The Art of Spending Money is classic Morgan Housel - a bit repetitive (both within the book and across his other books), focused on the actually important stuff in personal finance, rarely discussed in classic personal finance books, and absolutely crucial for people to read. Below, some reflections I had as I read through it.
As I’ve discovered over the course of the previous few months, a nice sound system, solid driver assist, and a fast 0-60 are all nice features in cars, but there’s also something to be said for the ability to drive worry-free (I often say “to use the car as a tool”), without sweating running over a pothole, or going into a driveway at the wrong angle. A car that’s not attention-seeking also has advantages - namely, being able to park my car anywhere without worrying if it’s attracting the wrong kind of attention. That peace-of-mind is often inversely correlated to the amount spent on a car. This is related to the utility vs. status conversation in the book; I love a car with high utility; peace-of-mind is utility not found on a spec sheet. I don’t want the car to own me; the same applies to other physical assets too (I feel very similarly about watches). Below, a quote I found that captured this quite well:
“...Maybe you didn’t mind when your old car was dirty or dinged—but now that you bought a nicer car, you can’t stand it when it gets muddy, and you lose your mind when someone scratches it in the parking lot. That angst is a social debt, and some people who own nice things are nearly bankrupt with it.”
…and yet, though there’s more to be said about the hedonic treadmill and rising expectations from buying a nice car, my problem is that I’m prone to rationalizing spending less money, that I’m perhaps too worried about lifestyle creep. Below, two quotes on what to avoid:
“Have such a fierce saving ideology that you’re never able to treat yourself to a good life you can afford. Act like money’s only purpose is to accumulate in your bank account, where instead of a tool to live a better life you’ve essentially formed an accounting hobby.”
“I think what many people really want from money is the ability to stop thinking about money. To save enough money that they can stop thinking about it and focus on other stuff... Once you get ingrained with one smart behavior—a good saving regimen, or a way of spending money that you enjoy, or even an investing strategy—you run the risk of becoming blind to when it might be reasonable to do something different, and you’ve set yourself up for eventual trouble.”
I often think about what “the number” is where I achieve total financial independence. Housel’s chapter that covers the different levels of financial independence (“Wealth Without Independence Is a Unique Form of Poverty”) points out that there are, in fact, several numbers depending on your lifestyle and desired level of independence; the two I focused on the most were Level 12 (“Your investments and their reasonable return expectations will cover basic living expenses for longer than your life expectancy.”) and Level 13 (“Your assets and their reasonable return expectations cover above-basic living expenses. You can live the lifestyle you prefer and have something left over for family or charity.”). The number I previously had in my mind (~$5M for a family of four for Level 13) certainly overestimates what’s needed to cover the basics at Level 12, and touching on Ramit Sethi’s concept of Money Dials, my spending on travel, food, or whatever hobbies I have in the future will determine what Level 13 really looks like. Relatedly, I sometimes wonder what I’d do were I to hit the Level 13 number, and so long as I continue to mostly enjoy my work and so long as it doesn’t prevent me from doing other things that I’d enjoy more, I think I wouldn’t change much. I’m somewhat reminded of the “build the life you want, then save for it” idea from FIRE circles, but also of my dad, who primarily works to keep himself busy (which he enjoys, despite the occasional complaint).