The Psychology of Money

By: Morgan Housel

5 out of 5!

If I could recommend one finance book to anyone it would be this one! This book is not about ones and zeros or the price of a stock or how to read market movements, this book is all about the intersection of behavior and money.

There’s a difference between being “logical” and being “reasonable” when it comes to finances. As with most decision making, there are numerous variables that influence us. Housel does an excellent job of recognizing the power our emotions and feelings have over our financial decisions even when we know what the “logical” decision is. Sometimes the “logical” decision isn’t the “right” decision because we’re not robots. How “logical” is a financial decision that keeps you up at night or adds to the stresses of your life? It’s all about your ideas and behaviors in regards to your finances, so the “right” decision for one person does not mean it’s the right decision for another.

A large part of the book is cautionary tales juxtaposed with stories of success through simple means mainly through the managing of ones ego. Countless stories of huge earners burning through their wealth trying to prove something versus everyday joe’s that retire comfortably with financial independence. It’s not arguing to live an austere, bland life, in fact, it’s arguing the opposite! Humility and moderation can actually be the catalyst for allowing you to live a life you want apart from financial worry.