May 22, 2025 • 13 mins
Is there an art to spending your own money? We spend a lot of time discussing earning and investing money, but how often do we really think deeply about spending it? Morgan Housel, author of the best-selling “Psychology of Money” (8 million copies sold worldwide), is the author of a new book, “The Art of Spending Money, Simple Choices for a Richer Life.” It arrives in October. Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news, Molle.
Speaker 2 (00:11):
Again buy you. Is there an art to spending your
own money? We spend a lot of time around these
parts discussing earning and of course investing money, but how
often do we really think deeply about spending it. I'm
Barry Ridholtz, and on today's edition of At the Money,
(00:34):
we're going to discuss how you should think about spending
your cash. To help us unpack all of this and
what it means for you, let's bring in Morgan Housel.
He's the author of the Psychology of Money. The book
has received widespread acclaim and has sold over seven million
copies worldwide. His new book, The Art of Spending Money,
(00:58):
Simple Choices for a Richer Life, arrives in October. So, Morgan,
you've covered human behavior and nature. What led you to
say I want to write about a new book about
the art of spending money?
Speaker 3 (01:14):
Well, thanks, Barry. The first reason was I didn't call
this book the science of spending money because I don't
think that exists. Science implies that there is like a
one size fits all rule for you and I, and
that's not the case. I call it the art of
spending money. Because art is subjective, it is often contradictory,
it is different from person to person, and that's really
(01:34):
what spending is. The reason why I wanted to tackle
this is because you just alluded to this. There is
so much commentary, so much ink has been spilled. It's
so much good ink has been spilled on how to invest,
how to grow your career, how to earn more money,
very little on spending money. And I think the reason
why is because it is assumed that everybody knows how
to do it, which is just spend more and you'll
(01:56):
be happier, you'll be better off, and doesn't really matter
what you spend it on. You hear a little bit
of nuance of spend on experience versus things. But to me,
there is so much more in the psychology of spending.
When you dug into the deep mechanics of envy and
jealousy and getting attention and copying other people, there are
so many good stories to dig in there that might seem,
(02:20):
you know, not exactly, not really deep. This is not astrophysics,
it's just basic psychology, but it tends to be ignored,
particularly in finance, where all the attention is how do
you just get more money, and you kind of leave
it to assumption of what you're going to do with
the money after you get it.
Speaker 2 (02:34):
So let's talk a little bit about the science behind
some of the things you're discussing there. There's been a
lot of academic research does money make you happy or happier?
At what point does the rule of diminishing returns kick in?
What does the science of spending look like before we
(02:56):
get to the art of spending.
Speaker 3 (02:58):
One of the things I think is really interesting is
that what a lot of the research shows is that
if you are already a happy person, money can make
you happier. But if you are a depressed person or
a miserable person, whatever it might be, that it will not.
And it's easy to just kind of contextualize this into
a real person's life of if you are in a
bad marriage and you hate your career, and you have
(03:18):
a two hour commute, and just go on down the list,
you're an alcoholic, you're obese. If you take that person
and you give them more money, will they be happier?
And the answer is no, of course not, because all
of those other aspects of their life are going to
override whatever money can do.
Speaker 2 (03:31):
For them.
Speaker 3 (03:32):
But if you also take somebody who's in a great marriage,
loves their career, they're happy, they're healthy, they sleep eight hours,
they have a good set of friends, and you give
that person more money, there's a good chance that they're
going to use that money to just leverage what they're
already doing, to spend more time with the friends who
they already love, to spend more time getting healthier and
eating good food. And so money can really just just
(03:53):
leverage the person who you already are and the lifestyle
that you're already living. But I think a lot of
people go straight with that when they are unhappy and
they think, if only I had more money, all my
problems would go away.
Speaker 2 (04:06):
And one of the interesting things in the academic literature
that I recall seeing a few years ago was when
they draw these charts of money potentially making people happier.
Divorce is a giant red flag people in all of
the divorce or people who have recently been divorced, that
that's a really challenging road to holl isn't it.
