Why Long-Term Commitment Is Key to Building Wealth, According to Morgan Housel

Think about money choices like picking what to eat at a big buffet. You can pile your plate high because everyone else is, or you can choose what actually tastes good to you. How you spend your money matters because it shapes your life and your future—just like the food you pick shapes your meal.

Why This Matters to Investors

For investors, understanding why we spend and save the way we do can help protect our portfolios and build true wealth. If we follow every trend or try to impress others, we might make risky moves or spend too much, hurting our long-term goals. But if we focus on what really matters to us, we can invest smarter and enjoy life more.

The Art of Spending: What Really Makes Us Happy?

Morgan Housel, a well-known financial writer, says how we spend money is deeply personal—like making art. It’s not just about numbers; it’s about what makes us happy and comfortable. Society, ads, and social media often push us to buy things for status or to fit in, but that doesn’t always lead to real joy.

• Internal benchmarks: Spending on things that truly make you happy, like time with family or a peaceful home.
• External benchmarks: Buying things to impress others, like fancy cars or designer clothes.

Studies show that spending money on experiences, such as trips or hobbies, often brings more lasting happiness than buying stuff (American Psychological Association).

Bulls vs. Bears: The Two Sides of Spending

• Bull case (pros):
  • Spending on what you truly value can boost happiness and satisfaction.
  • Investing in yourself or experiences may have long-term benefits.
  • Some social spending (status) can open doors in careers or communities.
• Bear case (cons):
  • Chasing status can lead to overspending and financial stress.
  • Focusing only on “what’s next” may make you feel like you never have enough.
  • Trying to keep up with others can lead to poor investment choices and FOMO (fear of missing out).

Balancing Today and Tomorrow: Avoiding FOMO

Housel warns that FOMO—wanting what others have—can push us to make fast, risky decisions. He says real wealth comes from slow, steady growth, not quick wins. A famous study found that investors who stayed in the market for the long haul did much better than those who tried to time it (Fidelity).

• It’s not about getting rich fast—it’s about staying invested and growing over time.
• Think about what you’ll regret more: missing out on fun today, or not having enough later?
• Find your own balance, since everyone’s comfort with risk and regret is different.

Knowing When You Have Enough

There’s a story about a fisherman who’s happy working a few hours a day, but a businessman tells him to work harder and get rich—so he can retire and work just a few hours a day! The lesson? Sometimes, we already have what we’re working toward, but keep chasing more because society says we should.

• It’s normal to want more—this drives progress and innovation.
• But always wanting more can mean never feeling satisfied or content.
• True wealth is not just about how much you have, but also about wanting less and enjoying what you’ve got.

Research shows that after a certain point, extra money doesn’t make most people happier (PNAS study).

Investor Takeaway

• Ask yourself if your spending is for your own happiness or to impress others.
• Focus on steady, long-term investing instead of chasing quick gains or trends.
• Spend on experiences and things that truly matter to you, not just what’s popular.
• Remember, wanting less can be just as powerful as having more—find your own “enough.”
• Keep your investment goals personal and ignore the noise from social media or your neighbors.

For the full original report, see CNBC