Review of The Art of Spending Money
The Art of Spending Money focuses on how we use it, and about learning how to make the most of it.
Money and Happiness
There are no universal laws of what kind of spending will make everyone happy and fulfilled.
The key to happiness is being content with what you have. Happiness is contentment which is what you have relative to what you want. Core ingredients of happiness are friends, family, health, meaning, a clear mind which cannot be purchased, only earned.
Everything worthwhile in life is just the gap between expectations and reality and it determines level of happiness. What matters is whether you understand and can control the psychology and behaviours that can make the connection between money and happiness more complicated than we assume.
Spending Money
Spending money is more art than science. The art of spending money covers individuality, greed, jealousy, status and regret.
Spending money often reflects the social and psychological experiences of the spender. The same product has very different meanings to different people. We should try new things and reject what do not bring us happiness. Do not fall for marketing ie advertising.
Beyond a certain level of basic spending, every notch of higher lifestyle comes with social obligations, judgements by others, and shifts in your own expectations that are very real liabilities but easy to ignore.
Good at earning money does not necessarily translate to good at spending money.
Use of Money
There are two ways to use money: one is as a tool to live a better life; the other is as a yardstick of success to measure yourself against other people. It is obvious which one leads to a happier life.
What many people want from money is the ability to stop thinking about money, to save enough money that we can stop thinking about it and focus on other stuff. I fully concur with this statement.
The wise way to use money is by using money to minimise future regret.
Money and Life
The simplest formula for a pretty nice life is independence plus purpose; independence to do what you want, and the wisdom to want to do meaningful things. 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.
The struggle in managing money is knowing how much you should invest for the future (to take advantage of compound interest) versus spend today (we are one day closer to death than we were yesterday). It is a deeply personal problem and no one-size-fits-all formula.
It is almost impossible to grow wealth without controlling your biggest expenses and it is very difficult to build wealth without caring about smaller expenses.
However, refusing to recognise that you have met your goal can be as bad as never meeting the goal to begin with.
Conclusion
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. Humans actually want respect and admiration from other people, rather than more money.
The author proposes 15 levels on the spectrum of financial dependence and independence. We can use this guide to assess our current financial situation. He advises viewing every bit of savings as having actively purchased bit of financial independence, pushing us higher on the independence spectrum.
Overall, The Art of Spending Money prompts the readers to take a hard look at our own spending habits and encourages us to look for ways to spend money that would make our life better.
One-sentence summary for The Art of Spending Money
Money is a tool to be used to make things even better, rather than a master to obey.
Quotes
- Everyone is a product of their unique past.
- True happiness is when you stop asking what else you need to be happy.
- The ability to not need to prove yourself to strangers is priceless.
- Wealth without independence is a unique form of poverty.
- Monotony makes time speed up, variety makes it slow.
Rating
⭐⭐⭐
Interested in The Art of Spending Money?
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