here: You might think that displaying your success to strangers is bringing you attention and admiration. But often the emotion it’s actually stirring up in others is envy. “The appetite for applause counts amongst the lowest of human character traits.”

The happiest people I know are the most content. Not necessarily the richest, the healthiest, the most beautiful, or the most successful. Just whoever gets to a point of saying, “I’m good, I’m satisfied with what I have and who I am.” That’s nirvana. That’s who takes the happiness crown.

She had little, but wanted even less. And she was one of the happiest people you could have ever met. I’ve met half a dozen billionaires in my life—not a single one was as happy as my grandmother-in-law.

Would you rather be a billionaire who wakes up every morning anxious about what you don’t have and jealous of those who have more, or an ordinary person who wakes up so content, with so much pleasure, able to appreciate what you have regardless of how much that is? My grandmother-in-law was financially poor but psychologically rich. The gap between what she had and what she wanted was smaller than some people’s with one hundred times as much money as she had.

Psychological wealth is such an important concept, and with money it comes from proper expectations. Happiness is contentment. Contentment is what you have relative to what you want.

Desire is a hidden form of debt that must be repaid before you get to feel any happiness.

Dopamine is the chemical of desire that always asks for more—more stuff, more stimulation, and more surprises. In pursuit of these things, it is undeterred by emotion, fear, or morality. From dopamine’s point of view, it’s not the having that matters; it’s getting something—anything—that’s new.

People often chase the wrong emotion. They go for a buzz of happiness, which is fun but fleeting. It’s better to go for contentment, which feels even better and is much more durable.

So much of everyone’s life is invisible. Especially the difficult, depressing, and miserable parts that people try to hide. An interesting thing about money—acquiring it, having it, spending it—is that when you imagine having more of it, you focus almost exclusively on the parts of your life that might become better. What’s easy to ignore are all the hidden parts that probably won’t.

A related point is that the core ingredients that truly make people happy—friends, family, health, meaning, a clear mind—cannot be purchased, only earned.

When spending more money does make you happier, it’s usually for indirect reasons. Spending money on a nice, big house might make me happier—but probably because it makes it easier to entertain friends and family, and spending time with those people is actually what makes me happier. It’s the same with vacations—going to Maui might be a joy, but perhaps the best part is a week of uninterrupted, work-free, email-free, commute-free time with your family.

Never focus on what money can do for you without a clear understanding of the cost of acquiring more of it.

Internal and external benchmarks. The first is how happy you are with yourself, the other is what other people think of you. It’s astounding to watch how agonizing it can be when someone focuses too much on the external benchmark. And it’s so thrilling to witness someone whose only goal in life is to nail their internal benchmarks.

Warren Buffett once said: “The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard.”

The people I admire most have a way of escaping the bubble of culture. Sometimes via religion; sometimes via old books; sometimes via time in nature. Without such an escape, propaganda wins. You stop thinking for yourself. Modern delusions grow into an all-consuming mind virus.

I have a theory: The more susceptible you are to advertising, the less satisfied you are with your own life. You’re desperate for someone to tell you what you should like because you haven’t yet figured it out for yourself.

There is no such thing as an objectively good experience—every amount of “good” is just the gap between expectations and reality. It’s the distance between what you have now and what you either had or expected before. The contrast, not the amount, is what makes you happy.

So much of being happy with your money is battling the hedonic treadmill—the ability to become accustomed to something you once considered a luxury. One way to fight back is respecting the idea that occasional treats can generate more joy than perpetual luxury.

When you live a simple and modest life, your occasional experience with nice things can generate more joy than if you had those things all the time.

Don’t be proud of your consumption. 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.

Utility being hijacked by the pursuit of status is so common in everyday life. Think about the burden of maintaining a house that’s bigger than you need, or the stress you feel from buying a nice car you can barely afford. Status devouring utility is one of the most common frustrations of modern spending.

The pleasure you get from utility can be more durable than pleasure gained from status. The key to success in so many areas of life is endurance and longevity. I’m not interested in anything that’s unsustainable.

Good advice is never as simple as saying “Live for today” or “Save for the future.” The only good advice is “Minimize future regret.”

Envy is inversely correlated with self-examination. The less you know yourself, the more you look to others to get an idea of your worth. But the more you delve into who you are, the less you seek from others, and the dissolution of envy begins.

