How to spend it, and not spend it

Both the profligate and the parsimonious believe price is the arbiter of value; both are wrong

Appearances are defined by deception

Standard of living does not equal cost of living; quality of life does not equal access to comfort

Quantity is no substitute for quality

‘The happy man,’ wrote Seneca, ‘is not he whom the crowd deems happy, namely, he into whose coffers mighty sums have flowed, but he whose possessions are all in his soul.’[i] Even if you could both earn the megabucks and avoid the lifestyle creep to make the earn-high-and-screw-the-spending maths work for you, you run into other problems.

Where the aim is to live a Good Life, as soon as you earn enough that your life isn’t defined by poverty, the ‘earn your way out of trouble’ approach doesn’t dissolve troubles, it distracts you from them. This distraction deceives us into equating ‘standard of living’ with ‘cost of living’ and ‘quality of life’ with ‘access to comfort’.

Even ignoring that conspicuous consumption is a fundamental flaw, ‘more expensive’ is by definition to start from a negative (you are giving up more than you could before you receive something – hopefully more valuable – in return). This can be justified, of course, but our trades are not automatically wise: just as water cannot be ‘more boiled’, emotional needs cannot be ‘more met’.

As for comfort, we’ve seen how excessive external comfort prevents the cultivation of internal strength that real comfort is contingent upon.

We accumulate expensive stuff and tell ourselves this means we are valuable people. We search for ever-more-elaborate ways to avoid the discomfort that creates growth despite deep down wanting the growth more than the comfort. We signal success, but we feel failure. And in daily doubling down on the mistake – in never stopping to question it, despite underneath the deception each of us already possessing our answer – we wire ourselves into an inability to act in a better way.

There’s nothing wrong with upgrading the quality of your life, but there’s everything wrong with simply upgrading the cost of your life. Getting sucked into the trap of believing you need to earn in the top 0.0001% of people who’ve ever lived to have a chance of happiness, while overlooking that it didn’t work for anyone else that got there first, and nor did it work for you last time you did something similar on a smaller scale, is a terrible way to live.

This idea has always fascinated me: why do so many act as if happiness were off limits for as-near-as-makes-no-difference everyone that’s ever lived?[1] Life may be suffering, but it doesn’t have to be insufferable. As Cicero asked: ‘In what respects does poverty prevent people from being happy? All right, you like statues, or pictures. But if you should happen to have such tastes, people of modest means are actually better placed to indulge them than men of substance.’[ii] In what respect, we could also ask, do possessions provide happiness?[2] And in what respects does a status symbol actually signal status, as opposed to someone’s clamouring – so far unsuccessfully – for it? Desperation for status is simply the most socially acceptable way to brag about one’s insecurity.

The myopic misunderstanding of what constitutes quality of life is nothing new. For example, Adam Smith wrote the following in 1759: ‘What are the advantages which we propose by that great purpose of human life which we call bettering our condition? […] It is the vanity, not the ease, or the pleasure, which interests us.’[3] [iii] This is what happens when we divorce spending decisions from the thought they deserve; the thought they would get if it weren’t so much easier to live in the future than the present. What you do for your income is usually in service of the future. What you do with your income is about who you are right now.[4] It’s little surprise therefore that we’re all so cheered by the former and scared by the latter. Hope sings more sweetly than reality.

Social performance is no substitute for self-assurance

Recall the words of James Carse quoted earlier: ‘wealth is not so much possessed as it is performed.’ We talk of possessing wealth for personal ‘security’, but our actions suggest we use social security as a substitute, often sacrificing self-security in the process.[5]

Yet if that social security is dependent upon a continuing performance, it cannot be regarded as ‘secure’ in any meaningful sense. To display wealth diminishes its function as a safety net, yet the most common use of money is display. Many go so far as to dedicate their lives to displaying a level of wealth that they don’t possess. All the world’s a stage, and we’re performing a pretty silly play.[6]

The numbers path instructs that your resources should be wasted, replenished, rinsed, and repeated. The narrative path says that the Good Life is the side-effect of a participatory process of productive use of your resources, and that therefore it is refinement and alignment, not waste and repeat, that should guide you.

