Caroline Woods: You talk a lot about the right ways to spend money. So tell us, what are the smartest ways to spend money that will actually make you happier?

Morgan Housel: I think there’s two big things to keep in mind. One is that everybody is so different that there is no universal formula on how to do it. Even when people come up with ideas of spend money on experiences, not on things that can be right for one person in the right way and wrong for the other. People get into a lot of trouble with money, whether it is how they earn it, save it, invest it, or spend it. When they follow advice that is right for somebody and not for them, it’s the most. It’s one of the biggest problems that we have with money, where there is no one single right answer. We want to pretend there is, but there isn’t. Some of the biggest advice is spend more time looking in the mirror, so to speak, to figure out who you are, what you want, what works for you. We’re all a little bit different. The other is that there are really two ways to use money. One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others by to insert yourself in the social hierarchy. And what a lot of people actually want is not a big house or nice clothes. They want a bigger house than their neighbor and nicer clothes than their friends. And realizing that at some level can be OK and is unavoidable. But if you are always chasing, particularly for the attention of strangers who are not even paying attention to you, that can be a big trap that’s hard to get off of.