Be careful who you socialize with. Good advice for a lot of things in life is to remember that you are a reflection of the three or four people you socialize with the most. If your friends have expensive tastes, your expectations converge on that lifestyle. If your friends’ idea of an awesome Friday night is skipping rocks into a lake while chatting about life, your material expectations stay more grounded.

Independence plus purpose. The independence to do what you want, and the wisdom to want to do meaningful things.

Social debt is what happens when how you spend your money influences what people think of you in unwanted ways. It’s often a hidden form of debt, which makes it especially dangerous. Sometimes it’s people being envious of you. Sometimes it’s you suddenly feeling superior to people whose company you used to enjoy.

There’s an ironic saying, “It’s very expensive to be rich,” which is as true as it is absurd. The expense comes when people desperately try to keep up with spiraling social debt that’s attached to living a rich lifestyle.

I once did some consulting for a family that was worth $8 billion. If you googled their name, nothing came up. No Forbes list, no gala photos, no profiles, no Wikipedia pages…nothing. That was intentional. They mastered what so many other people—the rich, the middle class, the aspiring rich, and everyone in between—failed to recognize. They lived the most amazing life you could imagine, and they had virtually no social debt. They had total freedom, privacy, and independence. They chose their friends carefully and gave money away anonymously. It reminded me of what Naval Ravikant once said: The best position to be in is rich and anonymous.

Keep your identity small. “The more labels you have for yourself, the dumber they make you,” he writes. “If people can’t think clearly about anything that has become part of their identity, then all other things being equal, the best plan is to let as few things into your identity as possible.”

frugality inertia. It’s what happens when a lifetime of good saving habits can’t be transitioned to a reasonable spending phase.

mental liquidity. It’s the ability to quickly abandon previous beliefs and strategies when the world changes, you change, or when you come across new information.

You only get there when your financial beliefs aren’t tied to your identity. Wanting more money than you need to be independent and happy is an accounting hobby.

The best definition of independent thinking is when your beliefs on one topic can’t be predicted from your beliefs on another topic. If you tell me your salary, and I can accurately guess how much you spend on cars, homes, clothes, and vacations, are you using money as a tool to leverage your unique personality, or are you just going along with what society says you should want to spend your money on?

The people I know who’ve used money best have inconsistent spending habits. They spend a lot of money on this, and very little on that. They value this, and couldn’t care less about that. They’re independent thinkers, forcing their money to work for them, not the other way around.

Some people live for international travel; others can’t stand being away from home for any reason. For others it’s nice restaurants; others don’t get the hype and prefer cheap pizza. I know people who think spending money on first-class plane tickets is a borderline scam; others would not dare sit behind the fourth row. I have a friend who owns more than five hundred pairs of sneakers, which give him so much joy. I can’t understand it for the life of me.

Author Ramit Sethi has advice that I love: You should spend extravagantly on the things you love as long as you mercilessly cut the things you don’t. His specific example: He loves clothes, but isn’t a car guy. So he dresses like a rich man and drives like money’s tight.

Within the confines of your budget, experiment with as many types of spending as you can, cutting quickly and without mercy the things that aren’t working for you. Try spending more than you currently do on food, travel, clothes, sporting events, experiences, whatever it is. But immediately stop if it’s not making you happier, just as if you were reading a bad book.

Money and kids might actually be the most emotional of all financial problems—I have yet to meet a parent who is totally unemotional about their children’s financial future.

Those are the two options for the rich when giving money to their children: ruin their ambition with inheritance, or risk some form of strife by denying them an easy life.

But everything I’ve seen tells me that when kids are young and living with their parents, the parents and the kids have to live the same material lifestyle. So you, the parent, need to pick that lifestyle carefully. “You haven’t earned what I have” can be a less effective message than “Let me teach you the value of hard work by doing it together.” Lead by example, not by humiliation.

A noble goal as a parent should not be to raise successful children—success should be an offshoot of raising children who feel confident enough to find success on their own.

Your kids are paying attention. Always, and all the time. Whether you realize it or not. If the parents are spoiled and materialistic, the kids will be too.

They see what you value. They watch what you waste. They made a mental note of how happy you were when you came home and announced that you got a raise, or how scared you looked when you got laid off. They noticed when you were envious of your neighbor’s new car. They heard you and your spouse bickering over spending decisions. They noticed when you were greedy. They noticed when you were frugal. They paid attention to all of it.

