Books play an essential role in our life. Recently I read the book "The Psychology of Money". It was a great experience, and I learnt various things about money.
To everyone, money plays a different game. Every individual thinks differently while making financial decisions. The Psychology of money gives you some lessons on wealth, greed and happiness. Most people try to make financial decisions based on specific mathematical calculations. But in the real world, it's a different game.
“Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness
Behaviour is more consequential than smartness when it comes to money. Ordinary people with no formal education can be wealthy if they have a certain level of control over their emotions and behaviour. The author also tells stories to exemplify his points. Some of my favourite lessons are:
“Spending money to show people how much money you have is the fastest way to have less money.”
― Morgan Housel, The Psychology of Money
Never enough
Your expectations rise with every passing second. But happiness is inversely proportional to your expectations. There is no fun in getting one step ahead if you could never get satisfied.
Getting wealthy Vs staying wealthy
Making money requires taking risks. But staying wealthy is the opposite. Staying wealthy requires humility and fear that you may lose everything you have. Planning is important. But more important is planning on the plans that didn't work.
Freedom
What is the highest form of wealth? Having the freedom to do whatever you want is the highest form of wealth. People want to become wealthier to be happy. And happiness comes when they can control their lives. It is the highest dividend money pays.
Wealth is what you don't see
Having a car doesn't mean you are wealthy. There is a difference between being rich and being wealthy. Being rich is owning things with your money. It could make you less rich. Being wealthy is money not spent.
Surprise
If you rely on history while making financial decisions, you would most certainly fail. In the financial world, you can't rely totally on historical events. The financial world is full of surprises. Be always ready to expect one.
“Growth is driven by compounding, which always takes time. Destruction is driven by single points of failure, which can happen in seconds, and loss of confidence, which can happen in an instant.”
― Morgan Housel, The Psychology of Money
In the last, the author tells his own financial journey. Everyone's financial perspective is different. Never follow anybody while making your financial decisions.
If you are a beginner in investing world, you can skip this book. A lot of financial terms might confuse you. If you have some basic knowledge, you are good to go. A must-read book that teaches you several things regarding money.
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