The people of Arabia were renowned for their generosity even in pre-Islamic times. When we look at that era's poetry, we see that the Arabs were proud of their generosity. However, their generosity was not for the sake of God or for an altruistic motive; rather, it was the cause of self-pride. But the Messenger's generosity was purely for God's sake. He never mentioned, and did not like to have mentioned, it. When a poet praised him for his generosity, he attributed whatever good he had or did to God. He never attributed his virtues and good deeds to himself.
The Messenger liked to distribute whatever he had. He engaged in trade until his Prophethood, and had considerable wealth. Afterwards, he and his wealthy wife Khadija spent everything in the way of God. When Khadija died, there was no money for her burial shroud. The Messenger had to borrow money to bury his own wife, the first person to embrace Islam and its first supporter. 
If the Messenger had desired, he could have been the richest man in Makka. But he rejected such offers without a second thought. Although God mandated that one-fifth of all war spoils should be at the Messenger's free disposal, he never spent it on himself or his family. He and his family lived austerely and survived on scanty provisions, for he always gave preference to others. For example, his share of the spoils of Hunayn was of 40,000 sheep, 24,000 camels, and 16 tons of silver. Safwan ibn Umayya, from whom the Messenger had borrowed some weapons, gazed upon the spoils with greed and bewilderment. Aware of this, the Messenger gave him as many camels as he wanted. Astounded with such generosity, Safwan ran to his people and announced: "O my people! Accept Islam without hesitation, for Muhammad gives in such a way that only one who has no fear of poverty and relies fully on God can give!" Such generosity was enough to guide Safwan and his people, who had been among the bitterest enemies of Islam until just before that day, to the truth. 
The Messenger regarded himself a traveler in this world. Once he said: "What connection do I have with this world? I am like a traveler who takes shade under a tree and then continues on his way." According to him, the world is like a tree under which people are shaded. No one can live forever, so people must prepare here for the second part of the journey, which will end either in Paradise or Hell.
The Messenger was sent to guide people to truth. Therefore, he spent his life and his possessions to this end. Once 'Umar saw him lying on a rough mat and wept. When the Messenger asked him why he was weeping, 'Umar replied: "O Messenger of God, while kings sleep in soft feather beds, you lie on a rough mat. You are the Messenger of God, and as such deserve an easy life more than anyone else." The Messenger answered: "Don't you agree that the luxuries of the world should be theirs, and that those of the Hereafter should be ours?" 
Islam does not approve of monastic life. It came to secure justice and human well-being, but warns against over-indulgence. Thus many Muslims have chosen an ascetic life. Although individual Muslims generally became rich after the Messenger passed away, others like Abu Bakr, 'Umar, and 'Ali preferred an austere life. This was partly because they felt the need to live as the poorest of their people, and partly because they strictly followed the Prophet's example. During his caliphate, Abu Bakr was offered a glass of cold water to break his fast during Ramadan. He brought the glass to his lips and suddenly began to weep. When asked why, he answered: "One day, the Messenger drank such a glass of cold water offered to him and wept. He said that God says: 'On that day, you will be questioned concerning every bounty.' We will be questioned about this water. I remembered that and wept." 
In the early days of his Caliphate, Abu Bakr earned his living by milking a woman's sheep. Some time later, he was given a small salary. While on his death-bed, he gave a pitcher to those around him and asked them to give it to the new caliph after his death. 'Umar succeeded him and, when he broke the pitcher, some coins came out, together with the following letter: "I lived according to the living standards of the poorest of Madina, and put in this pitcher the amount left of my salary. Therefore, these coins belong to the public treasury and must be returned there." On reading the letter, 'Umar wept and remarked: "O Abu Bakr, you have left an unbearable burden on your successors."
The Messenger was, in the words of Anas, "the most comely and generous person." Jabir ibn Samura reports: "Once we were sitting in the mosque, and a full moon was shining above us. The Messenger entered. I looked first at the moon and then at his face. I swear by God that the Messenger's face was brighter than the moon." 
The Messenger never refused anyone and, as Farazdak said, only said the word "no" when reciting the profession of faith while praying. Once, a bedouin came and asked the Messenger for something. The Messenger complied with his request. The bedouin continued to ask, and the Messenger continued to give until he had nothing left. When the bedouin asked again, he promised that he would give it to him when he had it. Angered by such rudeness, 'Umar said to the Messenger: "You were asked and you gave. Again you were asked and you gave, until you were asked once more and you promised!" 'Umar meant that the Messenger should not make things so difficult for himself. The Messenger did not approve of 'Umar's words. 'Abd Allah ibn Hudafa al-Sahmi stood up and said: "O Messenger, give without fear that the Owner of the Seat of Honor will make you poor!' Pleased with such words, the Messenger declared: "I was commanded to do so!"
He never refused a request, for it was he who said: "The generous are near to God, Paradise, and people, but distant from the Fire. The miserly are distant from God, Paradise, and people, but near to the Fire," and: "O people! Surely God has chosen for you Islam as religion. Improve your practice of it through generosity and good manners." His mercifulness rose up as moisture into the sky, and then rained as generosity so that hardened hearts would be fertile enough to grow "good trees whose roots are firm and whose branches are in the Heavens, and which yield their fruits every season by the leave of their Master."
 Ibn Hisham, 4:135; Ibn Hajar, al-Isaba, 2:187; Muslim, "Fada'il," 57.
 Bukhari, "Tafsir," 2; Muslim, "Talaq," 31.
 Muslim, "Ashriba," 140; Abu Nu'aym, "Hilya," 1:30.
 Suyuti, al-Khasa'is, 1:123; Hindi, Kanz al-'Ummal, 7:168.