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Book Review: The Psychology of Money By Morgan Housel

I am bringing back my book reviews. If you know me, you know I love reading particularly non-fiction. even though I am starting to do some fiction now. This review is for The Psychology of Money By Morgan Housel. It is from 2022 when I first read it. I was desperately in need of financial education.



This review is coming after such a long break from the last book review, Shoe Dog by Phil Knight. One of my goals in 2022 is to improve my financial intelligence on my wealth journey. This holiday period away from the stress of academic work, I am reading Morgan Housel's book "The Psychology of Money". The book offers a fresh perspective on money and I have learned so much about how the little changes we make regarding money every day can make a huge difference.


The book chapters are very short, and you will not have to stress about finishing a chapter, It is a book you would pick up and every chapter would drive your determination to find out what is next.

Some practical lessons from the book for me including quotes are:

Compounding: A new way to see how Warren Buffet built his wealth and why delayed gratification still has no alternative, still.




“Buffet’s fortune isn’t due to just being a good investor but being a good investor since he was literally a child……His skill is investing, but his secret is time”.


Savings and your ego: how stepping outside yourself to question your ego can help you curtail your spending and save good money.

“Think of it like this, and one of the most powerful ways to increase your savings isn’t to raise your income. It is to raise your humility. It’s a daily struggle against instincts to extend your peacock feathers to their outermost limit and keep up with others doing the same”


It is one thing to be wealthy and it is another thing to stay wealthy, the same logic as understanding that being rich, and having money to spend for a flashy lifestyle does not translate to being wealthy.


“Getting money requires taking risks, being optimistic and putting yourself out there. But keeping money requires the opposite of taking a risk. It requires humility, and fear that what you’ve made can be taken away from you just as fast. It requires frugality and an acceptance that at least some of what you’ve made is attributable to luck, so past success can’t be relied upon to repeat indefinitely”.



The place of luck and risk in life: And true to what we believe as Christians, you must believe in something bigger than yourself to succeed in life. As much as there is plenty of hard work, and smart work, the forces that supersede human effort are an ever-present entity in our lives. Believe that even the best human effort is limited.


“Luck and risk are siblings. They are both the reality that every outcome in life is guided by forces other than individual effort”


This is not something you hear so often in a “list” world of must-have, must-do, must-be to achieve our dreams. People always talk of human efforts so much that they forget the place of time and chance as the Bible puts it or the impact of “being at the right place at the right time”. Yes, we can prepare for whenever good luck finds us, but we should never underestimate the presence of forces beyond individual effort no matter what goal we aim to achieve.



The wisdom of knowing when enough counts: The more today is driven by more. We want more of everything that we are busy chasing more, we have no time to reflect on the essence of that desire.

“Modern capitalism is a pro at two things: generating wealth and generating envy”.


Why do you want more? What is your driving force? Do you have the capacity to manage the more you seek? Will that ambition satisfy this desperation? Is this a social comparison problem?


“The point is that the ceiling of social comparison is so high that virtually no one will ever hit it. Which means it’s a battle that can never be won or that the only way to win is to not fight to begin with - to accept that you might have enough, even less if it’s less than those around you”.


Even with the best plans, we cannot consistently hit the right notes with our plans all the time, so we must make room for errors. You must make room for moments when things do not go according to plan but even then, that should not stop you considering you have anticipated that. Another thing to see from creating room for errors in the place of prayer because life can be uncertain with an ever-present force of surprises. You pray that your effort is enough, that the odds will be in your favor and that despite the randomness of life, you can still find the wins that propel you forward.



What is interesting is that no one ever recommended this book to me unlike “Rich Dad, Poor Dad” or “Gifted Hands” but this book is one of my biggest finds this year and I am happy to be reading it as I reflect on my 2021.


These are just some of the parts, but the book has an even more interesting message that you have to find your nuggets as you read. 2022 is around the corner but it is important to run with the lessons of 2021. This book is a must-read for anyone trying to find their footing with their finances because it will help you reflect on your past journey with your money and how you can begin again to build wealth.


My only question is why this book isn’t yet on any best sellers list, considering the constant battle in life with poverty and financial freedom.



 

 

 

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