The Art of Spending Money
Spending money is something we do almost every day, often without giving it much thought. But what if there’s more to spending well than simply knowing what you can afford?
In a recent episode of our START WELL® podcast, host Dawn Thomas sat down with guest host Cara Graham to discuss The Art of Spending Money by Morgan Housel.
This highly anticipated follow-up to The Psychology of Money, a book previously discussed in Season One, focuses on how we use wealth and the psychology behind our spending.
It explores identity, envy, happiness, status, independence, insecurity, and contentment – while challenging us to think differently about why we spend, what our spending says about us, and how our financial decisions influence not only our own lives but the children watching us.
Two ways to use money
According to Housel, there are two ways to use money: as a tool to live a better life, or as a yardstick of status to measure yourself against others.
Cara found herself feeling almost defensive while reading the book.
“It makes you reassess why you’ve done things. For example, it’s not just about having the nice big house – you make that purchase to have friends and family over and make memories,” she says. “The underlying message is self-reflection – to look yourself in the eye and ask, ‘What’s driving this?’”
Dawn agreed that, as you’re reading it, you find yourself thinking about your own life – and it can be quite confronting.
Talking to kids about money
Many of the topics in the book can spark natural conversations about money with the young people in your life.
When it comes to money, we can’t do everything – we have to make choices and prioritise. It’s helpful for kids to see their parents making these decisions, and to start thinking about their own choices from a young age.
For example, when it comes to wanting their first car, they could consider: am I choosing this because there’s social pressure, or because I really want it?
It almost introduces a traffic light system where they think about why they want it before they buy, which will stand them in good stead for adult life, Cara explains.
Children are always watching
A particularly powerful chapter of the book focuses on the financial lessons kids absorb in the home.
The key reminders are that children are always watching us; they learn financial behaviour through observation; and the values parents display around money shape future habits.
It encourages the reader to consider the question: how do you want your children to remember you?
A much-needed reminder
Cara loves these types of mindset books, and believes we should reread them every so often to remind ourselves why we do things. “Inherently our brains are lazy and will take the path of least resistance, so we do need that regular reminder,” she says.
Listen to the full episode here.