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“The best use of money is a tool to leverage who you are, but never to define who you are.”—Morgan Housel, author of The Art of Spending Money
If you ever want to know what a culture values, what a country values, look at their tax laws. I will never forget the wisdom shared by Martin Ginsberg, a tax attorney and the husband of Supreme Court Justice Ruth Bader Ginsburg, on how a country’s subsidies reveal the guiding values of its populace through tax breaks or credits. I share this because, simply because it is the law, but that doesn’t mean it needs to be the law that guides your life principles. Similarly, we see titles for the Richest person under 30, or a list of the world’s billionaires on the cover of countless magazines each year, and again, they wouldn’t create the list and place it on the cover if it didn’t sell.
Yet again, the bustling culture projected in the media supports the culture they need to stay in business or to remain in office. This doesn’t answer the question of what it means to live a fulfilling life—a life of contentment.
I start with this point because it would be understandable to mistakenly think that having more money, having the latest trend of décor, clothing, [fill in the blank for the latest trend of anything seen or discussed on social media, television, publications, etc.] is the path to a better life. But the truth is, there is no concrete formula, and your most successful approach to financial freedom, once you have learned the basics of money management, will be unique to your life journey and the lifestyle that nourishes you.
And there in lies the art of spending money.
As we know there are countless books on financial guidance, and having read many of them over the decades, there are constant contradictions, alongside worthwhile bits of wisdom and expertise. Often in the same book.
In today’s episode/post, I am going to be pulling quotes from a recent book that was published, The Art of Spending Money by Morgan Housel, however, this books falls into that category I just mentioned. And my approach to extrapolating useful insights follows his own advice, have a strong filter. We’ll talk about that more later the final point on this list, but essentially, apply critical thinking skills to any book you read, bringing to the table your previous experience and knowledge, so you can know with clarity what is worth grabbing and applying to your life and what is not.
Overarchingly, Housel offers an abundance of wisdom, much of which aligns with living a life of contentment, and that is why I wanted to bring you this list of how to finesse the art of spending.
“Money itself doesn’t buy happiness, but it can help you find independence and purpose—both key ingredients for a happier life if you cultivate them.” —Morgan Housel
How we choose to spend our money is personal, it is something we must make with an independent mind that is wise in knowing when we don’t know something about our finances and to find experts in the fields we need to better understand.
With sound money management skills – budgeting, savings, retirement – topics that have each been discussed at length in the many posts found in TSLL’s Money Archived posts, we can now explore how to best spend our money to live the life that supports, nourishes and brings us peace of mind. Let’s explore 13 ways to do just that.
1. Set your objective to making a life instead of ‘making money’ to live
“There are spasms of disgust, moments of wise suspicion; but they are transient, and men soon come to regard a city as the prison from whence there is no escape. But is no escape possible? That was the question which pressed more and more upon me as the years went on. I saw that the crux of the whole problem was economic, I knew that I was not the gainer by a larger income, if I could buy a more real satisfaction on less income. I saw that it was the artificial needs of life that made me a slave; the real needs of life were few. A cottage and a hundred pounds a year in a village meant happiness and independence; but dared I sacrifice twice or thrice the income to secure it? The debate went on for years, and it was ended only when I applied to it one fixed and reasoned principle. That principle was that my first business as a rational creature was not to get a living but to live; and that I was a fool to sacrifice the power of living in securing the means of life.” —William Dawson, author of The Quest of the Simple Life (1909)
When we consciously choose to live well, to savor our everydays, enjoy the present moments, our choices may change in how we spend our money if we have been constantly playing catch up or find ourselves wistfully looking into the future at days without the stress that we feel now.
This simple, yet significant shift is liberating and clarifying. And when we have clarity, we are on the road to cultivating a life of contentment that brings us the peace, and yes, the fulfillment we thought we would find by chasing the money in the first place.
