Book review: “All The Money In The World”



Are you tired of grubbing for money?

The financial media is gloomier than ever about the prospects of saving enough for retirement. Every day we’re admonished that we’re not saving enough, that we’ll need millions of dollars, that we can’t retire until our 70s, and that we can’t even be sure whether any of today’s numbers will turn into tomorrow’s reality.

Americans are also rumored to be suffering from frugal fatigue. We’re expected to be alert to every little latte factor while using an overwhelming plethora of tools to track our spending, our budget, and our progress toward financial independence.

But when can we start being happy? Are we there yet?

All The Money In The World book cover

Note that George has a smile on his face…

Laura Vanderkam claims that we have more than we think, and we just need to spend it more creatively. Instead of saving all our lives for happily ever after, we can find more ways to deliver little bursts of happiness now. It’ll actually make us feel more satisfied with our progress in saving for retirement, and it will help our lives feel less like deprivation.

Part of the psychology of our relationship with money is that it’s a status marker. We use money (or, more realistically, we borrow it) to show our level of wealth and to compare our progress to the rest of society. Of course the reality-show media has become very good at showing how celebrities are far ahead of all of us and we’ll never catch up. We’ll never have the big mansions or the luxury vehicles– we might not even have the fancy clothes or shoes. After a few years of trying to save for your “future”, you’re tired of being reminded that you’re the only one who seems to have given up your present lifestyle for a future fantasy.

However, it’s just as easy to compare our status to the rest of the world as it is to compare it to “celebrity world”. The global median household net worth is only about $2200, and $61K puts you in the top 10%. Yet in 2007 the American median household net worth was about $120K. Globally, we’re closer to the 1%.

If you’re a servicemember or a veteran, then you already understand that happiness status is relative. You many never spend your life in a mansion or drive a luxury vehicle, but you know exactly how you feel when you don’t get to sleep for two days. Or when you’re living in the field and digging your own toilet. Or when it’s your turn to take a submarine shower– next Tuesday. Or when there’s no fresh fruit for the rest of the month. When you come back to “civilization” then you feel pretty rich for a while, right? Even today, two decades after my last submarine deployment, I still remember an awesome rainfall showerhead in a hotel in Yokosuka, Japan, although the hotel is long gone. I still feel guilty about letting food go to waste. And, yes, I can make lettuce last for six weeks. My spouse says you don’t want to know.

Another psychological issue is the hedonic treadmill. We all tend to have a certain setpoint of happiness, and it’s not affected by money for very long. Interestingly, it also doesn’t take very much money to bump up our happiness level for a little while before it returns to its “normal” level. Research has shown that a thousand dollars won’t boost our happiness level much more or for much longer than a hundred dollars. However, the real advantage of a thousand dollars is that it can be used to deliver ten jolts of hundred-dollar of happiness as well as just one huge jolt.

I read a lot about personal finance and consumerism, yet Vanderkam brought up two examples that I’ve never considered before: weddings and yards.

Everybody “knows” that fiancées are entitled to a diamond engagement ring worth “about two months’ salary”. We’re supposed to spend the “right” amount on wedding rings, the wedding ceremony, the reception, and the honeymoon. We joke about the American version of a wedding dowry, but I didn’t know that the entire industry didn’t really ramp up these “traditions” until the 1930s. States had abolished their 19th-century “breach of promise” laws which enabled women to sue men who didn’t follow through on promises of marriage. When the promise of an engagement lost the force of law, women began to seek a more concrete demonstration of a man’s commitment– just as the diamond industry was struggling with a glut of overproduction. DeBeers persuaded Hollywood to show their stars wearing diamonds and acting out engagement scenes, both on film and in real life. Within one generation a diamond was considered a “traditional” part of an engagement, and the entire wedding industry jumped on the bandwagon. Today’s wedding-planning website perpetuates the legend with statistics– and a huge online store for planning every detail, right down to personalized (yet perishable) Hershey’s Kisses.

But what about after the honeymoon is literally over? A wedding is one (very long) day but a marriage is a lifetime of challenges. If the average couple spent $5392 on an engagement ring that proved their worth to each other, how else could that “concrete commitment” help their hedonic treadmill? The money could buy over a hundred nights of babysitting alone. The $12K spent on the “average” reception could also pay for nearly five years of housecleaning (until toddlers are hopefully old enough to start cleaning up their own messes). The $2000 wedding flower bill could also buy two hundred $10 bouquets– a monthly flower surprise that could go for well over a decade of inflation-adjusted blooms.

Vanderkam isn’t suggesting that we stop spending money on weddings– only that we spend it more thoughtfully. Buy the engagement ring if it has meaning to you, but avoid the Olympian challenge of matching society’s “average” amount. Have a fun ceremony, but don’t turn it into a major logistics operation stressful day of drama and hysterics. Treat yourself to some time off together, but don’t feel obligated to “do the honeymoon” straight out of a bridal magazine. If you plan your wedding well, then you’ll deliver a great boost of enjoyment to your hedonic treadmill. However, if you also manage not to blow all your assets on that one event then you’ll be able to keep boosting your hedonic treadmill for years. Whether you spend $500 or $50K on the wedding, the boost will deliver about the same amount of happiness for about the same length of time. But if you only spend $500 on the wedding then you’ll be able to spend it on other things that will deliver the same boost– again and again and again.

You can imagine how Vanderkam feels about the American fixation with “as much house as you can afford”, including a green carpet of perfectly manicured grass. If you’re contemplating a weekend of yardwork, then read her “Laughing at the Joneses” chapter first.