Author Ramit Sethi says too many people ask $3 questions (can I afford this latte?) when all that matters to financial success are $30,000 questions (what college should I go to?). The latte example I use above often drives financial advisors mad, because they see people wondering if they should cut lattes from their budget when those same people attend colleges they can’t afford, own cars they can’t afford, and live in homes they can’t afford. They obsess over $3 problems while $300,000 problems get far less attention.

Spend less than you make. Quietly compound. Money serves you, not the other way around. No one is thinking about you as much as you are. Independence is wealth. Health is wealth. Aim to be a good ancestor. Love your family.

[Maria C · Rating 4 out of 5]

The Psychology of Money is a book that has stuck in my mind for a few years now and I reach for Housel's lessons when I feel a large and impulsive purchase about to happen (lol) sort of like the voice of a sensei guiding me to exit out of an online shopping cart.. Well here comes "The Art of Spending Money" and now I have the full roster of tools available at my disposal to make the absolute most optimal choices with my hard earned bucks! Woot woot!

I enjoyed reading this book, just like the first, it was engaging and colorful throughout. The examples and stories told are clear and although not all are relatable (what's up with Vanderbilts??) they really drive the point home. There's plenty of food for thought given and I enjoyed reflecting on my own life choices as this book went on and did some soul searching through out (and will continue to ponder in the weeks to come).

Very happy to have both books in my mental toolkit of strategy and defense in the ruthless world of personal finance!

[Marjorie · Rating 4 out of 5]

3.5

[Scott Ward · Rating 5 out of 5]

Everyone who has ever been tempted to “keep up with the Joneses” should read this book. Housel first describes why it’s titled “the art” and not the science because the best way to spend money may be different for everyone. Some need to buy the Ferrari and some shouldn’t because they would only do it for the wrong reasons. But it’s not just Ferraris, mansions, yachts and so on, we can be careful about how we spend on the little things as well.

The author starts with a distinction between rich (easily measured income and assets/net worth) and wealthy which is wisely using riches for your goals and purposes and not being “owned” by your wealth and things. So the main advice is to ask why you’re spending the money the way you are: to gain admiration, seek approval, garner influence and power, satisfy an appetite or itch, overcome some past hurt or snubbing, succumb to the familial or peer expectations, and so on. For example, he writes about the Vanderbilts, once one of the richest if not the richest families in the world. Within a few generations, the family was bankrupt because grandchildren and great-grandchildren followed an expressed dictum of “spending no matter the pleasure” whereas other socialites were seeking pleasure no matter the expense. So we need to be aware of some hidden social, emotional and expectation costs to how we spend our money. What are we telling others about us by how we decide to buy or not buy?

It’s not a new idea but it’s valuable that Housel puts here. Don’t look up at others and figure out what you don’t have; be content. In another research study, silver Olympic medal winners are more unhappy than bronze medal winners. Silver medal achievers seem to only look at how close they were to gold while bronze winners are delighted they weren’t fourth or fifth. Similarly, people (especially CEOs) can get trapped into believing their and their organization’s successes are due to their own efforts, without acknowledging that “luck” may have had a part in it, while poor results or disasters (loss of job, e.g.) are caused by others and so people often end up with victim mentality. People can often fail to recognize when a behavior or decision has stopped providing positive results because something has changed. And vice versa, something has changed and what was giving you less than satisfactory results now starts working. Housel counsels against this hubris of believing you’re the champion or the victim.

Interestingly, he does not give advice but suggest aspects to decide for yourself if your current habits are working or not. Additionally, Housel writes about some paradoxes of finances and wealth. One example: paying attention to the bigger expenses will help you save money and you should ignore smaller expenses; yet, paying attention to the small things can lead to big savings over time. While he highlights some of the super-wealthy and their mistakes and regrets, he also illustrates principles with ordinary, everyday middle income examples. In every case, spend with purpose. This book will help you determine what that purpose is (or purposes are) and how content you are with that goal.