Speaker 3 (04:28):
I think what it comes down to is that having
more money is so quantifiable that it we use it
as a crutch for all of our problems. For example,
if I said I would have a better life if
I was a ten percent better dad, what does that
even mean? What does a ten percent better dad mean?
There's no way to quantify it. But if I said
I would have a better life if my salary went
(04:49):
up by ten percent, you can easily quantify that, wrap
your head around it. So we chase that, and we
assume that that's going to be the solution to all
of our ills. Even if becoming a better dad might
make me a happier, better person. But since it's impossible
to quantify, I just ignore it and pretended that it
doesn't exist.
Speaker 2 (05:05):
You alluded to impressing others. How should people avoid spending
money for status and symbolism as opposed to bringing themselves
satisfaction and happiness.
Speaker 3 (05:19):
I'm the first to say I love nice things. I
like a nice house, I like a nice car, I
like nice clothes, I like nice vacations, I travel well,
et cetera, et cetera. I'm not saying live like a
monk by any means. But what is true is that
a lot of spending is for social signaling. You just
want to show other people who you are and how
successful you are to me. The next layer below that is, well,
who are you trying to impress and are they even
(05:40):
paying any attention to you? And this is different for
every person, but for me, the people in my life
who I want to love me are my wife, my kids,
my parents, and maybe two or three friends. And I
really want their love and affection and admiration, and I
want to do things, including with my money, to help
them and to give them a better life so that
(06:00):
they will love me back. That's the truth. But after
that small set of you know, seven people or whatever,
it falls very quickly from there. And then there's another
layer below that of like work associates who I love
having a good time with and having a nice dinner with.
But then it really collapses from there, and I could
not care less what ninety nine point nine percent of
the world thinks of my house or my car or
(06:22):
my clothes, because they're not paying any attention. It is
so easy to overestimate how much other people are looking
at your stuff, your house, your cars. They're not paying
any attention. They're busy worrying about themselves and thinking about themselves.
And so when you frame it like that, it's not
to say don't use your money to gain attention. It's
use it to gain attention from the very small core
(06:43):
group of people who you want to love you. There's
a great quote from Warren Buffett where he says, the
definition of success in life is when the people who
you want to love you do love you. And I
think you can twist that into thinking how you spend
your money as well.
Speaker 2 (06:57):
So in the modern era of social media and TikTok
and Instagram, there's a lot of influenzer flexing and they're
trying to show off their lifestyle. I recall being on
vacation at a place in Puerto Rico and two lounges
over was this woman who, instead of just lying there
(07:18):
and enjoying the beautiful son and surf, read a book whatever,
she was just constantly taking selfie's doing. And so I
finally had to say, hey, what are you doing? So? Oh,
I'm an Instagram influencer, and so you're not just gonna
kick back and enjoy this, so, oh no, this is work.
You and I had a conversation a couple of years
(07:38):
ago that's so related to this. Let's see if you
recall this, you know, the person driving down the street
in the loud Lamborghini, or the person around the corner
from you with the giant house. You're only seeing one
half of the balance sheet. You're only seeing their assets.
We talked about, well, did they pay cash for that
or did they go deep into hawk in order to
(08:00):
buy a house or a car to show off for
the neighbors. Talk about that a little bit.
Speaker 3 (08:04):
Yeah, wealth is what you don't see. Wealth is the
cars that you didn't purchase and the giant house that
you didn't buy. That's what wealth is. It is money
that you didn't spend that you can now say for
either for future consumption or for independence today. That's what
wealth is. And so I can see your car, I
can see your house, I can see your watch in
your clothes. I cannot see your bank account or your
(08:24):
brokerage statement. So the most important part of wealth, literally,
in my view, the definition of wealth is invisible to everybody.
And that is so unique in life because if you
take like physical fitness, you can see somebody's physique. It's
right there, and so you know kind of who to
admire and who to chase. Oh, that person's in great shape.
I should ask them what they do, I should ask
(08:46):
them their diet and try to mimic what they do.
But if you see somebody with a mansion or a
or a Ferrari or whatever it is, you don't know
that they got that by success. That may be the
picture of a leverage and it's possible that they haven't
slept into because they're wondering how they're going to make
their next Ferrari lease payment. And so we have kind
of like a fake view of who we're chasing and
(09:06):
what we should do because wealth that we're chasing is invisible.
