Part 3 of my series on the book “The Art of Spending Money” by Morgan Housel.
For me personally, when it comes to personal finance, one of the hardest things is to find a good ratio between the money I spend vs. the money I save.
As I wrote about in the last post from this series, saving is what gives us independence.
On the other hand, spending money on the things we truly value is a great way to boost happiness.
So what to do now?
Good advice never simply says 'Live for today' or 'Save for the future.' The only good tip is: 'Reduce future regret.'
This is the recipe for success that Morgan proposes. And the famous psychologist Daniel Kahneman adds that “a smart approach towards money requires a well-calibrated sense of how we’ll experience regret about our current decisions at various points in the future.”
In the end, our task is to strike the right balance between two of the most powerful forces in our world:
- Exponential growth
- The fact that today we are one day closer to death than yesterday.
One great way to kill two birds with one stone is to try to have experiences that you can later look back on with nostalgia.
Trying to do this is a good way of having a great time in the present while also saving (a memory in this case) for the future.
And when it comes to saving, there is also a case to be made for doing it slowly, step by step, over many years. Not trying to rush the accumulation of wealth by taking shortcuts.
The fastest way to get (and stay) rich is to do it slowly, silently in the background.
Because “the faster wealth was created, the more likely luck played a decisive role. That can reverse just as quickly.”
A quote from Laozi that sums this sentiment up perfectly:
Nature is never in a hurry, yet accomplishes everything.
And if you’re patient, you will too.