Book Review: The Psychology of Money by Morgan Hausel
January 25, 2023
The psychology of money delves into the behavioral aspects of how individuals hold their money. The book is divided into 20 chapters written like a short story. I found the concept of this short story refreshing. Because after reading a chapter I could quit for an evening or a few days and then go back to the book and start a new chapter and learn new concepts. traditional book. Each chapter is packed with facts from history, psychology, and sound financial advice that’s beneficial to everyone.
My favorite chapter in the book was Chapter 10: Saving Money. The first idea, simple and often overlooked, is that building wealth has little to do with income or investment returns, but more to do with your savings rate. Morgan classifies people into three categories: those who save, those who don’t think they can save, and those who don’t think they need to be saved. This chapter is aimed at the latter two of him.As a saver and someone who has devoted his life to helping others financially, I don’t have to be convinced by this statement..
For those who think they can’t save, Morgan provided some tips.
- You can create savings by spending less
- You don’t need a specific reason to save, but having a goal increases your chances of success.
For those individuals who think they don’t need to save, Morgan shares these tips.
- The value of wealth is relative to what you need. A higher saving rate means less spending. Spending less means saving more when you need it.
- Beyond a certain income level, all you need is what is below your ego. Here he talks about materialism and really looks at the lens of what you really need.
In short, everyone has more control over their ability to save than they realize. If you want to learn more about the psychology of money, I recommend reading this book.