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When financial writers discuss money, the focus is usually on acquisition—i.e., how to maximize your portfolio. I’ve contributed my fair share to the pile of advice, which can be distilled into this mantra: Stay calm, stay in and stay the course. As Warren Buffett said, “Investing is simple, but not easy.”
However, far fewer words have been devoted to the best way to spend your portfolio. Morgan Housel’s new book, “The Art of Spending Money: Simple Choices for a Richer Life,” reminds us that the harder task is deciding how we use money. The way we spend reveals more about who we are—and whether we’ve built a life worth living—than any return on investment.
How do we figure out what truly adds value to our lives versus what just feeds the status beast? Housel offers a brilliant psychological tool I believe every IBJ reader should adopt: the reverse obituary.
Housel elevates the “reverse obituary” from clever exercise to measuring stick for financial decisions. Write the obituary you’d want others to read about you and then shape your spending and daily actions to fit it. Housel’s own template skips bank balances and asset tallies, emphasizing instead his hope to be remembered as a devoted husband, father and friend who contributed to his community and helped others.
The book notes that when centenarians look back on their lives, almost none wishes they had made more money. Their regrets universally center on spending more time with family, being kinder to friends and taking better care of their health. The reverse obituary flips the script on how we measure success. Instead of writing about a life that has just ended, you write a vision of the life for which you want to be remembered. It’s the eulogy you hope to earn.
By anchoring your spending choices today to the values you hope define your legacy, you minimize future regret and align your financial decisions with your personal purpose. If the purchase you’re considering doesn’t fit the values in your reverse obituary, perhaps you shouldn’t buy it.
Just like the time-honored saying that comparison is the thief of joy, the central battle Housel identifies is the distinction between two ways to use money: 1) as a tool to live a better life, or 2) as a “yardstick of status” to measure yourself against others.
Most of us, he contends, aspire to the former but spend our lives chasing the latter. This echoes the concept of the “positional treadmill”—the relentless chase for status goods that constantly move the finish line, leaving us exhausted and no happier than when we started. We buy things we don’t need, often with money we don’t truly have, to impress people who, as Housel dryly notes, are too busy worrying about their own status to truly notice ours.
In his earlier book, “The Psychology of Money,” Housel made the important distinction between being “rich” (visible to the outside world) and “wealthy” (hidden). Housel suggests that the goal isn’t to be rich—it’s to be free. True wealth is the freedom to spend time as you wish, choose work you enjoy and give without fear.
The irony is that many people surrender freedom by chasing status. Housel warns that money can hijack your identity if you’re not careful. “Money is a tool you can use,” he says. “But if you’re not careful, it will use you—without mercy and often without you even knowing it.” That’s why enduring happiness is found in contentment. The happiest people are those who’ve found a way to stop thinking about money.
Housel cautions against judging how other people spend their money. He doesn’t say, “Don’t spend.” He says, “Spend wisely.” Let money be a tool to allocate your finite time and attention. Your spending should reflect your values. Flip your frame—from, “How much can I make?” to, “How well can I live?”—and you can begin spending with intention, guided by your own compass.
Ultimately, “The Art of Spending Money” is not just a financial guide. It’s a philosophy of life. It challenges us to rethink our assumptions, resist the lure of comparison and embrace the quiet power of intentional living.
The Greek philosopher Epictetus said, “Wealth consists not in having great possessions, but in having few wants.” We’re approaching the season when America celebrates conspicuous consumption, so I’m reminded of the final scene of “It’s a Wonderful Life.” Surrounded by townspeople he helped, George Bailey finally realizes that the truest riches aren’t found in his bank ledger. When his brother Harry toasts, “To my big brother, George—the richest man in town,” it isn’t irony. It’s truth.
Money is a tool, not a trophy. The art of spending isn’t about getting more; it’s about needing less. If you can master that, your reverse obituary will write itself, and it will read much like George Bailey’s: loved by many, grateful for much and truly the richest person in town.•
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Kim is Kirr Marbach & Co.’s chief operating officer and chief compliance officer. He can be reached at 812-376-9444 or [email protected].
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