Speaker 2 (09:11):
So this comes back to the concept of spending as
an art and in one of the sections of the book,
you talk about self awareness over spreadsheets. How self aware
do we need to be in order to be more
artful spenders towards happiness and life satisfaction.
Speaker 3 (09:33):
I think every big, big financial decision, spending decision, is
two parts head and heart. It is yes, like if
you're buying a house, of course, it's not just a spreadsheet.
I tell the story that when my wife and I
bought our first house nine years ago, we found the
listing on Zilo and we're like, Oh, that looks great,
let's go check it out. But this is just information gathering.
(09:53):
This is just we're just going to go look at it.
But we're not making any decisions here. And we pulled
into the driveway and as soon as we pulled in
the drive my wife gasped and she said, I love it.
And at that point, forget the spreadsheets, forget the like,
the like, the valuation comps. That is all hard at
that point. But here's the thing. We don't regret that
in the slightest it was. It was a great house.
(10:14):
And we had Christmas mornings with our kids. Both of
our kids were you know, we're born not in that house,
but we brought them home as newborns in that house.
So many amazing memories that you could not track on
a spreadsheet.
Speaker 2 (10:25):
I'm laughing because the very first house my wife and
I bought, I don't know, twenty nine years ago, we
pulled into the driveway. I looked at her face and
I just said, uh oh, And that was the first
house we bought, the house I'm in for the past
almost fifteen years. We pulled up the driveway and same
(10:47):
as your wife, She's like wow, and I'm like, uh oh,
here we go again.
Speaker 3 (10:52):
Real estate's an interesting one too, because does buying a big,
fancy house make you happier? If you phrase it like that,
the answer is no. Spending more time with your spouse,
your kids, your friends, your neighbors does that make you happier? Absolutely?
And can a big house make it easier to have
your friends over like yes, So there's an indirect path
to which, yes, spending money on a great house can
(11:13):
make you happier, but it's not because of the house.
It's because it makes it easier to spend time with
people that you admire and love.
Speaker 2 (11:19):
So let's bring this back to a theme that I
have seen in all of your writings, all of your books.
I've known you for how many years? Of fifteen years?
Just about sounds right. Going back to Vancouver peace of
mind as the ultimate spending return tell us about that.
Speaker 3 (11:38):
I think it's different for every person there are. There
are certainly people out there that would go crazy if
they were not stressed out and if they were not
pushing themselves to the max every day. But the vast
majority of people, including myself, what I want out of
money is a simple life. Now, simple doesn't mean cheap
or frugal. Simple can be extravagant. But it's simple in
(11:59):
the sense that you are using money as a tool.
It's not using you. It's not conducting your behavior or
your activities. I want to use money as a tool
in my life to be to leverage who I want
to be and for me then I think you and
many other people. That is like like doing the best
work that I can, but having full control over my schedule,
(12:20):
doing a lot of reading, working when I want, with
whom I want for as long as I want, being
in control over my time. That's what I want out
of money, using it as a tool rather than it
using me. To say, Morgan, this is how you should
spend your money. You should get these people's attention. That
guy's car is faster than your years, so you need
to upgrade. That is when money is using you rather
than you're using it.
Speaker 2 (12:40):
Perfect way to sum this up and to end, Morgan
Housel's new book, The Art of Spending Money, Simple Choices
for Richer Life, arrives in October. To wrap up, spending
money can bring you happiness if you go about it
the right way, if you're not just flexing and showing off,
if you're spending time with friends and family and loved ones.
(13:04):
If you're using money as a tool to achieve certain aims, well,
then have at it. Go out and spend money, just
don't post everything you do on Instagram. I'm Barry Ridolts.
You're listening to Boombergs at the Money
Bloomberg Audio Studios, podcasts, radio news, Molle.
Speaker 2 (00:11):
Again buy you. Is there an art to spending your
own money? We spend a lot of time around these
parts discussing earning and of course investing money, but how
often do we really think deeply about spending it. I'm
Barry Ridholtz, and on today's edition of At the Money,
(00:34):
we're going to discuss how you should think about spending
your cash. To help us unpack all of this and
what it means for you, let's bring in Morgan Housel.