2. Acquire a deep understanding and examination of yourself
“There are no universal laws of what kind of spending will make everyone happy and fulfilled.” —Morgan Housel
Once we have clarity about our intention of how to live, decisions become easier. The decisions become easier because we have the clear-mind to understand the whispers from our soul, the yearnings of our curiosity and thus the unearthed courage that will give us the strength to honor what we need.
As Housel points out, what financial decisions you make will be personal and unique to you, so while advice, and reading the wisdom of experts in finance is a good idea, we must then take that expertise and tailor it to how it will work best for us to live the life that brings us independence and thus freedom to be fully ourselves, and let go of the rest.
“Personal finance is more personal than it is finance. A lot of money problems come from people spending or saving money in a way they think they’re supposed to that doesn’t match their personality.”
3. Find a job/career/calling that you enjoy
“It’s like someone held underwater for a minute—they do not take a calm breath when they surface; they gasp. A lot of spending is gasping. Related: I have noticed that those most capable of delayed gratification are often those who enjoy their work. The pay might be good, but the urge to compensate for your hard work with heavy spending isn’t there.” —Morgan Housel
While there will be times early in our career and perhaps in the middle of our working career where we have to take a job to pay the bills. These are stepping stones, not permanent places of residence. So long as we know that going into the job, and know why we are doing it, then we are motivated to reach the place, reach the job that is fulfilling. Not fulfilling because we will make more money, but because we will be able to do the work, each day, that we enjoy.
There is the often shared saying that if you love the work you do, you won’t work a day in your life, and while I appreciate this sentiment, and I think for the most part it is true depending upon the context, what we need to find is the work that energizes us and excites us, while also giving us a sense of purpose that we personally care about. The tricky part is the last point. Society has its ‘jobs’ that it puts on a pedestal, but if that job drains you, then let someone else do it for whom it energizes. There is a job that will both contribute to constructively and energize you, and so long as you keep searching, you will find it. Sometimes where you didn’t even know a job existed.
While we will want to be paid for our time, expertise and effort, and compensated fairly, to only work for pay is to distrust that there is a possibility to find that magic fit. Sometimes it lands in our lap, but it will never be found if we don’t set the intention to engage our curiosity and explore, letting others know what we love, what we want to learn more about, etc. Let your interests, passions and strengths be known and you never know who will notice and invite you to spend your days working on what you love.
4. Gain respect for who you are rather than what you own
“So much of modern spending is an attempt to foster [extrinsic pride]. But so much of the deep, fulfilling pride we naturally crave comes from [intrinsic pride]: being proud of who you are and what you’ve done more than what you’re wearing or driving.” —Morgan Housel
Another shift in what motivates our life choices that will make an extreme difference in our peace of mind for the long-term and in the present. So long as we are making spending decisions based on others’ approval or praise, we will be in constant pursuit of the fulfillment we seek. The shift needs to happen from external presentation to internal motivation. This is something we’ll talk about more later in this list, but while it may take time to gain respect for who we are, our character, how we treat people, etc., it is a priceless gift we give ourselves that can never be purchased while trying to impress others.
Speaking of trying to impress others . . .
5. Relinquish the need to impress anyone
“When you don’t feel the need to impress other people, your desires fall.” —Morgan Housel
The benchmark to focus on is how at peace you are with yourself, rather than how happy others are with you. This is not to be confused with not caring about other people or not being compassionate; instead, it is about honoring your needs and being wise enough to know when you are doing something, purchasing something, or acting in a way in order to impress someone else or gain their favor.
I shared #4 just prior to this point because it is important to note that while we wish to be respected for who we are rather than what we do, we must be careful not to do or purchase something to impress others at the expense of our own peace. So, a bit of a follow-up or caveat to keep in mind.
6. Exercise regular appreciation for your present life
“Once I started to thank the ordinary, the extraordinary started to happen.” —Words are Wands
Gratitude continues to be a pillar of living a life of contentment, and it extends into our financial lives as well. It’s the wanting that will pull us off course from so much of what we say we want in our lives. Paradoxically, by appreciating where we are right now, all that surrounds us – the wanted that has been acquired, even the frustrating moments that are trying to teach us something that will be useful to live the life say we want – we plant the seeds for our wants to materialize in the future. But so long as we want, we aren’t in the present, and we need to be here and now, right now in order to plant the seeds for them to grow tomorrow.