She also debunks a popular myth of early retirement: “You can’t retire early if you have kids“. Instead she shows that the marginal cost of the third child can be nearly zero– unless you try to raise each kid as if they’re the only one. Admittedly “marginal cost” is a terrible reason to have children, but “cost” is also the wrong reason to stop having them. Most families make the right decision about the number of children they want (for the right reasons), and Vanderkam shows you how to make the finances work for your family values whether the number is two– or six.

So if you’re spending smaller amounts of money in favor of more frequent doses of happiness, can you retire yet? It depends on your budget. Vanderkam starts with a chapter titled “Don’t Scrimp More, Make More“. When I retired a decade ago, I kept a white-knuckle grip on the purse strings. I “knew” the statistics and the risks, and I was going to make sure that we didn’t overspend a nickel of our budget.

But I should have paid attention to our daughter’s approach. She was only 10 years old at the time, and the word “scrimp” was not in her vocabulary. If she wanted something then she saved up her money until she could afford it, and then she bought it. If she wanted something NOW then she went out and earned more money doing dirty jobs (at home and for the neighbors) until she could afford it. She’s carried that thinking into college, where she earns her “special treats” by giving $12/hour campus tours. She doesn’t have to walk backwards for a few hours just to afford a nice dinner with friends, but she enjoys bragging on her campus and meeting new people. The extra money is a pleasant bonus, and she sees these income opportunities everywhere she goes.

Vanderkam applies the same logic to her chapter on “Rethink Retirement“. She’s not one of the hardcore “Never retire, rewire!” crowd, but she points out that it’s simplistic to expect that your work week will go from decades of 50+ hours to decades of zero. Instead you’ll replace your office environment with self-directed entertainment, and some of those activities might earn you money as well as fulfillment. Or you might completely overhaul your lifestyle to spend your time doing things you enjoy instead of spending money to get things done.

It all sounds so deceptively simple, doesn’t it? In “The Military Guide“, it boils down to ignoring society’s standards and “aligning your spending with your values”. In Vanderkam’s book, it includes an eight-page handbook of exercises to jumpstart your thinking. You have the tools and the supplies– what you really need is the time for thoughtful contemplation and the creativity to find the solutions.All The Money In The World” is a very pleasurable way to reflect on your own situation and recover your creativity.


Related articles:
Book review: “Why We Buy”
Old-school frugal
Do you have affluenza?
Frugal living is not deprivation
Book review: “Your Retirement Quest”
Book review: “1001 Things to Love About Military Life”
Retiring early– with kids?

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About Doug Nordman

Author of "The Military Guide to Financial Independence and Retirement" and co-author of "Raising Your Money-Savvy Family For Next Generation Financial Independence."
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6 Responses to Book review: “All The Money In The World”

  1. RonBoyd says:

    Excellent review! You should find a way to post it to a wider audience. (Pinterest perhaps)

    • Doug Nordman says:

      I need to spend more time on and Pinterest. I’ve thought about pinning the entire “Recommended Reading” list to those sites. But so far, surfing has had a higher priority…

  2. Wade Pfau says:

    Thanks Doug, this sounds like an interesting book.

    And though I’m frugal, I am rather curious about how the marginal cost of a third child can be zero. I understand hand me downs and all that, but there are not economies of scale on all expenses.

    • Doug Nordman says:

      I think Vanderkam’s best contribution to the personal-finance genre is her idea of doling out little jolts of happiness.

      As for marginal costs of kids, you made me look! I did use her caveat “nearly”. And did I mention that she had her third child while she was writing the book? Might be a little confirmation bias there.

      Personally, I’m not willing to risk any experimentation. We were understaffed and outgunned for our first child, and we saw no reason to make the odds any worse. It’s not as if we had the spare time to do anything about those odds, anyway.

      Vanderkam makes some good points, though. The third kid shares a bedroom. They consume calories, of course, but more of those calories are eaten at home and fewer are eaten out. They have entertainment expenses, but again the family makes fewer trips to Disneyworld and more trips to the local state park. The third kid doesn’t get to do two or three activities, and the other kids might have to cut back to keep the total kid activity budget within limits. In her case the third child was also the trigger to move from a high-cost area to a lower-cost area.

      I think an economist would determine that the overall family spending did not rise by anywhere near 25%, if only because certain hedonic adjustments were made. And if I was that third kid, I’d be mighty tired of hearing about hedonic adjustments…

      I wonder at what family size the marginal cost of the next child is indeed zero. Six? Seven? And I wonder how much beyond that a family has to grow to make the marginal “cost” of the next child actually become a profit center. Twelve? Maybe this math only works in agrarian societies. Again, I’m not willing to contribute any personal experience to this research!

      • Wade Pfau says:


        I liked that jolts of happiness idea too.

        This marginal cost issue is interesting. You are posing a good research question. Perhaps it would be possible to look at this without a personal experiment by using existing datasets on household spending. But to really get a correct answer about this, we would have to run an actual experiment where people are _randomly_ assigned a certain number of children. It might be a little hard to get approval for that experiment from the ethics board though.

        I think it might be a bit of a “cheat” to assume cheaper vacations on account of the 3rd child. But the hedonic adjustment idea is relevant here. Also, you want to have the 3rd child if the marginal benefits exceed the marginal costs. Benefits are harder to quantify.

        Thanks again for the interesting discussion. I’ll put this book on my list to get.

      • RonBoyd says:

        Kotlikoff & Burns, in their book “Spend ’til The End,” have a chapter entitled “Pricng Procreation.” They put it this way: “The birth of a child, not withstanding having an extra mouth to feed, would actually raise their individual living standard from $6,571 to $8,264 each. That’s a 26% increase! … Alas, having more kids beyond Lucky is a loser. … Note, however, that they are still 10 percent better off with three children than with none.”

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