He's the author of the Psychology of Money. The book
has received widespread acclaim and has sold over seven million
copies worldwide. His new book, The Art of Spending Money,
(00:58):
Simple Choices for a Richer Life, arrives in October. So, Morgan,
you've covered human behavior and nature. What led you to
say I want to write about a new book about
the art of spending money?
Speaker 3 (01:14):
Well, thanks, Barry. The first reason was I didn't call
this book the science of spending money because I don't
think that exists. Science implies that there is like a
one size fits all rule for you and I, and
that's not the case. I call it the art of
spending money. Because art is subjective, it is often contradictory,
it is different from person to person, and that's really
(01:34):
what spending is. The reason why I wanted to tackle
this is because you just alluded to this. There is
so much commentary, so much ink has been spilled. It's
so much good ink has been spilled on how to invest,
how to grow your career, how to earn more money,
very little on spending money. And I think the reason
why is because it is assumed that everybody knows how
to do it, which is just spend more and you'll
(01:56):
be happier, you'll be better off, and doesn't really matter
what you spend it on. You hear a little bit
of nuance of spend on experience versus things. But to me,
there is so much more in the psychology of spending.
When you dug into the deep mechanics of envy and
jealousy and getting attention and copying other people, there are
so many good stories to dig in there that might seem,
(02:20):
you know, not exactly, not really deep. This is not astrophysics,
it's just basic psychology, but it tends to be ignored,
particularly in finance, where all the attention is how do
you just get more money, and you kind of leave
it to assumption of what you're going to do with
the money after you get it.
Speaker 2 (02:34):
So let's talk a little bit about the science behind
some of the things you're discussing there. There's been a
lot of academic research does money make you happy or happier?
At what point does the rule of diminishing returns kick in?
What does the science of spending look like before we
(02:56):
get to the art of spending.
Speaker 3 (02:58):
One of the things I think is really interesting is
that what a lot of the research shows is that
if you are already a happy person, money can make
you happier. But if you are a depressed person or
a miserable person, whatever it might be, that it will not.
And it's easy to just kind of contextualize this into
a real person's life of if you are in a
bad marriage and you hate your career, and you have
(03:18):
a two hour commute, and just go on down the list,
you're an alcoholic, you're obese. If you take that person
and you give them more money, will they be happier?
And the answer is no, of course not, because all
of those other aspects of their life are going to
override whatever money can do.
Speaker 2 (03:31):
For them.
Speaker 3 (03:32):
But if you also take somebody who's in a great marriage,
loves their career, they're happy, they're healthy, they sleep eight hours,
they have a good set of friends, and you give
that person more money, there's a good chance that they're
going to use that money to just leverage what they're
already doing, to spend more time with the friends who
they already love, to spend more time getting healthier and
eating good food. And so money can really just just
(03:53):
leverage the person who you already are and the lifestyle
that you're already living. But I think a lot of
people go straight with that when they are unhappy and
they think, if only I had more money, all my
problems would go away.
Speaker 2 (04:06):
And one of the interesting things in the academic literature
that I recall seeing a few years ago was when
they draw these charts of money potentially making people happier.
Divorce is a giant red flag people in all of
the divorce or people who have recently been divorced, that
that's a really challenging road to holl isn't it.
Speaker 3 (04:28):
I think what it comes down to is that having
more money is so quantifiable that it we use it
as a crutch for all of our problems. For example,
if I said I would have a better life if
I was a ten percent better dad, what does that
even mean? What does a ten percent better dad mean?
There's no way to quantify it. But if I said
I would have a better life if my salary went
(04:49):
up by ten percent, you can easily quantify that, wrap
your head around it. So we chase that, and we
assume that that's going to be the solution to all
of our ills. Even if becoming a better dad might
make me a happier, better person. But since it's impossible
to quantify, I just ignore it and pretended that it
doesn't exist.
