The Psychology of Money

Timeless Lessons on Wealth, Greed, and Happiness

Author: Morgan Housel

Personal Score: 8.2/10

Goodreads Score: 4.4/5

Get it here on Amazon.


🚀This Book in 3 Bullets

📜Book Summaries & Key Lessons


Lesson #1: No One is Crazy

Lesson #2: Luck & Risk

Lesson#3: Never Enough

Lesson #4: Confounding Compounding

Lesson #5: Getting Wealthy is Different From Staying Wealthy

                    1. Protect your wealth haven.

                    2. Plan for the unplanned (You make a plan and god laughs).

Expect the unexpected and plan for it. Never trust sure things. Always work in the best margin of error and be flexible in the plans you do have (By budgeting and not over-leveraging). You can lose a lot of money because a plan went 80% right when you needed it to go 100% right. It’s not being conservative necessarily. Conservatism is avoiding risk, leaving a margin for error is elevating your chances of success given any situation of risk.

                   3. Be sensibly optimistic.

Optimism isn’t blindly thinking everything will go right. It’s believing in yourself and your plan enough to know that over time, things will work out better. The best thing about the margin of error is the more margin of error you have, the smaller your gains have to be to outperform most.

Lesson #6: Tails, You Win

Lesson #7: Freedom

Lesson #8: The Man in The Car Paradox

Lesson #9: Wealth is What You Don’t See

Lesson #9: Save Money

Lesson #10: Reasonable > Rational

Lesson #11: Surprise!

Lesson #12: Room for Error

Lesson #13: You’ll Change

Lesson#14: Nothings Free

Lesson #15: You & Me

Lesson #16: The Seduction of Pessimism

Lesson #17: When You’ll Believe Anything

All Together Now

🎴Top Quotes

"All subjects are governed by defined rules - be it physics, chemistry, mathematics, or any other. Finance, however, is driven by emotions and the psychology and behavior of people."

"Doing well with money has a little to do with how smart you are and a lot to do with how you behave. And behavior is hard to teach, even to really smart people."

"Controlling your time is the highest dividend money pays.”

"The freedom to do what you want, when you want, with whom you want, for as long as yo want, is true freedom.”

"Good investing is not about getting very high returns. That's not replicable over many years. Good investing is about getting decent enough returns over decades. That's when compounding turns wild."

"The hardest financial skill, and one of the most important ones, is to get the goalpost to stop moving. It gets dangerous when the taste of having more - money, power, or prestige - increases ambition faster than satisfaction."

"Rich is the current income. Wealth is income not spent. Wealth is hard because it requires self-control.”

"Happiness is just results minus expectations.”

“Money’s greatest intrinsic value—and this can’t be overstated—is its ability to give you control over your time."

“Some people are born into families that encourage education; others are against it. Some are born into flourishing economies encouraging of entrepreneurship; others are born into war and destitution. I want you to be successful, and I want you to earn it. But realize that not all success is due to hard work, and not all poverty is due to laziness. Keep this in mind when judging people, including yourself.”

"Failure can be a lousy teacher, because it seduces smart people into thinking their decisions were terrible when sometimes they just reflect the unforgiving realities of risk.”

“Arrange your financial life in a way that a bad investment here and a missed financial goal there won’t wipe you out so you can keep playing until the odds fall in your favor.”

“There is an iron law in economics: extremely good and extremely bad circumstances rarely stay that way for long because supply and demand adapt in hard-to-predict ways.”

“We tell ourselves stories to fill in the gaps of what are effectively blind spots.”

"One of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.”

"Spending money to show people how much money you have is the fastest way to have less money.”

"Ordinary folks with no financial education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence.”

"We all think we know how the world works, But we’ve all only experienced a tiny sliver of it.”

"Your personal experiences with money make up maybe 0.00000001% of what's happened in the world, but maybe 80% of how you think the world works."

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