As H.L. Mencken quipped, ‘There is always an easy solution to every human problem – neat, plausible, and wrong.’[iv] Numbers-based solutions are still ‘solutions’, but to problems we shouldn’t worry about, based on strategies for games we shouldn’t be playing. Because of the ways we’re wired, and society is set-up, we’re tempted down neat, plausible paths that lead to playing the wrong games, and making mistakes with money that range from dumb to disastrous. And all for want of a little thinking. Shutting one’s eyes, or one’s mind, is easier than not, but comfort from ease is short-lived, and what looks like the easy answer is often a pricey part of the problem. Simple’s great; over-simplification isn’t.

Using our wealth to signal something about ourselves is inevitable; it can’t be all bad. Shooting up flares so we can be found by other members of our tribe when we’re lost in the social supermarket is part of being human. But powerful forces deceive us into signalling not wisdom, but its opposite.

We clutch at social performance as a substitute for something more meaningful, because we are too distracted and deceived to understand what it is we’re subbing it in for. As the School of Life put it:

We choose the wrong things because we don’t know ourselves well enough to select what will best work for us. […] Even apparently modest things like what we put in the trolley in the supermarket or what shoes we wear are distillations of large, nebulous notions: who we think we are, how we wish to live and what we think will contribute to our well-being.[v]

As contributors to our centre of narrative gravity, our expenditure speaks more honestly than our income. ‘You’ are a continuing series of expenditure-driven expressions, whether you want to be or not.[7] Everything you do with your limited resources is an ongoing, accumulating answer to the questions: ‘What do I want to do with my life?’, ‘What do I value?’, and ‘What sort of person do I want to become?’ When we deceive ourselves into thinking those questions are the same as ‘What do I have?’, those resources are wasted.

We are shopping for our ‘self’, but we rush straight to the salary-indicating side of the store, all but ignoring the character-cultivation one. Rare may be the person that directly states that a pay rise elevates their value as a human; yet rarer still is the person who doesn’t apply such judgment to other people. We may say generosity or health is important, but we buy tat and gout. Who we are is what we do, and what we do is incessantly and inescapably allocate our resources in the name of a narrative. We do not buy things, we buy stories.[8] And if we want our stories to be more Shakespeare and less primed for pulping, we need to give them some thought.

First, we need to avoid flinging our resources into the fire. And in a way that has nothing to do with frugality.

Beware the Micawber Fallacy

Advice on how to spend it or not spend it doesn’t work; returning your attention to how you are allocating your resources in service of your relationship with money does

Be wiser, not a miser

‘Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.’[vi] So said Mr Micawber in Charles Dickens’s David Copperfield. It’s so famous it’s even referred to as the Micawber Principle.

There’s a lot to like about the Principle. It connects money to living a Good Life in relative, rather than absolute terms. It highlights the importance of expenditure. It acknowledges that more expensive does not equal better. However, the point of principles is to construct them with contemplation so you can easily follow them without when it’s most important to do so. And to blindly follow the Micawber Principle is to increase self-deception, not dissolve it.

Living beyond your means isn’t living well. But nor, necessarily, is living within them. It could even be worse. When living within your means is the result of obsessing over the price of everything the result isn’t happiness, it’s an entrenchment of picking the numbers path over the narrative one, and the consequent reinforcement of deceptive patterns of beliefs about money. And if you obsess over anything, it compounds into a shitstorm in your brain.

Happiness is the result of becoming wiser, not becoming a miser. The Micawber Principle rightly divorces the Good Life from an absolute quantum of money; but it wrongly enforces the attachment of our expenditure to our income. Thinking about our expenditure in terms of its relationship to our income rather than the value each spending act brings to our life doesn’t work. The Micawber Fallacy is to believe your expenditure is more important than your income because of the Micawber Principle. It’s not. Because the principle still treats the money in your life as a number, and your expenditure is more important than your income because of its role in your narrative.

Healthy money

A heathy relationship with money can be confusing to conceptualise. It often helps to compare it to a healthy relationship with possibly the only thing that our lives revolve around as much – food.

The world has almost as many nutritional prophets and proselytisers as it does obese people. If dietary advice is working, it’s doing so awfully subtly. That the advice isn’t working isn’t because it’s too confusing or contradictory. The problem isn’t knowing which fad is best. The problem is that the unifying feature of all the advice that could work, and that’s probably responsible for 95% of any results, is the one bit of advice addicted minds don’t want to hear: cut the crap.

