Money wisdom from Coco Chanel

Money wisdom from Coco Chanel

When we think of Coco Chanel, and her eponymous fashion powerhouse, we think of haute couture, luxury, ostentatious spending, decadent lifestyles, and conspicuous consumption. Hardly the kind of stuff to be associated with a financial guru. Yet Gabrielle Bonheur “Coco” Chanel, born in a poorhouse hospice into a stark, frugal life, firstly at home with many other siblings, none of who attended school, then at an orphanage, then becoming a seamstress, a waitress, and a hat designer, before making it big, probably knew more about money wisdom than most of us do!

For a start, she was rich. When she died in 1971, she was estimated to have a net worth of US$100 million, which would be around a billion dollars today. Along the way, she opened her fashion house, closed it due to World War II, and reopened it after the War. And also negotiated to be paid 2% of the sales of all Chanel perfumes sold, as well as having her business rival pay for all of her living expenses as long as she lived! That has to be some pretty astute financial and annuity planning, for someone who eventually lived to the age of 88!

And she also knew a thing or two about being happy, and the role money and wealth play in it. That, is what the most important money wisdom of Coco Chanel is about.

Happiness and wealth

How money and wealth relate to happiness is a much debated topic nowadays. After all, there is plenty of research on this, such as the well-known 2010 study by Princeton researchers Daniel Kahneman and Angus Deaton (both Nobel prize winners), which finds that people tend to feel happier the more money they make, up until a point. The point which Kahneman and Deaton estimated to be about $75,000 a year per person. Or this subsequent study from Purdue University using much wider data, and finding that the ideal income point for individuals is $95,000 for life satisfaction and $60,000 to $75,000 for emotional well-being. When people earned more than $105,000, their happiness levels decreased.

But other sociological surveys like this might contradict some of these findings. Part of the reason is because the methodology used in such surveys is not necessarily correct, as there is:

  1. No mechanism or incentive for the people surveyed to tell the truth. After all, who wants to admit that they are wealthy, but feeling miserable?
  2. No common yardstick or definition for the respondents to benchmark what “happiness” actually means. What a person defines as “happiness” is not the same for another person.

A more appropriate way, as discussed by Richard Layard, is to ask people to compare themselves to their previous selves. That is, are they happier now when they are earning more, compared to 5 or 10 years ago? And for many of us, the answer is obviously that we remember being happier when we were penniless students, not having a care in the world, compared to our richer selves now! So money doesn’t actually make us happier, beyond a certain point. But why? And that is where the money wisdom of Coco Chanel comes in!

Coco Chanel The best things in life

1. The best things in life

The best things in life are free.

The second best things are very, very expensive.

Coco Chanel

Why does more money not make us happier? Well, as it turns out, the things that make us happiest are actually free. Family, friends, relationships, meaningful work, tasks, helping others, contributing to a cause etc. And the list goes on, but the commonality is that these things do not cost very much, if at all. None of these things are actually enhanced very much by pouring more money into them either.

But on the other hand, if we spend our hard-earned money on trophies and toys which purportedly make our lives more fulfilling, such a fancy car, a McMansion, expensive holidays and trips to exotic places to capture a more stunning Instagram shot, the thrill of it all makes us smile. Until it wears off. Because there is always someone else’s car, house, holiday, trip which is bigger, better, more fun and more stunning. That comparison makes us miserable or lacking something all over again. And it never ends, nor does it get any cheaper.

This is where the wisdom of Coco Chanel tells us that we should focus on what really makes us happy for all time, rather than indulge in the very expensive, but transient fixes for happiness. If we do spend money for happiness, it would be better to spend it on things or experiences which make the best things (which are free) even better. For example, making the trip (in first class perhaps?) to see a long lost relative or friend. Or bringing the family and parents for a trans-pacific cruise which gives everyone the chance to be together. Or going on the long-delayed road trip of a lifetime with school friends.

