Morgan Housel

Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people. Money—investing, personal finance, and business decisions—is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.

Timeless lessons on wealth, greed, and happiness

The Psychology of Money

Sunk costs-anchoring decisions to past efforts that can't be refunded-are a devil in a world where people change over time. They make our future selves prisoners to our past, different, selves. It's the equivalent of a stranger making major life decisions for you.

Nkwachi Nwamaghinna

Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.

The author talks about the importance of resilience in life.

Simayon Thampi

Perhaps 99% of the works someone like Berggruen acquired his life turned out to be of little valid. But that doesn't particular particularly matter if the other one percent turned out to be the work of someone like Picasso. Berggruen could be wrong most of the time and still end up stupendously right. 

A lot of things in business and investing work this way. Long tails-the farthest ends of a distribution of outcomes-have tremendous influence in finance, where a small number of events can account for the majority of outcomes.

That can be hard to deal with, even if you understand the math full stop. It is not intuitive that an investor can be wrong half the time and still make a fortune. It means we under estimate how normal it is for a lot of things to fail. Which causes us to overreact when they do

Kyler Phillips

True success is exiting some rat race to modulate one’s activities for peace of mind.

Comfortably living below what you can afford, without much desire for more, removes a tremendous amount of social pressure that many people in the modern first world subject themselves to.

Independence, to me, doesn’t mean you’ll stop working. It means you only do the work you like with people you like at the times you want for as long as you want.

If you want to do better as an investor, the single most powerful thing you can do is increase your time horizon. Time is the most powerful force in investing. It makes little things grow big and big mistakes fade away.

Less ego, more wealth. Saving money is the gap between your ego and your income, and wealth is what you don’t see. So wealth is created by suppressing what you could buy today in order to have more stuff or more options in the future.

Go out of your way to find humility when things are going right and forgiveness/compassion when they go wrong. Because it’s never as good or as bad as it looks.

The illusion of control is more persuasive than the reality of uncertainty. So we cling to stories about outcomes being in our control.

The End of History Illusion is what psychologists call the tendency for people to be keenly aware of how much they’ve changed in the past, but to underestimate how much their personalities, desires, and goals are likely to change in the future.

The ability to do what you want, when you want, for as long as you want, has an infinite ROI.

To get around this, I think of my own money as barbelled. I take risks with one portion and am terrified with the other.

That flexibility and control over your time is an unseen return on wealth.

Think of it like this, and one of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.

The world is filled with people who look modest but are actually wealthy and people who look rich who live at the razor’s edge of insolvency.

Modern capitalism is a pro at two things: generating wealth and generating envy.

The hardest financial skill is getting the goalpost to stop moving.

To make money they didn’t have and didn’t need, they risked what they did have and did need. And that’s foolish. It is just plain foolish. If you risk something that is important to you for something that is unimportant to you, it just does not make any sense.

Heller responds, “Yes, but I have something he will never have … enough.”

Success is a lousy teacher. It seduces smart people into thinking they can’t lose.

A genius who loses control of their emotions can be a financial disaster.

agi ☻

“One, financial outcomes are driven by luck, independent of intelligence and effort. That’s true to some extent, and this book will discuss it in further detail. Or, two (and I think more common), that financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know.”

Rohit Khanduri

Money is a topic that can bring on a lot of stress and anxiety for many people. That's why it's important to understand the psychology behind our relationship with money. One book that delves into this topic is "The Psychology of Money" by Morgan Housel. This book is not only informative but also an enjoyable read, making it a must-read for anyone looking to have a better understanding of their financial mindset.

Concise and to the Point

One of the standout features of "The Psychology of Money" is its brevity. The book is only 256 pages, but it manages to pack an immense amount of information into its pages. The author, Morgan Housel, does an excellent job of presenting complex financial concepts in a way that is easy to understand. He uses real-life examples that readers can relate to, making it an engaging and thought-provoking read.

Fun Storytelling

Another aspect of "The Psychology of Money" that makes it such an enjoyable read is the author's storytelling. Housel has a knack for weaving together stories and anecdotes that illustrate his points perfectly. This storytelling makes the book feel less like a dry, technical read and more like a conversation with a friend. It's refreshing to read a book about money that doesn't feel like a chore to get through.

Overall, "The Psychology of Money" is a fantastic book that I'd highly recommend. It's concise, informative, and fun to read, making it accessible for both finance experts and novices alike. I would give this book a 4 out of 5 stars rating. If you're looking to gain a better understanding of your relationship with money, this book is definitely worth picking up.

Lewis Ngugi

Worth the time to listen to 🙌🏽
A lot of the points shared in the book are actionable and I agree with the author, it's just a switch of one's attitude that makes them wealthy.

I thought the book was incredible. There was times where I could not put the book down. My biggest takeaway is that wealth is silent. Wealth is what you don’t spend not what you can see. However, we live in a society that constantly uses wealth signifiers to announce that they are rich. 

Felicia

I thought the book was incredible. There was times where I could not put the book down. My biggest takeaway is that wealth is silent. Wealth is what you don’t spend not what you can see. However, we live in a society that constantly uses wealth signifiers to announce that they are rich. 



Liam Ellul

Actually a really good book, simple but not reductive. Good concepts presented in a no BS way.

ahmed

I've read/listened to this book in Jan 2023 , the perfect timing for such a book.

Aaron Chiandet

It’s nothing more than a collection of moderately interesting blog posts. A teenager or young adult would likely get value from it though.

Jaiden Ratti

I've read a lot of books on personal finance and this is one of the few I would recommend to people. Housel is a master of reaching out beyond numbers and spreadsheets and toward minds and behaviors. Definitely will be coming back to it.

Olga V

Omar Fernandez

Very effective at telling you: 

Wealth is what others don't see, what you don't spend, what you save. 