7. Stop having expectations, start embracing intentions
When we understand that wanting is an endless game, it becomes far easier to step off the playing field and live our own lives. Wanting holds us hostage in the future, never satisfied with the present moment. As soon as we achieve one goal, another is dangled in front of us. I recall when I purchased Le Papillon; my realtor said, with assurances that this wouldn’t be my final home. I can see you in another one later. And of course, that is his job, so I dismissed it entirely as a reflection of keeping himself in business, but also a reflection of what often happens with clients, they want something bigger when they can afford it, or to live in the nicer neighborhood, when they can afford it. For me, I was grateful to be able to let him say what he said, not let it influence me, and not be upset by it. There was peace in this awareness, both in the culture and in understanding my own needs.
We set intentions, rather than holding expectations, and in this way, we also let go of our goals. Intentions replace goals as well and set us free to dance with all that life will offer us if only we would keep an open mind of the possibilities, many of which we cannot even imagine when we first set our intention.
What helps us naturally let go of chasing more wants and no longer having expectations is being grounded in contentment. When we enjoy the life we are living right now, even as imperfect as it may be, it is part of the equation; we are exemplifying what contentment is. Rest assured, as we have talked about before and talked about in detail in the Contentment Masterclass, being fully in the present, grateful for where we are, doesn’t mean we cannot grow, evolve, stretch, and learn. Ironically, being present is the most effective way to grow fully and into our potential.
8. Keep an Inner Scorecard rather than an Outer Scorecard
“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.” —Warren Buffet
The freedom and independence of effective money management isn’t about money directly, but, as was shared above in the opening quotes, indirectly, what we do with it. Being able to be ourselves, all the uniqueness that makes us who we are, to be able to have the choice to do what we want, when we want, with whom we want, that is more often than not what we truly are seeking when we seek acceptance from the external world. We want them to like us so that we can be with people we think we want to be with. We want to be accepted, approved, and appreciated because we want to feel loved. But we’ve got it backward – being loving to yourself and others includes being wise with your money, so that you can then find your dharma, enjoy your daily life, and connect with similar souls who value you for who you truly are, and you them.
9. Understand the difference between being rich and being wealthy
“If you’re already satisfied with who you are, you naturally view money as a tool to be used to make things even better. That’s when you become wealthy.” —Morgan Housel
Way back in 2011, I shared this post that explored the seven traits of the wealthy as taught by Jean Chatzky. And her wisdom continues to ring true. True wealth is a concept, not the amount in our checking, savings, or retirement accounts. However, to dismiss the necessity of money is foolhardy. What we need to understand is how to keep money in its place – a place of support to live a fulfilling life, rather than the leading actor of our life.
When we are in control of our money, that implies that we have self-discipline as well as self-knowledge. This combination is the path to wealth because wealth contributes to fulfillment, supporting our journey to living the dharma we have discovered after conscious searching.
10. Purchase for utility, not for status
“Buying things for their utility gives you the ability to express your own identity, while chasing status often makes you conform to others’ identity.”
Whenever I ponder a project in my house, I ask myself, how will this improve how I move through my days and experience this space? Will it cause ease or stress? And will this be something that will last so that I don’t have to make this decision again in the near future or ever again? The latter question is determined by two factors – the quality of the product as well as my enjoyment and pleasure of seeing/using it. To drive that point home, when we purchase for utility, we are ultimately also purchasing something more durable. Cost per wear comes into play because while it may cost more upfront, in the long run we are purchasing more time and more successful use of the item.
And when we include personal preference with literal longevity, we have met the criteria for utility.
“When you value utility over status, what actually happens is that you value individuality over conformity.”
Once you know what you need functionally, ensure it suits your taste. Taste that is free of influence from what will be ‘liked’ on social media, or by your family or friends. Each of us is exceptionally talented at one special skill that only we know how to do: being ourselves. Embrace that gift you were given, and it will guide you to understanding what is best to nourish your life, and you will pay no mind to whether it conforms to society’s whims.