And the list goes on. None of these are cheap, to be sure. But they are worth every cent you pay for them, because the money spent is simply the means to an end, the end of getting to do the things which make you truly happy.

Chanel money wisdom Money and Rich

2. Having money and being rich

There are people who have money …

and people who are rich

Coco Chanel

So, more money doesn’t necessarily make us happier, because the things that make us happy aren’t necessarily the things which can be purchased with money. Which means the pursuit of money and wealth for its own sake is likely to be futile as far us making us happier goes.

And even if we accumulate more and more wealth, especially for those of us lacking anything better to do, we can become wealthier, but not necessarily rich. Only quite recently (say, for the last century or less) has the idea of career success, both in material and psychic form, become important, to the extent that we are willing to work endless hours during our best years to attain it. For time immemorial, career success was a means to an end, to ensure that you (and your loved ones) could retire to a leisurely and pleasurable lifestyle, pursuing sports, arts, culture, food and drink, together with friends and family.

This sort of lifestyle, could very well be considered a rich one. It is certainly not the sort of lean FIRE, or coast FIRE, or even regular FIRE that is usually talked about. But it is probably closer to the conception of what is rich and rewarding, as opposed to just being merely wealthy. Of course, it was equally true in Coco Chanel’s day that there were the truly rich as opposed to the well off (just like there are billionaires and millionaires today). But it is not just having more money that distinguishes the rich from those who have money, it is also their lifestyles which differentiate them.

Coco Chanel Vulgarity

3. Some people think luxury is the opposite of poverty

Some people think luxury is the opposite of poverty. It is not.

It is the opposite of vulgarity.

Coco Chanel

So there is a right way and a wrong way to spend money to gain happiness. The right way is of course to spend money to bring friends and family together to enjoy common experiences and make memories which last a lifetime, and which cannot be displaced by others spending more money alone. The wrong way, which is the common way, is to splurge on trinkets and trophies, in the vain hope that having something bigger and better than the neighbour brings us happiness (and their admiration).

But all of us, at one point or other, must have felt that someone else’s display of conspicuous spending, be it on shoes or bags, or cars or even houses, comes across as something distasteful. After all, all of us have come across people who overshare, or humble brag, or do one of countless other things just to get a reaction. And this lends truth to Coco Chanel’s view that these are not displays of luxury. Rather they are simply displays of vulgarity!

Many of us may have come from poverty (or at least, the lower classes) to money and wealth within a generation. Unfortunately, this places us in a quandary of how to spend our wealth. Without the guidance of long family history of managing wealth, it is all too easy to go for the flash rather than discretion in our spending. And end up looking vulgar in our attempt to show the world that we have overcome poverty!


Love her or hate her, it is undeniable that Coco Chanel has had a profound impact on the world. But through her insights on beauty, fashion, wealth and success, we get a taste of the wisdom she had on money too. Without a doubt, the money wisdom of Coco Chanel stemmed from her impoverished youth, her ability to get her way, and her headstrong nature. But instead of succumbing to a life of career achievement above all else, she certainly played her cards well, enjoying a lifestyle not just of wealth, but of riches.

What she has to say may not fit with everyone’s world view. But in a sense, turning her back on the popular opinion of the day has always been Coco Chanel’s signature. Just as rejecting today’s notions of what it takes to be happy (money and riches) and fulfilled (career achievement) is. After all, she also said:

Chanel I do not think of you at all

I don’t care what you think of me.

I don’t think of you at all.

Coco Chanel


Andrew T. Jebb, Louis Tay, Ed Diener & Shigehiro Oishi (2018) Happiness, income satiation and turning points around the world, Nature Human Behaviour volume 2, pages 33–38

Daniel Kahneman & Angus Deaton (2010) High income improves evaluation of life but not emotional well-being

Richard Layard (2006) Happiness: Lessons From A New Science, Penguin Books

Mathews et al (2021) Lived Experiences In Singapore: Key Findings from the World Values Survey, Institute of Policy Studies



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