While not everyone will benefit from going vegan, or keto, or carnivorous, or herbivorous, or other-fad-that-worked-for-its-promoter-ivorous, everyone will benefit from cutting out sugar and pretty much every ‘food’ that comes in psychedelic plastic wrapping that makes it look like it’s dressed for a rave. Every body knows what it really wants: something nutritious, not something engineered to abuse our addictive tendencies.[9] Your cells ‘want’ hyperpalatable poison as much as your lungs want be to tarred. However, when the deceptive signals have become embedded in our brains, what the body really wants is as easily overruled as the part of a crack-addict’s brain that suggests selling one of its organs to a back-alley doctor for the next hit isn’t such a smart idea.

The same is true of advice on how to spend it, or not spend it. Any advice beyond not buying stuff that makes your life worse (perhaps starting with psychedelically clothed ‘food’) however well-meaning, is useless; a projection of prejudices, not practical wisdom.

How not to spend it

Advice on how not to spend it is most notably expressed via the cult of extreme frugality – the ingenious ‘life hacks’ of the internet’s thriftiest underground communities. This is often accompanied by sound principles for both saving and investing, and often opens up important opportunities for examination, e.g. proving you can live just as well on less money makes it much easier to quit a crappy job.

However, as long as the focus remains on the frugality, it’s tackling – often in a painful ‘sacrificing’ way – the symptom, rather than the cause. The only sustainable answer is to do something about the self-deceptive wiring that screwed everything up in the first place, and will continue to do so the second the sacrifices prove too painful. Frugality still focuses on the arbitrary number of a price tag as an indication of the role something plays in a life.

Living within one’s means is an almost certain side-effect of buying what you want, not what you’re addicted to. Penny-pinching is putting the proverbial plaster on a broken leg. And extravagance is the tip of the iceberg of poor life choices. The real danger comes from the unthinking, addictive roots of all financial decision-making, the results of which aren’t always as obviously seen as supercars, square-footage, and seven-course tasting menus.

No diet – in the sense that most people understand the concept, i.e. as a temporary prescription akin to a course of antibiotics – ever works. No diet based on denial can ever work. If you believe yourself to be a person with a sweet tooth, or who is hard-wired to like cake, crisps, and cola, no amount of denying yourself these things, however steadfastly you do it, will change these unhelpful – and unnecessarily true – stories that you are telling yourself about who you are and how you react to certain stimuli. If you continue believing that you are a person for whom the appeasement of such addictions is a reward, or a ‘treat’,[10] rather than the satisfaction of a fix in the same way a smoker needs nicotine or a junkie needs heroin, then you will always be short-changing your body’s desire for health.[11]

The same applies to cutting your expenditure. If it’s equated with denial, it won’t work. You can’t win a battle that never ends. Because even if you can keep up the fight, you’re still exhausting your valuable energy in an unnecessary cause, and that is no sort of victory. A trim-looking credit-card statement, like a trim-looking stomach, can be a sign of success, or of failure. It is, as always, not about the numbers.

A trendy diet can work as a short-term reset, because of what it cuts out rather than what it adds in, and because it forces people to be more observant of ingredients lists. Advice to cut spending back to its bare minimum can work in a similar short-term way, because if you’re wasting money, then cutting spending on everything makes it highly likely you’ll cut the waste. Cutting all the way back before building back up is a great way to achieve clarity around your priorities. Forcing yourself to re-choose what to keep is more effective than idly choosing what to discard because it forces you to question the truth of stories about your preferences that have gone unchallenged for years, maybe decades.

It could well lead to automating savings behaviours, for example ensuring that full use is being made of things like employer pension contributions, which will have benefits long after the crash diet has ended. Short-term fixes work when what they fix is your capacity for linking your short-term actions to your long-term vision.

Mindful short-term fixes can work because they force us to pay attention. We saw earlier that paying attention is not shining a spotlight on a snapshot situation, but a process of continually renewing your interest, and refreshing your intention.[12] It is a form of remembering, in this case remembering which version of you are you voting for with each decision. Generous or selfish? Healthy or self-destructive? Focused on alignment or accumulation? On becoming wiser or more deceived? Short-term attention becomes a long-term healthy relationship.

