Book Review - The Psychology Of Money
If you’re looking for an in-depth, step-by-step guide to saving and investing money then The Psychology Of Money by Morgan Housel is not the book for you. If you’re looking for insight into how you think about money and why you do what you do with money, then this book is a great place to begin. The Psychology Of Money is a collection of short stories about how people think about money and what drives people make the decisions they make.
According to Housel, managing your money has less to do with education and knowledge and more to do with the your mindset. How you behave with money may play a more critical roll in your long term financial goals than any knowledge you may have when it comes to making financial decisions. Housel calls this a soft skill - and that soft skill is the psychology of money. Throughout the book, Housel uses short stories to highlight what people are thinking in the midst of stable and not so stable financial times. The book also does a good job of explaining basic principles in investing and compounding, planning, saving, what it means to have enough, freedom and independence, being rich vs being wealthy and even luck.
This is not a typical finance, money management or investing book and that’s a good thing. Unless you’re really interested in the subject matter then finance and investing books can be a bit dry. This book was enjoyable to read and I frequently found myself going over my allotted time to get to the next story. I observed a lot of my behavior in many of the stories shared, and learned important lessons and concepts which in hindsight, I only thought I had a firm grasp of before - like the difference between being wealthy vs being rich or how much luck can play a significant a roll in your success as any detailed strategy.
The book’s easy flow and accessibility for many readers may also be the thing that turns some away. There are not a lot of hard and fast rules on how to manage money or what to invest in or how specifically to invest. So for readers looking for tricks and tips or detailed investing advice may find this book lacking. There are however, plenty of books out there on investing and the author makes it clear that this is not that kind of book.
The Psychology Of Money is a well written, easy to read book on why we do what we do with money. Housel provides interesting and thought-provoking stories which I think many readers will be able to identify with. I plan on keeping this book around to re-read and remind myself of the lessons provided. This book will be a welcome addition to anyone’s financial library.