Speaker 2 (05:05):
You alluded to impressing others. How should people avoid spending
money for status and symbolism as opposed to bringing themselves
satisfaction and happiness.
Speaker 3 (05:19):
I'm the first to say I love nice things. I
like a nice house, I like a nice car, I
like nice clothes, I like nice vacations, I travel well,
et cetera, et cetera. I'm not saying live like a
monk by any means. But what is true is that
a lot of spending is for social signaling. You just
want to show other people who you are and how
successful you are to me. The next layer below that is, well,
who are you trying to impress and are they even
(05:40):
paying any attention to you? And this is different for
every person, but for me, the people in my life
who I want to love me are my wife, my kids,
my parents, and maybe two or three friends. And I
really want their love and affection and admiration, and I
want to do things, including with my money, to help
them and to give them a better life so that
(06:00):
they will love me back. That's the truth. But after
that small set of you know, seven people or whatever,
it falls very quickly from there. And then there's another
layer below that of like work associates who I love
having a good time with and having a nice dinner with.
But then it really collapses from there, and I could
not care less what ninety nine point nine percent of
the world thinks of my house or my car or
(06:22):
my clothes, because they're not paying any attention. It is
so easy to overestimate how much other people are looking
at your stuff, your house, your cars. They're not paying
any attention. They're busy worrying about themselves and thinking about themselves.
And so when you frame it like that, it's not
to say don't use your money to gain attention. It's
use it to gain attention from the very small core
(06:43):
group of people who you want to love you. There's
a great quote from Warren Buffett where he says, the
definition of success in life is when the people who
you want to love you do love you. And I
think you can twist that into thinking how you spend
your money as well.
Speaker 2 (06:57):
So in the modern era of social media and TikTok
and Instagram, there's a lot of influenzer flexing and they're
trying to show off their lifestyle. I recall being on
vacation at a place in Puerto Rico and two lounges
over was this woman who, instead of just lying there
(07:18):
and enjoying the beautiful son and surf, read a book whatever,
she was just constantly taking selfie's doing. And so I
finally had to say, hey, what are you doing? So? Oh,
I'm an Instagram influencer, and so you're not just gonna
kick back and enjoy this, so, oh no, this is work.
You and I had a conversation a couple of years
(07:38):
ago that's so related to this. Let's see if you
recall this, you know, the person driving down the street
in the loud Lamborghini, or the person around the corner
from you with the giant house. You're only seeing one
half of the balance sheet. You're only seeing their assets.
We talked about, well, did they pay cash for that
or did they go deep into hawk in order to
(08:00):
buy a house or a car to show off for
the neighbors. Talk about that a little bit.
Speaker 3 (08:04):
Yeah, wealth is what you don't see. Wealth is the
cars that you didn't purchase and the giant house that
you didn't buy. That's what wealth is. It is money
that you didn't spend that you can now say for
either for future consumption or for independence today. That's what
wealth is. And so I can see your car, I
can see your house, I can see your watch in
your clothes. I cannot see your bank account or your
(08:24):
brokerage statement. So the most important part of wealth, literally,
in my view, the definition of wealth is invisible to everybody.
And that is so unique in life because if you
take like physical fitness, you can see somebody's physique. It's
right there, and so you know kind of who to
admire and who to chase. Oh, that person's in great shape.
I should ask them what they do, I should ask
(08:46):
them their diet and try to mimic what they do.
But if you see somebody with a mansion or a
or a Ferrari or whatever it is, you don't know
that they got that by success. That may be the
picture of a leverage and it's possible that they haven't
slept into because they're wondering how they're going to make
their next Ferrari lease payment. And so we have kind
of like a fake view of who we're chasing and
(09:06):
what we should do because wealth that we're chasing is invisible.
Speaker 2 (09:11):
So this comes back to the concept of spending as
an art and in one of the sections of the book,
you talk about self awareness over spreadsheets. How self aware
do we need to be in order to be more
artful spenders towards happiness and life satisfaction.
Speaker 3 (09:33):
I think every big, big financial decision, spending decision, is
two parts head and heart. It is yes, like if
you're buying a house, of course, it's not just a spreadsheet.