Live below your means no matter what. It may suck now, but it's the only way to build wealth. 

Invest, but only in a way that helps you sleep at night well. Even if the perfect investment portfolio for you to maximize returns can be proven to be the best, if you can't sleep well at night,  you won't stick it out and it'll end up worse for you. 

Building wealth is all about freedom. Freedom to choose how you spend your time is true wealth. Money helps you buy that freedom. 

Very clear insight on how money works and how people react to wealth. This is a book that everyone should read!

Luca Moerenhoudt

There are a lot of actionable insights and learnings from this book as well as lots of historical anecdotes which explain why certain people behave the way they do towards money. 

Whilst some of Morgan's insights aren't particularly new or novel, I think that fundamentally underpins the message of the book which is that finance and money should be made simple. 

When we can remove ego we can create more wealth, he talks about your wealth being the gap between ego and income which resonates. Overall, lots of useful takeaways from this book to think about money in a more meaningful and profound way.

There are a lot of actionable insights and learnings from this book as well as lots of historical anecdotes which explain why certain people behave the way they do towards money. 

Whilst some of Morgan's insights aren't particularly new or novel, I think that fundamentally underpins the message of the book which is that finance and money should be made simple. 

When we can remove ego we can create more wealth, he talks about your wealth being the gap between ego and income which resonates. Overall, lots of useful takeaways from this book to think about money in a more meaningful and profound way.

Kehinde Adeleke

Amazing book that I feel everybody should read because of how important the advice are.

You just need to know the type of invest to are and acknowledge that some of your financial decisions won’t be rational to others. They just need to be able to make you sleep well at night. And I think that’s enough.

Sarah Schumacher

This book was incredible. Short chapters but each packed with concise well-written statements that distilled important concepts into something you can immediately grasp. I don’t love reading about finance, but I do love psychology, and the marriage of these two angles was done incredibly well.

It also helps that I have the exact same goals/expectations and financial strategy as the author, because I know we’re coming from the same place (an extremely important idea he covers in Chapter 16). It’s only the last chapter where he gives an overview of what he does personally; the rest of the book is a primer on larger principles.

Do NOT skip the Postscript on US history. In a few pages he summarizes why we ended up here in the most succinct way. That section alone should be required reading.

TLDR; don’t read this book for specific investment advice. Do read it to absorb core principles that will help you make better decisions about your finances, and potentially much more.

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Gratuitous mashup example: this feels like taking Jon Kabat-Zinn’s Wherever You Go There You Are, Daniel Kahneman’s Thinking Fast & Slow, Ray Dalio’s Principles and some Seth Godin, then mashing them into a single book about financial decision making. A great book to read a chapter or two out of often. It feels like a series of blog posts that became a book, but in the best possible way.

Groundbreaking book simplifying personal finance for those who may not have had the opportunity to receive positive psychology teaching around money. This book is something I gift to people often. Practical, timeless, and important takeaways for thinking about your money.

Jacob Medure

I really enjoyed this book and loved the overall content. It’s not just a balanced view on personal finance, it focuses on the psychological patterns useful to have a balanced and successful financial life.

Jacopo Nardiello

Zia Nazaliah Ainisyifa

aku baca buku ini fisik, karena sengaja beli, tapi karena translate, jadi kata2 atau kalimatnya banyak yg ga aku pahami :") keknya lebih baik beli buku ini yg versi aslinya bahasa inggris.. 
Buku ini ngomongin terutama kek tentang saham, investasi, terus banyak nyeritain sejarah keuangan suatu negara juga, buku ini juga banyak nyeritain pengalaman dari suatu tokoh, banyak kutipannya juga, yaa memang ada beberapa poin yg bisa aku ambil tentang pelajaran keuangan sih👌

Tuago

Very quick read with some very useful advice on personal finance

Sumayya Tsabitah

i expected too much lol. it talks more about the rich and poor, wealth, and savings. kinda basic, i was wondering where is the psychology part? it was just mentioning quotes from some of psychologists but didn’t explain more why human did it. but yeah to be fair, it’s enjoyable reading

Julien Sobczak

If you want to earn more money or want to be happier, starting with this book is a good idea. As outlined by the author, "Two topics impact everyone, whether you are interested in them or not: health and money." This book will benefit everyone (as confirmed by its huge success).

"The Psychology of Money" challenges brilliantly the preconceived idea that finance is a science, like physics, with rules and laws. The author argues that money is a soft skill, where how you behave is more important than what you know, and where your emotions play a major role.

It's one of my favorite books. It's the kind of book where you end up with a lot more insights than you expected before opening it.

The 20 chapters revolve around the main topic, but exist on their own and could be read independently, even if it's probably simpler to just read it from cover to cover as it's a short book.

Róbert Istók

One of the best books I've read about finance!

It is short but packed with value. It gives you a great mental model of money and long term wealth generation. 

Make sure to read the postscript as well, there are valuable history lessons to learn about!

Bouke van der Bijl

Very clear and short book that contains a lot of things that might should be common knowledge or obvious, but aren't explained so clearly as in here.

It treats money as the thing it is: a bunch of (trust) relationships between people, with all the emotions and messiness that comes with people. And that's how it should be treated! So don't pretend you're a spreadsheet, read this book and become a little more aware of what goes on in your head.

Madhuri jain

Akshay Vadher

You would already know most of the things in the books of you are sane and thoughtful about psychology and money.
Still it is a nice reminder of what and what not 💰 planning is.

Few points and related stories are very good.

Rory O'K

Absolutely fantastic, concise breakdown of the most interesting thing about economics and personal finance: how much it all depends on what people think.

The Psychology of Money Timeless lessons on wealth, greed, and happiness

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