Frugality for the sake of it misses the point. While it may rid someone of the false belief that quality of life equals access to comfort, it is still defined by equating cost of living with standard of living. It just reverses it. It turns it into higher savings rate equals higher standard of living. The chance of wasting money resources is diminished, but the chance of wasting time and energy resources isn’t. This is much safer than the extravagant alternative, but it’s still focused on a numbers scorecard, and is therefore still doomed to fail (in the sense of cultivating a Good Life). Dropping the attachment to the numbers scorecard opens us to the opportunity to use a more meaningful one. For example (to borrow from Bruce Lee) to ‘seek elegance rather than luxury, and refinement rather than fashion’.[vii]

When aiming for a healthy relationship, getting stuck seeing money merely as a medium of exchange or store of value stops us seeing it as an expression of and shaper of a relationship. It’s not the numbers, but the relationship that correlates with a Good Life.

This applies to frivolity as much as frugality. We’ll see next how common advice on how to spend it is just as flawed as the advice on how not to.

Are you reading the wine list the wrong way around?

Your enjoyment of an experience relies on the story you tell yourself about it; high expense is an unnecessary, even foolish, ingredient of such stories

You’re in a restaurant, and you’ve just been handed the wine list. After getting over the initial hurdle of red, white, rose, or orange (or perhaps something bubbly) where do you look?

Is it to the left – guided, perhaps, by matching the tasting notes to your meal? Or perhaps by a nostalgic yearning for a much-loved holiday in southern France? Or maybe you’re drawn towards a vineyard with a funny name? Starting on the left, you make your choice, and then see if you can afford it. Or do you start on the right – looking at the prices and working back from there?

If you’re like most people, you start at the right more often than not. And if you ask for help, the first question a standard-brand sommelier will ask is invariably ‘what’s your budget?’ Yet does this work? At one end, you could miss getting exactly what you want for a fraction of your budget. And at the other, is discovering that what you wanted you don’t want enough to pay what it costs a disappointment or a lesson?[13]

We adopt the same attitude with most purchases; and nowhere more obviously than with the biggest purchase most of us will ever make: buying a home.

The common approach is to work out what is the most expensive house we can afford – and not even that, the most expensive house we can afford with the most borrowing the bank will give us – and work backwards from there, even if we could have had all our needs met for a much smaller sacrifice of current and future resources.

We do this despite being well aware that the most emotionally salient features of house-buying (the once-a-year garden party) that play the starring role in our purchase decision play a miniscule role in the quality of our lives compared to duller daily things like a commute or a living environment that encourages us to do the stuff we most want to do.[14]

We’ve trained ourselves to unthinkingly reduce everything to a number, so we instinctively collapse inescapably complex decisions into simplistic shortcuts to mistaken conclusions. That this is understandable – complexity inspires just the sort of discomfort and highlights just the sort of lack of confidence we run from at any cost – doesn’t stop it being really, really, stupid. When we’re uncomfortable and unconfident thinking about money, higher stakes don’t inspire greater reflection, they inspire bigger mistakes. Failures to think things through wouldn’t be too bad if they were restricted to the realms of coffee and cat food. Unfortunately, as the size of the spend increases, so does our tendency to bugger it up.

Houses are especially complex because a single object is used to meet myriad needs. Houses are palaces of self-deception. Primarily (one hopes) they provide shelter and somewhere to store sustenance. They are a place to recharge, and a canvas for creative expression. They are an environment that enables and encourages us to fulfil our potential.

But such intrinsic values are often dwarfed by extrinsic ones. Every house is bought partly for ourselves, and partly for our perceptions of other people’s perceptions of us. Partly to house what is integrally valuable to us, and partly to showcase what is incidentally valuable to the world, that we may bask in its reflected glorification.

There’s often a fine line between stuff that says something important about oneself and stuff that says, crudely, ‘look at what I can afford’. We attach ourselves so enthusiastically to the latter that we’re prepared to not only spend all our resources on it, but to borrow some more and make a leveraged all-in bet on it too.

Again, if this worked, no one could argue with it. But it often doesn’t work at all, or when it does, it does so at unimaginable and unnecessary cost.


