Book IV begins with an extremely long chapter that I will break into two parts. It has to do with the first of the 'spending virtues,' liberality. Now the word implies that one is bountiful and generous, but of course for Aristotle it is meant to be the mean between the extremes. Thus, the normal, natural position of a person should be generosity:
Let us speak next of liberality. It seems to be the mean with regard to wealth; for the liberal man is praised not in respect of military matters, nor of those in respect of which the temrate man is praised, nor of judicial decisions, but with regard to the giving and taking of wealth, and especially in respect of giving. Now by 'wealth' we mean all the things whose value is measured by money.
This might be surprising, especially for those who were raised to think of thrift as a virtue. However, it is the magic of the spirit behind capitalism that free exchange causes a flourishing that increases the wealth of all. Hoarded wealth does nothing, like the dragon's gold in the Beowulf that simply laid hidden in the earth for generations, doing no one any good. It's the exchanging that creates flourishing. If I take some of that wealth and spend it to hire an artist, my world now has beauty; if I pay for a meal, it has good food. The artist and the cook now have money they can spend to improve their lives and to yield to others the ability to improve theirs also.
This is a fecund understanding to have come from the ancient world, which was in positive terms much poorer than we are today. Even so, they already had the spirit of it: generosity is the natural position, the mean for which we should strive.
It is also surprising to hear prodigality discussed outside the Biblical context: the story of 'the prodigal son,' which frames our understanding for more than two centuries, was not available to Aristotle.
Further, prodigality and meanness are excesses and defects with regard to wealth; and meanness we always impute to those who care more than they ought for wealth, but we sometimes apply the word 'prodigality' in a complex sense; for we call those men prodigals who are incontinent and spend money on self-indulgence. Hence also they are thought the poorest characters; for they combine more vices than one. Therefore the application of the word to them is not its proper use; for a 'prodigal' means a man who has a single evil quality, that of wasting his substance; since a prodigal is one who is being ruined by his own fault, and the wasting of substance is thought to be a sort of ruining of oneself, life being held to depend on possession of substance.
This, then, is the sense in which we take the word 'prodigality'.
Thus prodigality is properly wasting one's substance, which means spending beyond what one can continue to support. It is not spending generously, but excessively.
Now the things that have a use may be used either well or badly; and riches is a useful thing; and everything is used best by the man who has the virtue concerned with it; riches, therefore, will be used best by the man who has the virtue concerned with wealth; and this is the liberal man.