I tell the story that when my wife and I
bought our first house nine years ago, we found the
listing on Zilo and we're like, Oh, that looks great,
let's go check it out. But this is just information gathering.
(09:53):
This is just we're just going to go look at it.
But we're not making any decisions here. And we pulled
into the driveway and as soon as we pulled in
the drive my wife gasped and she said, I love it.
And at that point, forget the spreadsheets, forget the like,
the like, the valuation comps. That is all hard at
that point. But here's the thing. We don't regret that
in the slightest it was. It was a great house.
(10:14):
And we had Christmas mornings with our kids. Both of
our kids were you know, we're born not in that house,
but we brought them home as newborns in that house.
So many amazing memories that you could not track on
a spreadsheet.
Speaker 2 (10:25):
I'm laughing because the very first house my wife and
I bought, I don't know, twenty nine years ago, we
pulled into the driveway. I looked at her face and
I just said, uh oh, And that was the first
house we bought, the house I'm in for the past
almost fifteen years. We pulled up the driveway and same
(10:47):
as your wife, She's like wow, and I'm like, uh oh,
here we go again.
Speaker 3 (10:52):
Real estate's an interesting one too, because does buying a big,
fancy house make you happier? If you phrase it like that,
the answer is no. Spending more time with your spouse,
your kids, your friends, your neighbors does that make you happier? Absolutely?
And can a big house make it easier to have
your friends over like yes, So there's an indirect path
to which, yes, spending money on a great house can
(11:13):
make you happier, but it's not because of the house.
It's because it makes it easier to spend time with
people that you admire and love.
Speaker 2 (11:19):
So let's bring this back to a theme that I
have seen in all of your writings, all of your books.
I've known you for how many years? Of fifteen years?
Just about sounds right. Going back to Vancouver peace of
mind as the ultimate spending return tell us about that.
Speaker 3 (11:38):
I think it's different for every person there are. There
are certainly people out there that would go crazy if
they were not stressed out and if they were not
pushing themselves to the max every day. But the vast
majority of people, including myself, what I want out of
money is a simple life. Now, simple doesn't mean cheap
or frugal. Simple can be extravagant. But it's simple in
(11:59):
the sense that you are using money as a tool.
It's not using you. It's not conducting your behavior or
your activities. I want to use money as a tool
in my life to be to leverage who I want
to be and for me then I think you and
many other people. That is like like doing the best
work that I can, but having full control over my schedule,
(12:20):
doing a lot of reading, working when I want, with
whom I want for as long as I want, being
in control over my time. That's what I want out
of money, using it as a tool rather than it
using me. To say, Morgan, this is how you should
spend your money. You should get these people's attention. That
guy's car is faster than your years, so you need
to upgrade. That is when money is using you rather
than you're using it.
Speaker 2 (12:40):
Perfect way to sum this up and to end, Morgan
Housel's new book, The Art of Spending Money, Simple Choices
for Richer Life, arrives in October. To wrap up, spending
money can bring you happiness if you go about it
the right way, if you're not just flexing and showing off,
if you're spending time with friends and family and loved ones.
(13:04):
If you're using money as a tool to achieve certain aims, well,
then have at it. Go out and spend money, just
don't post everything you do on Instagram. I'm Barry Ridolts.
You're listening to Boombergs at the Money
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Amy Robach & T.J. Holmes present: Aubrey O’Day, Covering the Diddy Trial
Introducing… Aubrey O’Day Diddy’s former protege, television personality, platinum selling music artist, Danity Kane alum Aubrey O’Day joins veteran journalists Amy Robach and TJ Holmes to provide a unique perspective on the trial that has captivated the attention of the nation. Join them throughout the trial as they discuss, debate, and dissect every detail, every aspect of the proceedings. Aubrey will offer her opinions and expertise, as only she is qualified to do given her first-hand knowledge. From her days on Making the Band, as she emerged as the breakout star, the truth of the situation would be the opposite of the glitz and glamour. Listen throughout every minute of the trial, for this exclusive coverage. Amy Robach and TJ Holmes present Aubrey O’Day, Covering the Diddy Trial, an iHeartRadio podcast.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.