The Psychology of Money book was written by Morgan Housel in September 2020. It is a self-help finance book around 250 pages. Written to provide timeless and simple information for ordinary people to relate to. With the aim to provide clear and concise advice and straightforward plan towards the behaviour that people have towards money.
It became a best-seller also immediately and sold over 1,000,000 copies in the first year. It was released during the recent pandemic and couldn’t have been timed any better. During a period where a lot of individuals were re-evaluating their current lifestyle, working arrangements.
As a time, where many people went on to change how they view and live their lives differently since that period or time.
Morgan Housel, first produced a blog in 2018 called the “The Psychology of Money”, where he explained first hand his rationale into his investing thoughts and ideas.
So what is the book all about ?
It explains his ideas and thought on the principles into how humans react towards money, conversely mainly those people that don’t have or possess it.
In simple lay man terms he tries to explain, how money is attained and kept, by highlighting some simple and key lessons that we all know and be taught at an early age.
Yet, the vast majority of people fail to act on these principles, so they never break out of the castle of possessing money, financial security and assets. So that they can improve their financial situation, or create so-called generational wealth.
What is included in the book ?
It consists of 20 small bit-sized chapters, which are easy to read, as newbie or seasoned investor. Which can be read again and again in small sections, as a refresher to improve your financial knowledge as you move forward towards creating a better financial future for yourself.
The start of the book is about the story of Ronald Read, a janitor who by investing and saving on a steady basis. Went onto to accumulate wealth of over 8 million dollars, even though he earn’t a meagre salary and pay check for most of his working life.
In that doing financially well, may have little to do with how or successful you may be, but more importantly how you behave and control your money and finances.
( Amazon link to buy the book)https://amzn.to/3Sb0kfR
Book Summary – Chapters
1: No one’s crazy
2: Luck & Risk
3: Never Enough
4: Confounding Compounding
5: Getting wealthy v staying wealthy
6: Tails, You win
7: Freedom
8: Man in the car paradox
9: Wealth is what you don’t see
10: Save money
11: Reasonable v rationale
12: Surprise !
13: Room for error
14: You’ll change
15: Nothing’s free
16: You & me
17: The seduction of pessimism
18: When you’ll believe anything.
Key takeaways from the book !
The book includes real anecdotes from people who have achieved financial success by following simple plans and attaining a positive behaviour towards how they control money.
It’s not just about the idea of making money, it’s more about the journey of how we manage and behave towards money. Along with the emotions that we attach to not having it or trying to attain it. Wealth is not only about having lots of money, but more importantly how we have our relationship towards the subject of money.
He advocates the notion and idea of not trying to get rich quick, or one size fits all type of person and investors. Everybody goals and and aims should be aligned and individual to their own circumstances.
Instead he tries to encourage people to embrace how you react to money and how you handle it. And ultimately how you control and manage it. So that it doesn’t control or manage you !
The principles highlighted don’t merely seem confined to personal finance. But covers a wide aspect into other areas of your life such as day to day family life, your well-being, and your relationships with other such as workplace employees or your employer.
Plus the principles highlighted in the book, relate to all spectrums of individuals. Whether you are a newbie, bewildered by the subject or notion of personal finance. Or a seasoned investor, looking to improve their financial situation or relationship with money in general.
Key saying or statements within the book !
You can be wrong half of the time, but still make a fortune.
Good investing isn’t about making bad decisions, but about not screwing it up.
Nothing is as good or as bad as it seems.
Doing well has very little to do with money, but how you manage and control it. Financial behaviour is hard to teach, even to the smartest people in the room.
Some things are never worth risking, no matter the potential rate of return.
The end game will depend ultimately on your savings rate and level of return.
Spending money showing off to other’s is the shore fire way to remain poor.
No one is impressed with your possessions as much as you are.
Remember !
If you like this book summary, follow the links on https://moneyminted.co.uk, to look at other investing books I recommend. To hopefully improve your financial knowledge, so you too can reach your financial goals and aims.
It’s not a get rich quick journey, but you will get their in the end if you create an action plan and think long term.
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