The Psychology of Money
Book Review, Financial book review.
Morgan Housel’s Psychology of Money teaches readers about the appropriate monetary behaviour to adopt.
The author’s conviction that money is not like physics with rules and laws, but rather with emotions and nuance where the appeal of sacred mathematics fails, led to the foundation idea of creating a book about money from a psychological standpoint.
What it is about?
The book offers 20 lessons on the attitude that anyone should adopt to build wealth. It communicates with compelling examples and attempts to evaluate both real and abstract aspects that impact wealth, such as chance, risk, hard effort, and intellect, to offer the most lucrative recipe for financial stability to the readers. It does not assist people in determining the best stocks to invest in. On the contrary, it seeks to identify the most reasonable method to think while making financial decisions.
What did I love?
The best part of the book is that it tends to bend towards reasonable thinking instead of rational thinking. The content makes an effort to understand people from varied socio-economic backgrounds and how they make their decisions. Mr Housel does not label any decision as right or wrong. His stance stretches beyond the mathematical understanding of economics and explores the financial outcomes from the lens of the people making the decisions. It transcribes the effects of personal history, background and mindset on individual financial choices and how they affect the economic milieu. Another impressive insight the author delineates is the observation that a major episode of a life of a successful person or a company comprises of events or failures. The utopian image of success is misleading and success is the tail event of multiple mistakes, failures and perseverance with a never-giving-up attitude. But the reality that most of us cannot afford to fail so many times is not taken into account.
What did I not like?
Although most of his advice is wonderful, it might not be feasible to adopt for a huge section of society, according to me. The limitations of the book are that it is centred around wealth generation through compounding and while the advice on managing behaviour is accurate, it is not for the middle class, or at least not for the Asian and African middle classes. Even even though he is aware of the difficulties faced by the medium and lower income groups, the happiness factor is accidentally overlooked. A person from a middle-class family would prefer to purchase an expensive automobile than invest money in stocks, even if the investment has a chance of making him 10 times wealthier in the near future since happiness and desires of the present are more important than a potentially improved lifestyle in the future. Time is considered more valuable than future comfort. It’s like saying, “You might be wealthy in your 40s, but you won’t be 20 again while your body can digest a dozen shots of tequila in a row.” What do you think?
Rating and Recommendation
I’d give Morgan Housel’s book The Psychology of Money 3.5 out of 5 stars. I would urge everyone to read this book at least once because it has some fantastic insights that will benefit everyone. If I were an American, I would have given it a 5, but I live in India, and the realities are different at this end of the world.
Buy The Psychology of Money here.
Have you read this book? What do you think about it?
Also read —
Happpyyyyyyyyyyy Readddddinnnngggg!
