I read self-help books selectively. There are several reasons why. But with Psychology Of Money gaining such a good response and Morgan Housel being extremely reliable in the field, I decided to give this book a shot (despite this book not meeting any of my 5-pointer checklist criteria).
As you can guess by the title, this book is about money and how people behave with it. The book is an easy read with simple language and digestible 20 chapters. The storytelling is compelling and does a good job of keeping you hooked.
Money is a serious business that affects literally everyone. But so few people are open about their relationship with money. This book does a good job of exploring that.
Insights From “Psychology Of Money”
You can find lessons from this book swarming the internet. But here are my takeaways:
- Don’t just think of money as investments, spreadsheets, and numbers. Money isn’t a hard science like physics, it’s a social science like sociology.
- The biggest thing money can buy you is freedom & independence. In Morgan Housel’s words:
“Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance.”
- Staying wealthy is harder than getting wealthy. In the context of social comparison, Housel says how much you save is the difference between your ego and your income. I loved that formula.
- Nothing in the world is determined by individual effort alone. Luck and risk always have a say in the outcome.
- Be careful who you take investing advice from. Not everyone is playing the same game you are.
In my opinion, the best chapter in the book is the last one where Morgan discusses how he spends his own money. It gives the book a whole lot of personality.
This book’s gone viral, quite literally. But you shouldn’t read this book just yet.
Shortcomings of “Psychology of Money”
I love that more people are talking about money. I am a woman in my early 20s who has recently started earning for herself and God, people my age need to know their way around money.
But this book doesn’t cut the bar for me. Not because the material isn’t great, because it is, but because:
1. This book is derived from a viral blog post that contains ALL the learnings of Psychology of Money. Unless you are someone who prefers to read 250+ pages of a novel when you could’ve got the lessons from a blog post, there’s no true need to buy the book.
- The title is clickbait-y. Yes, Housel talks about psychology. But I expected much more behavioral economics and decision analysis from the title of this book. Psychology of Money has only a rudimentary (still insightful) take on it.
- The third shortcoming is an extension of the second. The book talks about the psychology of money but doesn’t touch on how women & people of color have a different perspective on investments, savings, etc. This is a huge gap that’s left unexplored.
If I were you, I’d read the famous blog post this book is derived from and all the material Housel has written on Collaborative Fund rather than a whole book. This way, you can space out learning at your own pace and learn the lessons quicker in digestible posts.