There are plenty of things we easily call an art: the art of cooking, the art of writing, the art of mastering a sport.
I’ll admit, I never thought of spending as an art — until I sat down with Morgan Housel, the New York Times bestselling author of The Psychology of Money and Same As Ever. He joined me from his home in Seattle, days before the release of his latest work, The Art of Spending Money.
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Our conversation began with a question printed on the very first page of his book: “What have you experienced that I haven’t that makes you believe what you do? And would I believe the same if I experienced what you have?”
It’s a simple question, but in Housel’s hands it becomes a lens on nearly everything we think we know about life — especially about money. It’s also deeply personal. Housel is careful not to hand out prescriptions; he’s not interested in telling readers how to spend. Instead, he pushes them to turn inward, to interrogate what a “good life” really looks like for them.
“If nobody could see how I lived, other than my wife and my kids and immediate family, how would I choose to live?” Housel explained in our interview. “What kind of house would I want to live in? What kind of car would I want to drive? How would I dress if no one was watching?”
In his mind, the way we spend may be the most telling expression of our lives.
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The rich versus the wealthy
Housel draws a line between being rich and being wealthy. Being rich, he says, is having the money to buy what you want. Being wealthy is having the freedom to decide what you want in the first place.
When Cornelius Vanderbilt died, his heirs inherited what would equal roughly $300 billion today. At the time, The New York Daily Tribune warned that the family’s riches would bring “no happiness and no greatness” — a prophecy that proved true.
“The money told them who they could be, what they should value, how they should dress, where they should live, who they could marry,” Housel told Moneywise. “The money controlled every single aspect of their life and most of them were miserable for it.”
That’s where the danger reveals itself. For the Vanderbilts, money stopped being a tool and instead became the architect of their identity. And they weren’t alone. Research from AMG National Trust shows that nearly 70% of wealthy families see their fortunes vanish by the second generation. By the third, that figure grows to 90% (1).
Fast forward to today, and we’re entering what economists call the Great Wealth Transfer — the largest handover of private capital in history. Baby boomers are projected to pass down $84 trillion to Gen X, millennial and Gen Z heirs by 2045, according to Cerulli Associates.
Housel’s ideas feel especially timely now. The pursuit of wealth, he reminds us, isn’t about chasing that quick dopamine rush — the fleeting “five-minute emotion” we often mistake for happiness. It’s about building a life where contentment isn’t contingent on what sits in your portfolio.
To illustrate, Housel recalls his grandmother-in-law, who spent three decades of retirement living solely on $1,700 a month in Social Security. She had no private pension, no expansive estate, no hidden nest egg. What she did have was psychological wealth: the joy of bird-watching and the ritual of daily walks.
“I’ve met, I think in my life, a half dozen or so billionaires,” Housel told me. “She’s happier than every single one of them. She had no financial wealth. She had an unbelievable amount of psychological wealth because she was content.”
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The five-minute high vs. a lifetime of contentment
When you pit psychological wealth against financial wealth in a world built on feeds and FOMO, things get messy fast. Somewhere between the remodelled kitchens, the job promotions and the perfectly timed “soft launch” retirements, money stopped being private and started being performative. Social media didn’t just change how we spend — it changed how we compare.
As part of Gen Z, I wanted to ask Housel about the economy we’ve built on pretending — this constant “fake it till you make it” performance that plays out in squares and stories. It’s dangerously easy to scroll and feel like you’re behind. The cars, the trips, the dinners that look like stills from a film. And even when it’s you doing something worth sharing, there’s still that whisper: Post it. Prove it happened.
Housel didn’t bother sugarcoating it.
“Social media is a lie and you know it,” he said. “Everybody knows it.”
Before you start chasing what everyone else seems to want, you have to decide what game you’re actually playing. Housel told me that life, at its core, is a competition for resources — time, money, attention — but that doesn’t mean your goals should look like anyone else’s.
Think about Bitcoin. When a friend doubles their money overnight, it’s hard not to feel the flicker of envy. But if their strategy is built on short-term trading — constant buys and sells, adrenaline-fueled risks — it bears no resemblance to a long-term plan that prioritizes stability, steady income and compounding returns. The game looks the same on the surface, but the rules and outcomes couldn’t be more different.
History already told us how this story ends. During the dot-com boom of the late 1990s, tech stocks exploded. Everyone wanted in on the promise of the internet. The Nasdaq jumped 86% in 1999 alone, peaking at just over 5,000 points the following spring. When AOL merged with Time Warner, it felt like a coronation: a “new economy” had arrived.
But bubbles have a way of popping the moment everyone starts to believe they can’t. Day traders sent prices soaring, and when gravity finally kicked in, it wasn’t gentle. Startups once hailed as revolutionary disappeared in months. The IPO market froze. By late 2002, the Nasdaq had fallen 77%.
For the day traders, maybe it worked — for a while. But for everyone else, it was a lesson in what happens when hype outruns patience.
That’s the thread Housel pulls on in The Art of Spending Money. Life — like investing — only starts to make sense when you stop trying to play someone else’s game. Near the end of the book, he writes about what actually makes him happy: hiking, reading, writing and going to bed with a quiet mind. His income has grown, sure. But his joys, he says, haven’t changed at all.
He still has no interest in chasing the markets or keeping up with the Joneses.
“Independence offers the highest ROI that money can buy,” he wrote.
It made me think about my own version of independence. If I had more money, what would really change? I’d still wake up craving that first sip of coffee, still laugh watching my dog sprint through the park, still end the day curled up with a book, calling it a good one. The things that make my life feel full don’t ask for much.
And perhaps that’s what Housel leaves you with: Money doesn’t rewrite your story. It just gives you a bit more freedom to live it on your own terms. It’s not about earning enough to keep up with the neighbors or buying the life you think you should have. It’s about recognizing that contentment often comes from what’s already there.
Maybe that’s the true art of spending money, not in how much you have, but in how deeply you notice what it gives back.
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Article sources
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AMG National Trust (1); Cerulli (2); Goldman Sachs (3).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.