When financial writers discuss money, the focus is usually on acquisition — how to maximize your portfolio.  I’ve contributed my fair share to the pile of advice, which can be distilled into the 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 the harder, subtler task is actually 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.

The Reverse Obituary: Defining a Life Well-Lived

So, 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- 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 highlights when centenarians look back on their lives, almost none wish 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 you want to be remembered for—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.

Get Off the “Positional Treadmill”

Theodore Roosevelt said, “comparison is the thief of joy.”  Indeed, the central battle Housel identifies is the distinction between two ways to use money: as a tool to live a better life or 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 moves 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.

Being Rich is Different Than Being Wealthy

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 money can hijack your identity, if you’re not careful.  “Money is a tool you can use. 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.

Key Takeaway

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 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.

Exhibit A: George Bailey

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.

The opinions expressed in these articles are those of the author as of the date the article was published. These opinions have not been updated or supplemented and may not reflect the author’s views today. The information provided in these articles are not intended to be a forecast of future events, a guarantee of future results and do not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular stock or other investment.