One day, a good friend of mine asked for my advice because he was thinking of moving to a bigger house. Intrigued, knowing both the size of his house and that his children were settled in both size and number, I dug into what he really wanted. For no one who says they want a bigger house actually wants a bigger house. They maybe want to put some distance between their children, or put a cricket net in the garden (or perhaps give psychoanalysts something to theorise about).

It turned out that this friend wanted to get away from his wife and children. In a nice way. Everyone needs their personal space, and no one needs to be co-dependent. I suggested that before he committed to the extra couple of decades of work that a bigger place would necessitate, he told his wife what he’d told me. Having been party to many years of husbands and wives surprising each other during financial-planning meetings when they let slip wants of which the other was oblivious, I suspected that if he’d like more time to himself, then his wife probably did as well. And she did.

They now treat the study as a time-share. Hundreds of thousands of pounds – and goodness knows what knock-on physical and mental costs – saved by two easy interrogations of what was actually wanted.[15]

Wine or houses, this isn’t about spending specifics.[16] It’s an explanation of why, if you get the fundamentals right, you don’t need such advice, any more than you need to be told crisps are not what your body wants when you’ve gone without them for a few weeks. You already know what you want to spend your money on. You just don't know how to know you know. That's the role of advice.

How not to buy experiences

It is better to allocate resources to experiences than material goods, but a new trend for buying experiences in a way that turns them into material goods loses this benefit

The value of what you buy is determined by how it fits into the story you tell yourself about yourself. The enjoyment of an experience may be elevated by expense, as when wine tastes better when we believe it’s more expensive, but it’s the belief, not the expense, that shapes the story and enables the enjoyment. And when belief is all that’s required, it’s dumb to actually pay for it.

One of the most important investing lessons relies on the same concept. People avoid investing at all, or panic-sell when they don’t need the money, to buy emotional comfort based only on a belief. Because of the long-term compounding outperformance of equity-based investments, this is often the most expensive mistake anyone will ever make. It can ‘work’ in that someone who isn’t invested is probably less worried about the ups and downs of the market than someone who is, but it comes at a completely unnecessary cost.

Our stories are written with our actions. We’ve known this forever, and there are signs that it’s seeping through to how people are allocating their resources. More people favour splashing out on ‘experiences’ over material goods, reflecting a new collective consciousness of an old intrinsic understanding. Unfortunately, the way most people go about this, they bugger it up. By focusing on the output (the executive summary that ‘experiences make people happier than possessions’) rather than the input (the deep reasons why we get more enjoyment from experiences) we manage to buy experiences in a way that turns them into material goods.

When we buy an experience we are spending on both the chance to participate in a transitory process, and a vain attempt to eternalise the event: to fuse it to ourselves in the eyes of others. The value of an experience is in its transitoriness, yet every time we sign up for an ‘experience’ because we think it’ll produce a cool new profile photo or envy-inducing social-media ‘story’, we cancel that bit out. We try to transform the most powerful parts of our process of becoming into something to own, something to have.

Recall Rule #7: There is a wanky way to do anything. Depending on your attention and intention, the same experience can work, or it cannot. In terms of the Goodness of your life, there’s a galaxy of difference between going to a fancy secret supper club because the atmosphere sucks you in, makes your heart sing and your skin tingle, and going so you can tell other people you went.

From those that eviscerate the enjoyment of live music by trying to film what can only be felt, to those that share motivational images of a yogi in a forest with a caption about how we’re human beings, not human havings, before dashing off to India to immortalise the moment with the perfect selfie… there is a massive market in persuading people to own what should only ever be rented.[17]

This is not to say that one should experience things only after signing an NDA that expressly forbids ever telling anyone that you’re going to do something, are doing it, or did it. I suspect a huge part of what makes experiences so damn thrilling to a human is sharing them.[18] But if you wouldn’t undertake an experience if you had to sign such an NDA, you probably shouldn’t do it.

Experiences work because they are about the narrative and the participatory process. Because they transport us to a flourishing, flowing, meditative place of not-thinking. A place of insight into ourselves, the world, and how they dance together. However, they do not do so automatically.