The book reminded me of Thorstein Veblen’s hundred year classic, “The Theory of the Leisure Class” and its corollary that the upper socioeconomic caste is obsessed with “conspicuous consumption.” Some of Housel’s ideas are not new but he has pulled a lot of financial threads together.. Also, I found the author’s perspective helpful in reminding me of some past experiences. I had a friend, an executive, who continued to drive a 20-year-old, rusty Corolla because “it still gets me to work, no worse than a new car.” Meanwhile, as a fellow executive, I was advised to upgrade my vehicle—not to any ostentatious or excessively luxurious model—to show my staff that desiring to be in my position was capable of providing the means for improving their lifestyle. Again, there can be hidden social, emotional and expectation costs to our decisions.

If you’re struggling to maintain a budget, this book will be helpful. If you have financial peace, this book might help you redirect some spending to areas that do provide pleasure. Or satisfaction.

I’m appreciative of the publisher providing an advanced copy.

[Samcwright · Rating 3 out of 5]

I really love Morgan Housel’s books. I recommend the Psychology of Money to everybody. This one was a little less interesting. It still got some really good insights and I recommend everyone probably read at least once. It’s just not as good as his other stuff.

- Spend for utility and meaning, not status; real value comes from comfort, time, and relationships.
- Your inner scorecard matters more than others’ approval; align money with personal values.
- Money’s greatest return is freedom and control over your time, not luxury.
- Good spending minimizes future regret—prioritize what you’ll care about decades from now.

[Wayne Jones · Rating 3 out of 5]

I have loved Housel’s previous books, I would even say the Psychology of Money is required reading, however, this was really an essay padded out to a small book. Some useful points and worthy of a skim read.

[Alok · Rating 2 out of 5]

I love Morgan Housel’s writing. Psychology of Money was one of the few books I freely recommend to everyone who asked. Unfortunately, l can’t say the same about this book. Not because l disagree with anything said in the book. But there is nothing new l learnt. It felt repetitive and somewhat boring too.

The key lessons in the book are:
- if your wants and expectations are higher than what you have, you’ll feel poor no matter how much you have
- Buy things for their utility, not for their status value. This idea of ill effects of comparing or competing with others, showing off your wealth etc. is repeated in different chapters in different ways.

There are other ideas which are mentioned rather superficially and not developed well. e.g., lead by example if you want to impart certain values to your children, be nice to people etc.

I was getting quite bored with the book and was progressing slower than usual. Then, l reached a chapter where Morgan Housel advised to not feel obliged to complete the books we start reading if it doesn’t feel worth it. After that point, I skimmed through remaining chapters and finished it within half an hour. Great advise that :D

[Sophia Adair · Rating 3 out of 5]

2.5/5 - did not live up to his previous work, in my opinion.


The first half of this book is skippable, offering anecdotes and general ideas about what’s important to us. I get that this is an important topic as it relates to our spending, but Morgan loses the plot often, either failing to follow the theme of money or speaking far too generally. I was prepared for mostly philosophy and little concrete advice, as his writing usually goes, but this felt too much like every other self help book. The various washed up celebrity quotes were a bit too much, too.

One of the strengths of The Art of Spending Money is Housels tiered scale of financial independence. It helped me to identify where I was on the independence ladder, and let me more easily visualize the stepping stones I should aim for to get to where I’d like to be. I also loved the call to try everything — the wide funnel, narrow filter theory.

I did take away some bits of valuable information but all in all, this was not the authors best work.

[Drew Wassenaar · Rating 3 out of 5]

I like Housel's writing style - it is heavy on stories with plain language that makes it very accessible and quick to read. This one wasn't quite as good as the Psychology of Money, but there were still a few good nuggets in there so it was worth the read. At one point, he went into a very oddly specific story, and he acted like it was the archetype of how all people act/react. It was very strange and certainly not accurate for many people. Seemed like he just didn't have as much to say here so he needed to add some filler. BUT the main few nuggets were great! It is a helpful framework on how to use money to make you happy, which differs quite a bit from the standard way America thinks about money.

[Maliha · Rating 4 out of 5]

The Art of Spending Money is a solid read with a clear and practical concept. I appreciated how the book breaks down spending habits and reframes them in a way that feels both motivating and refreshing. It’s definitely a good reminder of principles we all know but sometimes forget to apply in daily life.

That said, I couldn’t give it the full 5 stars because at times it felt a bit repetitive. The ideas are valuable, but they’re not groundbreaking more like a gentle nudge to stay mindful about money rather than brand‑new insights. Still, it’s well written, easy to follow, and worth picking up if you want a reminder to be intentional with your spending.