Spend Your Money

On your passions, on experiences, on others, to save time, on things you use everyday, on small things that bring you joy

Most of the time, money is a good thing. Money allows those that have it to live longer and healthier lives, to buffer themselves against worry and harm, and enjoy more leisure time to spend with friends and family. Most importantly it gives them control over their time, what Morgan Housel describes as “money’s greatest intrinsic value.”

Yet, beyond a certain point, money doesn’t seem to make us happier. It certainly won’t solve all your problems. (Although, as Naval Ravikant quipped, money will solve your money problems). Money is a tool that gives you options—some good, some bad. But just because money can’t buy happiness doesn’t mean you shouldn’t enjoy spending it.

Surprisingly, I’ve read about a few entrepreneurs whose attitude to risk seems to flip once they have a liquidity event. Once they “make it,” they become risk-averse and develop a scarcity mindset, becoming irrationally conservative and struggle to spend their money.

In my opinion, this unwillingness to spend seems a bit crazy. What’s money for if it’s not for spending? But spending it on what? Spending it how?

Here are a few ideas¹:

• Spend money on your passions. In the wise words of Kevin Kelly, “Be frugal in all things except in your passions. Select a few interests that you gleefully splurge on.” I like that. I “gleefully splurge” on overseas travel, I have a fairly high-end mountain bike, and I recently upgraded my brewing equipment.

• Spend money on experiences. Many studies have shown that spending money on experiences makes us happier than spending money on things. We anticipate and remember experiences more than things. Experiences are more likely to be shared alongside other people. Experiences give us something to talk about and stories to tell, which can help us connect with others and reinforce our own identities. For me, my experiential spending is on things like travel, concerts, and entry fees for events.

  

  A French cooking class in Paris? Oui oui! An unforgettable experience

• Spend money on others. I’ve already mentioned donating to charity, but there’s another way to spend money—buying gifts for others. Research shows that spending as little as $5 on someone else—what’s called “prosocial spending”—boosts your happiness more than spending that same amount on yourself. So treat a friend, your partner, or a family member - it’ll be money well spent for them, and you. Flowers are always a good option, whether it’s for a friend finalising her divorce or a goddaughter who’s just been named dux, or sending Uber Eats to a family with a new baby, or even a bottle of wine via an online grocery order to someone’s who’s had a promotion.

• Spend money to save time. As Groucho Marx said, “Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.” So use money to buy back time—whether it’s hiring someone for household chores you hate, investing in tools that make jobs easier, going to the local, slightly more expensive supermarket because it’s more convenient, getting Hello Fresh to save brain cycles on deciding what to cook, or working less because you can afford to. Time is the currency of life, after all. (Which is also why I pay for a YouTube subscription despite the outrageous cost—it spares me from those life-sucking ads.)

"People who spend money on time-saving purchases experience greater life satisfaction, regardless of their income...If you pay to get out of doing tasks you don’t enjoy, you are simultaneously reducing the number of negative life experiences and increasing the number of positive life experiences (for which you now have more time). How can that not make you happier with your life?” - Die With Zero

• Spend money on things you use everyday. It makes sense to invest in things you use every day—your phone, chair, bed—especially if you look at it from a per-use cost. I upgrade my iPhone every two years because I use it for hours every day and that frequency seems to be the sweet spot where I get a decent step-up from my current model. The same logic applies to your home: since you spend so much time there, it’s worth investing to make it a space you enjoy spending time in. Just beware that you’ll adapt quickly: The new artwork will go unnoticed after a short while, the new speakers that sounded amazing at first now just sound…normal.

• Spend money on small things that bring you joy. As I’ve already mentioned, when it comes to happiness, frequency beats intensity. So rather than spending money big-ticket items such as fancy cars or TVs, it may be better to indulge in a variety of frequent, small pleasures—$35 for the best craft beer in the world, books, Uni-Ball UB-157 Gel Pens, an Xbox Game Pass.

Once you’ve spent money—on your passions, on experiences, on others, to save time, on things you use everyday, on small things that bring you joy—then I reckon you should aim to live simply. Not necessarily frugally, but simply.

For example, I own a great home in a friendly seaside neighbourhood, but it’s a modest 3-bedroom without a garage. In the words of JL Collins, I have the least house to meet my needs rather than the most house I can afford. I think a bigger home would create a bigger emotional and time burden.

Similarly, I don’t spend on things that I don’t value. I don’t have a fancy car, own a boat or a holiday home, or buy expensive watches. I don’t have an e-bike (well, not yet), fly business class, travel to watch the State of Origin, and I don’t spend $3,000 a night to stay at New Zealand’s most exclusive lodges. Maybe it’s silly, but I don’t even have an airline lounge membership. (Partly because every time we’ve visited the Koru Lounge my kids act like it’s the first time they’ve ever seen a buffet: “This? All of this? For me? For free?! Then I shall eat it all!”)

To be clear, I’m not judging anyone choosing to spend money on these things—the people I know who chose to spend money on these things are oftentimes “gleefully splurging”—they’ve loved rugby league since they were a kid, or wristwatches are a hobby, or their once-a-year weekend at a fancy lodge is an annual touchstone for their marriage. They probably can’t understand why I have more than one mountain bike.

So, what about you? What do you spend your money on?

P.S. I’m going to do an Ask Me Anything next Thursday. Do you have any burning, unanswered questions about anything that you’ve read in any of my posts? Let me know by replying to this email.

1. Just to be clear, I know I’m writing from a place of privilege, and I’m keenly aware of how lucky I am. Talking about spending money feels a bit self-indulgent given all the wealth inequality in the world, but if I’m going to be honest about this whole early retirement thing, it wouldn’t feel right to leave it out.