Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness

BlogJune 26, 2022

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People talk a lot about technical analysis or investment analysis. But few talk about the psychology of investing. The Psychology of Money is a book worth reading if you want to learn about finance or refresh your thinking about money to achieve personal financial freedom.

Introduction to Psychology of Money

Health and money are two critical areas in a person’s personal life. Money is everywhere and directly affects our lives.

We are taught that money matters in numbers and formulas. But the reality is not necessarily so. It has more to do with our behavior.

This book aims to use short stories to convince you that soft skills are more important than the theoretical side of money.

A lot of money has little to do with how smart you are but has a lot to do with how you behave. And manners are hard to shape, even for brilliant people.

A genius who cannot control his emotions can lead to financial disaster. In contrast, ordinary people with no financial literacy can become rich if they have the proper behavior skills.

Financial success is not hard science. It is a soft skill where how you behave is more critical than what you know.

I know you are wondering, is it true? Turn the pages of the book to get the answer.

In “The Psychology of Money” – Secrets of Ambition, Prosperity, and Happiness, award-winning author Morgan Housel shares 18 perspectives exploring the strange ways people think about money. And help you better understand one of life’s important topics.

Psychology of Money

About the author Morgan Housel

Morgan Housel is a partner of The Collaborative Fund – a venture capital firm. He is also a behavioral finance expert who has written articles for major magazines such as The Motley Fool and The Wall Street Journal related to finance investment and business topics.

The Psychology of Money is one of the author’s famous and best-selling books.

Quotes from the book Psychology of Money

At the end of the book, the author summarizes the contents presented in the book.

  • Try everything you can to find humility when things go well and forgiveness when things go wrong.
  • Less ego, more wealth.
  • Manage your money in a way that helps you sleep well every night.
  • If you want to do better as an investor, the most powerful thing you can do is increase your time horizon.
  • It feels okay when so many things go awry. You can be wrong half the time and still make a fortune.
  • Use the money to gain control over time.
  • Save. Just save. You don’t need a specific reason to keep it.
  • Determine the cost of success and be prepared to pay it.
  • Worshiping the void for error.
  • Avoid extremes in financial decisions.
  • You should love the risk because it’s worth it over time.
  • Identify the game you are playing.
  • Respect support.

Reader reviews of the book

The Psychology of Money by Morgan Housel is mainly based on data and context in the US. There should be points of content that are not familiar to everyone.

The book also received rave reviews from readers. Take a look at the reviews of people who have read this book to decide whether to continue spending time with it.

Review by BKP Herndon: EQ is as important as IQ for investors.

I am over 50 years old and have just contemplated. While I’ve been a very successful consultant for more than 35 decades of my savings, I may have been trying too hard to get the benefits I don’t need with the money I need. Reading this book will help me change some of my overly aggressive investing strategies. It has helped me take the most important lesson of all your accumulated years. Know when you have “enough.”

Review of Vikrama D: Great

Expectations from this book were very high. Two things were important from the book to me:

1. Expectations change even more slowly than reality. Everyone sees the world they have seen before.

2. Everyone plays the investing game differently. You need to define your game.

This is a beautiful book. It is not an investment book. It’s a book about your mind, mine, and how it thinks about money, saving, spending, and investing. And, it is excellent. Get it now.

Review of Dr. Smoker: Compilation of empty sayings about money and some new insights.

Books about money, finance, and how rich celebrities became rich and famous. And how you can become wealthy or at least wiser with money remains undiscovered. This is a saturated school for self-help books on finance. What makes this different? It is absolutely nothing in some ways, and in others, it is unique.

Defect:

The author offers cliché advice on saving, not spending like a kid on the newest and hottest toys. The author also doesn’t give a real insight into how any of the people he mentions in the book got rich. If you’re looking for that kind of book, don’t buy this one. I also despise him for saying only the men in the book, the rich and famous, and not a single woman. This is horrible for two reasons:

1. In the past, society has produced more wealthy women than ever before

2. Some rich men can use their gender privilege as leverage to rise to the top in the corporate world. At least the author referred to some men of color and not specifically to white men. There are more rich people of color today than in the past. The author also doesn’t do case studies on why some people hold onto their wealth during their lifetime. He doesn’t even mention all the families who have passed down their fortunes for generations. He didn’t mention privileges of inheritance at all. The author has a cliché commentary on people who once had money and lost it all because they spent childishly and were unprepared for an economic downturn.

The author also provides fuzzy historical information on how economies change over time. I am a massive fan of history, and nothing he said was new to me or even particularly insightful.

Advantages:

I have known that most people who drive are not rich for a long time. Most people are in a difficult financial situation, or they buy a car when the market is good and don’t have the foresight to get stuck soon, and they will regret buying that car. However, the author explains the trail concept interestingly. Also, connoisseurs may buy this book who never thought they would always be jealous of an expensive car. One of my favorite parts is the part about work when you see someone. When they rode in a luxury car, they had mediocre success and spent half their salary on that car.

I give this book 4 stars and no less despite the annoyances in the cons section. It’s a good reminder that you can’t be a fool with your gold. But these days, there’s no end to idiots trying to jostle each other with luxury cars and private schools they really can’t afford. The book caught on at first and served as a cautionary tale. But wow, it was disappointing towards the end.

Review of Delta D: Abuse of the word “psychology,” overload of fate, and excessive self-referencing

It contains some helpful tips and insights for the financially naive. However, these can (and should) be condensed into a new newspaper or magazine article. It’s hard to imagine anyone in need of such rudimentary guidance being drawn to a book with “psychology” in its title.

In any case, the title is an abuse of words. The descriptions of occasionally observed behaviors are not more “psychological” than Mungo Jerry’s line in “Life is for a living – yes! – that is our philosophy” is philosophy.

These helpful tips and insights add to the length of this book with plenty of content and excessive self-referencing from the author.

Conclusion

The Psychology of Money remains a must-read for those new to investing and personal finance. It is up to you to decide whether to spend the time and money reading this book.

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