As your family adviser, we spend much of our time discussing how to invest your money. However just as, or maybe even more important, is helping you determine how you ultimately want to use your wealth to achieve life fulfillment.
We help you connect your wealth and purpose. This can provide clarity and help make day-to-day spending decisions easier if you know how they align with your goals and values.
Recently, New York Times Bestselling author of the book “The Psychology of Money,” Morgan Housel, dove into the art of spending, how it differs for everyone, and what it might reveal about your motivations in life. Spending decisions can be difficult, so we thought we would share a few of Morgan’s thoughts on spending money.
There are two ways to use money.
One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others. Many people aspire for the former but get caught up chasing the latter.
Money is a tool you can use.
But if you’re not careful, it will use you. Sometimes the stuff you spend money on has so much influence over your autonomy and sanity that it’s not clear whether you own things or the things own you.
Everyone can spend money in a way that will make them happier, but there is no universal formula on how to do it.
The nice stuff that makes me happy might seem crazy to you, and vice versa. Like many things in finance, debates over what kind of lifestyle you should live are often just people with different personalities talking over each other.
Spending money can buy happiness, but it’s often an indirect path.
The big, nice house might make you happier, but mostly because it makes it easier to spend time with friends and family, and the friends and family are actually what are making you happy.
Unspent money buys something intangible but valuable
Freedom, independence, autonomy, and control over your time. Every dollar of savings buys a claim check on the future.
Some wealthy people struggle to spend money on things that would make them happy
This is because “I’m a saver” becomes such an ingrained part of their identity. What you intended to be a strategy to achieve a better life turns into an ideology you are beholden to.
Nothing is as desired as much as the thing you want but can’t have.
Material goods that play hard to get mess with our heads the same way people do. When something you like is just out of reach – you can almost afford it, but not quite yet – it takes on a mystique and exaggerates the dreams you have about how much that thing will make you happy and solve your problems.
The more money you have, the harder it becomes to know how to spend it in a way that will make you happy.
And that confusion sets in at fairly low levels of income. Luke Burgis writes: “After meeting our basic needs as creatures, we enter into the human universe of desire. And knowing what to want is much harder than knowing what to need.”
There is certainly an art to spending, but more importantly, there is also an art to ensure your spending helps you create a more fulfilling life. At TFO, we are always thinking of new ways to help you live the life you want. We are in the process of developing a new tool that will help you and your family create goals toward living a more fulfilling life. Stay tuned as we provide more information on this new exercise in the coming months.
Whatever your dreams and goals are, we stand ready to help you use your wealth to make them a reality. As always, if you have any questions relating to this topic, please reach out to your TFO Wealth Partners adviser.