11. Spend on Independence to Figure out Your Purpose
“The independence to do what you want, and the wisdom to want to do meaningful things. Spending on independence can be the most wonderful thing money can buy. And it’s more in your control than you might think.”
Spending is an art because of its bespoke necessity to nourish us uniquely. In order to be independent, we need to know what we need to feel free without feeling a sense of lack. There will be details in one person’s life that will appear excessive to others, and conversely, there will appear lack to outsiders when the person living the life is wholly fulfilled. It is not for us to judge what another needs to feel independent. What is our responsibility is to know ourselves. A reoccurring them in today’s episode/post – know thyself.
Funnily enough, while we are spending on what gives us independence, we will often find our dharma before we are fully free. However, that is absolutely fine, because once we find our dharma, we tap into an infinite energy source of exhilaration and curiosity that indirectly leads to independence through all that we do and give to our dharma. It’s a beautiful cycle that brings peace to our lives, life to our days, and inspires others to find their own dharma that will consequently lead to independence. It takes bravery, trust in ourselves, but it is absolutely worth it. In many ways, it serves as a retirement plan depending upon how you define an ideal retirement.
12. Spend Inconsistently
“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.”
In this week’s Monday Motivational post, I mentioned how we need to spend inconsistently as a way to elevate our ordinary days to extraordinary. However, in alignment with our topic today, what will make our days feel extraordinary is unique to each of us. This means we need to figure out where we want to spend and where we don’t need to.
For some, they will want to forego a car or vehicle in order to live in the city of their dreams. They can’t afford both (and don’t need to if they live in a city with reliable transportation), and thus the spending inconsistently. Housel points out that we become ‘followers’ when we spend like everyone else does in our income bracket. Two cars, a 3-4 bedroom house, nice neighborhood, same schools as our friends, etc. That’s not independent thinking. Whether you have children or not, the point is, know yourself well enough to understand what you will spend your money on that will elevate your daily experience and what you will not because it doesn’t. The only way to know what will fall where is to experiment and then filter ruthlessly which leads me to the final point.
13. Read Voraciously and Think Critically
“It’s impossible to know what you’re going to like until you try it, so you have to try everything. But the only way to try a million new things is to have a strong filter that immediately rejects what isn’t for you.”
Since graduating from university, I have lived in six different houses/apartments and in four different towns/cities across two states. I have interviewed with numerous places of employment in a handful of states and explored what living in these areas might be like. I continue to do that now as I ponder retirement, as I shared in my posts and episodes back in March following my trip to France. This experimenting is fun, yet necessary if we are going to know how to spend our money to live well. What we will discover will be unique to each of us, and it will be life-lifting in the discovery.
The reading voraciously comes into play as we want to gain ideas as well as expertise. Housel recommends, and I agree, that we don’t have to finish every book we pick up, and we definitely don’t have to agree with everything we read, which is where critical thinking must come into play. But all of this reading gives us ideas, gives us knowledge, so that we aren’t wondering, worrying and stuck.
However you devour reading material, it is a life changer. If you are more auditory inclined, that works just as well. Part of the reason I prefer books that I hold in my hand is that I can skip ahead, flip back, and peruse the table of contents to zero in on particular topics of interest. This includes fictional books as well. Many TSLL readers know that some of my travel inspiration has come from mysteries I have read about Brittany, France. My introduction to places in Britain and France comes from cookbooks, memoirs, and, yes, fiction as well. Let your curiosity guide you in choosing which books to pick up, but honor its direction, because it often knows something we aren’t privy to yet that will enhance our life journey.
The finessing comes from you, and the thoughtful choices you make to curate the life you love living. Honor that inner compass to guide you in your money decisions as well. Just as your life journey is a work of art, the engine that will propel you along the way, how you spend your money, is an art form as well.
Petit Plaisir
Baked Apple Cider Donuts/Bundt Cake
~Find the full recipe here.
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