The Psychology of Money: Timeless lessons on wealth, greed, and happiness Paperback – September 8, 2020

This book changed my life. It’s a must read as it gives you a whole new perspective on money. The author does a great job of using practical analogies to show you how money shapes our psychology.

Why the book was so easy and enjoyable to read? It has a lot of good examples, data, and fun facts to get the point across to the readers. The chapter titles are attention grabbers that get our attention so that we can read more. However, the most important thing to learn from this book is the "Margin of Safety."According to the author, it is one of the most underappreciated forces in finance. It comes in many forms: a frugal budget, flexible thinking, and a loose timeline - anything that lets you live happily with a range of outcomes. Controlling your time is the highest dividend money pays.The book is pretty much evolved around the concept of "Margin of Safety." It encourages readers to save money and not spend money lavishly. The key is staying wealthy and not just getting wealthy. We can't be complacent and assume that yesterday's success translates into tomorrow's good fortune. Wealth is what you don't see. Spending money to show people how much money you have is the fastest way to have less money.Good investing is not about getting the highest returns. It's about getting good returns that you can stick with and which can be repeated for the longest period of time. According to the author, the historical odds of making money in US markets are 50/50 over one-day periods, 68% in one-year periods, 88% in 10-year periods, and (so far) 100% in 20-year periods.Forecasting is hard. This is why investment guru Benjamin Graham strongly advocates for the margin of safety, as the purpose of the margin of safety is to render the forecast unnecessary. The author cited the success rate of venture financing from 20024 to 2014: 65% lost money, 2.5% of investments made 10X to 20X, 1% made more than 20X return, and only 1/2% (~100 companies) earned 50X or more.According to George Soros, it is not important whether you are right or wrong but how much money you make when you're right and how much you lose when you're wrong. You can be wrong half the time and still make a fortune.The most interesting part of the book is the last chapter: Postscript. Thanks to the internet, the world is more connected than ever. That means that the talent pool the readers compete with has gone from 100s or 1000s sprang their towns to millions or billions spanning the globe.The author ended the book with a not-so-pessimistic note. The era of "this isn't working" may stick around. And the era of "We need something radically new, right now, whatever it is" may stick around.

The Psychology of Money is an enjoyable and well-written read, filled with engaging storytelling that makes complex financial concepts accessible. Housel does a great job capturing the psychological forces behind money decisions, but I think the book could have benefitted from a wider range of examples to reflect the full diversity of human experiences. Still, it’s a compelling and insightful take on how we think about wealth, risk, and opportunity.

📚 Final Thoughts"The Psychology of Money" offers a refreshing departure from traditional finance books by focusing on the human elements of money management. It's a compelling read for anyone interested in understanding the psychological factors that drive financial decisions. Whether you're new to personal finance or looking to deepen your understanding, Housel's insights provide valuable guidance.

I am a tax consultant working mostly with business owners. I think that this is the best book I have ever read about money, aimed at non-financial professionals. I have bought 25 copies of the hard copy, because after I read my Kindle copy I wanted to lend it out to clients. They never come back! My clients read it and then make their children read it.The book is easy read and is broken into short chapters. It will revolutionize how lay people think about money and financial management. My biggest take away is that proper financial planning brings freedom to your life. Everyone talks about work/life balance, but that is a BS concept if you don't have someone paying your mortgage. BY changing how we think about money in our life we will start to use it as a tool to give us the freedom we need to live.

This is a great, easy to read book that gives financial advice and constant reminders that life is not a spreadsheet. Money is a tool and this book shows how to use it to be happier, not richer.5/5 highly recommend