Take travel as an example. Travel isn’t intrinsically happiness-producing. Ask anyone that’s travelled large distances with small children. But many blindly bet their bucks on it almost purely because they’ve heard buying experiences not stuff is the ‘answer’. If we weren’t so prone to take jobs that we ‘need’ to escape from (largely so we can afford to escape from them), we would be more likely to make more conscious choices.

For an experience to prove enlightening, to reward us with the insight we seek, it needs to be wisely chosen. It needs to be thoughtful. Not-thinking starts with thinking, not unthinking.

page2.2.1.3: The unexamined dollar is not worth a dime

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[1] An idea we’ll return to when looking at the Arrival Fallacy (Part 2, Section 3.1), for if the one goal of the Good Life is adequately proxied by attaching undue meaning to interim destination-centric goals, then you rob everyone that’s ever lived in a time without access to those destinations (be it a job title, or the latest gadget) the chance of living a meaningful life… and, by extension, future people rob you of yours. Fortunately, because life is a participatory process of complexification and growth, not a blind lurching towards ‘arriving’ at an arbitrary destination and the cessation of growth, your chance of meaning in life isn’t dead yet.

[2] Some do! But the correlation with improving one’s life is with neither the quantity of the possessions or their prices.

[3] See also the footnote in Section 2.3.2 re Bertrand Russell’s 1950 Nobel Acceptance speech, in which he lists vanity as one of the four insatiate desires.

[4] Even saving for the future isn’t spending on Future You, it’s spending on the emotional needs of Current You to be someone who is responsible for Future You.

[5] I.e. we sacrifice huge amounts of resources for the fleeting security of ‘fitting in’; resources that could have been a financial buffer against potential poverty.

[6] This also explains to some extent why rich investors will spend many hours and potentially multiples of their total other expenditure on chasing the chance of a few extra percentage points of investment returns, and at the same time aggressively resist any suggestion to shave the same quantum off their expenditure.

[7] See Rule #5: How you do anything is how you do everything. And while it’s possible to forgive the short- or even medium-term endurance of a poor career choice, there are no excuses for poor expenditure decisions beyond the first exploratory adventure of a particular type.

[8] The same is true in investing, with often costly effects, something we’ll cover in Part 2, Chapter 4.

[9] We’ll revisit wants and addictions (and the unhelpful talk of ‘needs’) in Part 2, Section 3.2.

[10] See Trigger #13: Treat.

[11] Sustained actions to the contrary can change the story, but that won’t happen if you aren’t open to reserving judgment for a bit and dropping the belief. If the mind doesn’t change, then the same wiring that caused the problem you’re trying to solve will simply rev up again when the forced actions run out of oompf.

[12] Part 1, Section 4.4.

[13] There is of course a ‘snob’ value to wine, but it can easily backfire. I once had a drink with a particularly egregious oaf in Qatar, who took one sip of whatever was open and proudly declared ‘I can’t drink this’ before making a show of ordering the most expensive bottle on the list. He made an impression, but I’m not sure it was the one he was going for. Being guided by something other than price makes you instantly less of a twat.

[14] There’s an investment side to property purchase decisions too. And property does not come out well. We’ll look at property-as-investment mistakes in Part 3, Section 1.2.

[15] We’ll look in more detail at the fact there’s an underlying emotional reward being sought by every purchase in Section 2.3.3 later in this chapter.

[16] The closest I’m allowing to advice is this, from pioneering designer William Morris: ‘If you want a golden rule that will fit everybody, this is it: Have nothing in your houses that you do not know to be useful, or believe to be beautiful.’ From “The Beauty of Life”, a lecture given in 1880 and later published in Hopes and Fears for Art in 1882.

[17] Something we’ll return to in Section 2.3.2.

[18] And indeed sharing is the easiest way to turn a material good into an experience.


[i] Seneca, On Sophistical Argumentation, quoted in Anthony Gottlieb, The Dream of Reason

[ii] Cicero, On the Good Life

[iii] Adam Smith, The Theory of Moral Sentiments

[iv] H.L. Mencken, A Mencken Chrestomathy

[v] The School of Life, The Book of Life, https://www.theschooloflife.com/thebookoflife/consumer-self-knowledge/

[vi] Charles Dickens, David Copperfield

[vii] Bruce Lee, Striking Thoughts

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