I’ve recently finished reading a book called ‘The art of spending money,’ by Morgan Housel. It’s quite a good read, so I thought I would share some of Morgan’s conclusions, since workers in the cement industry commonly complain that, although they may have a reasonable wage packet, they do not have a great work/life balance. Working out how to spend your money wisely might go some way to balancing the scales. It’s important to say that it hardly matters whether you have a lot of money to spend, or just a little: The lessons are the same.

The book is subtitled ‘Simpler choices for a richer life.’ The author points out that spending money usually has less to do with spreadsheets and numbers, and is more often based on psychology, sociology, envy, social aspirations and identity - in other words, feelings. Housel’s previous book was called ‘The psychology of money,’ so it seems he knows what he’s talking about. He says in this book, time and again, that spending money on fancy things - cars, houses, clothes, watches, jewellery - to try to bring you admiration, or even jealousy from your peers, is a never-ending, pointless road to nowhere. In fact, one of his chapters is entitled (in the idiosyncratic American capitalisation style) ‘The Most Valuable Financial Asset Is Not Needing To Impress Anyone.’ Your friends and family - the people that you really care about - love you for who you are, not what you own. Trying to impress people who you don’t care about, and who you may not even know? Pointless. As Housel says, ‘When you don’t feel the need to impress other people, your desires fall. When your desires fall, your satisfaction with what you already have grows. It’s really that simple.”

I’ve said it myself many times over the years: Dialling down your expectations in life will inevitably lead to greater overall life satisfaction. Being happy with what you have is practically a superpower.

At the end of the recent IEEE-IAS/ACA cement conference in Fort Lauderdale, I took a boat tour of the canals of what is apparently called ‘The Venice of the USA.’ As well as finding my 200th bird species for the year (Least Tern), I was amused to see the huge houses of the millionaires and billionaires, and some of their colossal yachts (costing up to US$150m). As we cruised along, ogling the properties and yachts, I continually asked my family, “But are they happy?” A case in point is a millionaire I knew who had a lovely 33-foot Sigma racing yacht, that he really raced hard. We were competitive, and did well in many races. He loved that boat. Then he made a load more money when his company was sold. He was persuaded to buy a much bigger boat - an Oyster - that was hellishly heavy and slow, and he perpetually came last. He was not a happy man. In his case, the boat size was inversely proportional to the joy he derived from it. Less can be more.

Sometimes. Housel suggests that living a simple life with occasional luxuries - a life of contrasts - can be very satisfying. Furthermore, he points out that the value of anything is its ability to help you live the life that you want to live, nothing more. The designer labels? Just designed to impress other people: Ditch them. Go for utility - can it do the job it’s designed to do, even better than the fancy brand? “The pleasure that you get from utility can be more durable than the pleasure gained from status,” he says.

I’m not immune to the lure of the label: I spent serious money a few years ago to buy some famous-brand top-of-the-range binoculars, which seemingly charged a premium for the name and badge on the side. I’ve since had a chance to compare them at length against a less ‘impressive’ pair (Nikon Monarch M5 10x42 binoculars), and there is literally no way to tell them apart in terms of optical quality. I paid over the odds (ahem, 10 times the price) just for the badge.
Housel finally gives some advice to readers:

  • Minimise future regret;
  • Be happy while you are living, for you are a long time dead;
  • Creating memories for the future is a good investment today; 
  • Saving for the future creates independence today;
  • There is only one success - to be able to spend your own life in your own way;
  • Within the confines of your budget, experiment with as many types of spending (on different things and activities for example) as you can, cutting quickly and without mercy those things that aren’t working for you. You can’t know what you like until you try it, so try everything;
  • Spend less than you make;
  • Health is wealth (as is independence);
  • Aim to be a good ancestor;
  • The luckier you are, the nicer you should be; People that made different decisions to you are no less worthy than you are.

What about you? What’s your take on this?