Financial Book Review: The Psychology of Money - Money Tip Tuesday

What do you think has more impact on your financial decisions, your income or your mindset? Would you believe that how you view and think about money matters more than how much money you make? If you’re striving for financial success and want some insight into how your thinking impacts your probability of building wealth, then I have a book for you! 

Links:

• The Psychology of Money by Morgan Housel
• Check out TCU University for financial education tips and resources! 
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• Learn more about Triangle Credit Union

Transcript:

Welcome to Money Tip Tuesday from the Making Money Personal podcast. 

Financial education can come from so many places. Lessons can be learned through experience, observing the actions of others, formal education or exploring resources across the internet. For those who like to learn through reading, one financial book you should read is called The Psychology of Money by Morgan Housel. 

I really enjoyed this book. I found it really easy to understand and relatable. 

This book was written to explain away the notion that only highly intelligent people of great means can be successful and to make specific points on how mindset and behavior impact our ability to build and maintain wealth.  

Originally written in 2018 as a short report, the content was later expanded on and published as a book. It’s not a long read as Housel’s choice was to make book of smaller, shorter points that someone would finish reading than one long one they wouldn’t. 

The book starts off with lessons from the lives of two men. One who was incredibly wealthy, loved to show it but eventually lost it, and another of a man who didn’t appear wealthy but stunned everyone when he left multimillions in inheritance and endowments upon his death. One went broke, the other left a financial legacy. The question these two very different stories raise is “What made the difference in these two people’s lives that led to such contrasting outcomes?” 

Housel attempts to answer this question in his book when he states, “doing well with money has a little to do with how smart you are and a lot to do with how you behave.” 

The goal for readers is that they’ll apply the principles outlined in the book, to cultivate a healthier relationship with money, make more informed decisions, and ultimately achieve greater financial stability and peace of mind. 

Throughout the book, Housel lists up to 20 points on how our psychology around money affects our behavior, but because I don’t have time to go over them all, here are some of the notable points that stood out to me most: 

1. In the book, he mentions how important it is to remember how the decisions people make with their money are tied to their individual experiences with the way the world works. Because those experiences vary widely, such as a child growing up in poverty versus another raised in luxury, the financial behaviors of one would seem completely foreign to the other.  Housel states, “what looks crazy to you might make sense to me. But no one is crazy – we all make decisions based on our own unique experiences that seem to make sense to us in a given moment.” I felt that this point is serves as a good reminder that there should be no expectation that everyone will have the exact same behavior around money, as they’re not all influenced by the same experiences. We should be understanding enough to know that poor financial habits or decisions a