Site icon Guideposts Books

The Psychology of Money Summary and Book Review

The Psychology of Money Summary

The Psychology of Money Summary

The Psychology of Money Summary, The Psychology of Money Book Review, The Psychology of Money, The Psychology of Money Book, The Psychology of Money Book Summary

“Doing well with money has a little to do with how you are and a lot to do with how you behave.”


The book “The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness” by Morgan Housel, rated 4.6 out of 5 stars on average is known to have altered the viewpoint regarding financial management of the majority of its readers.

Book: The Psychology of Money
Written by: Morgan Housel
Pages: 253 pages
Buy here: The Psychology of Money

Overall Review of ‘The Psychology of Money’ by Morgan Housel

The book is a perfect bait for financial education for people struggling to manage their monetary possessions. However, even people leading a successful financial life claim to have learned tons of new perspectives and approaches toward money.

Although money and finance are the key genres this book belongs to this non-fiction book holds a huge account of terms, conditions, and results related to financial conditions in our lives such as, ‘lessons on wealth, greed and happiness.’ Quotes like, “Everything has a price, but not all prices appear on labels” and “Controlling your time is the highest dividend money pays” prove the point.

Hence, irrespective of the fact what fortune are you currently making in your financial life; this book can prove to be a boon for some extra financial proficiency you could acquire to thrive in your monetary management. However, not each one of us can make enough time to cover hundreds of pages just to take away certain conclusive points. If you are one of them, you have come to the right place to have ‘The Psychology of Money Book Summary’ and ‘its timeless lessons’ in a short time!

About the Author: Morgan Housel

Morgan Housel is a partner at The Collaborative Fund, which already explains a lot about why he could teach you and guide you in a better way when it comes to financial management. Apart from being a prior columnist at The Motley Fool and The Wall Street Journal, Housel has won several awards related to Business and Financial Journalism. Having authored at least 6 books, Housel is known for his vast expertise in behavioral finance and its history. The Psychology of Money is his most sold novel to date.

The Psychology of Money Book Summary

The Book Psychology of Money comprises eighteen short stories, practical and real-world stories holding examples, situations, and learning related to business and of course, finance. Still, one sole idea that unites the purpose or say, moral of all the chapters of this book is ‘dealing with money’.

A sharp and most fundamentally-valuable lesson stated by Morgan Housel in his book is the fact that achieving money and managing it are two different things. Becoming rich is more about how you manage your money than just earning it as much as you can.

The Psychology of Money Summary

The following space contains The Psychology of Money Book Summary focusing on key takeaways from every one of the eighteen chapters illustrated within this book.

Chapter 1: No One’s Crazy

Each one of us holds a different opinion about earning money and other riches. People just undergone economic crises have different conclusive approaches to managing their money than people who survived the crises without drowning.

People who might have learned about stocks when the market was thriving will have better monetary faith and judgment than those who grew up while the stock market was falling. Hence, a person might do crazy things when it comes to money but you never know where that mindset came from. Every person treats it according to their personal experiences and biases, which you may not understand, but it doesn’t mean they are crazy.

Chapter 2: Luck and Risk

The chapter holds the story of Bill Gates and Paul Allen, founder, and co-founder of Microsoft, who consider it their ‘luck’ to have been admitted into a school where they could access a computer while most graduates of the time hadn’t had the slightest idea. But where ‘risk’ holds parts in the story is explained by Kent Evans.

Kent Evans, the third of the computer prodigies of the time could have been the third founding partner of Microsoft today if he hadn’t lost his life in a mountaineering accident before he graduated high school along with his peers. Hence, luck and risk, are the factors to be considered apart from hard work and dedication but none can exist without the other.

Chapter 3: Never Enough

Desiring riches even after you possess lots of them is one fine thing. However, one must know what is wise at this point. Enough is enough. The stories of Rajat Gupta and Bernie Madoff teach us the lesson that risking your possessions in greed of more is stupidity for you could lose all that you already have. Hence, learn to see what enough is.

Chapter 4: Confounding Compounding

The chapter features Warren Buffet, the most successful investor of the 20th century. We get to know how there are people in this world whose investing strategies and amounts are larger than Warren Buffet himself and yet they cannot achieve the milestone as him. And why is that? The man has been investing since the age of ten, unlike others who learned it later. Small investments over a longer period can derive enormous results than expected.

Also Read: Never Finished Summary and Review (2023) | David Goggins

Chapter 5: Getting Wealthy vs. Staying Wealthy

Housel talks about monetary success by referring it metaphorically to ‘survival’ and not just ‘growth’ as he quoted in the chapter saying, Getting money is one thing. Keeping it is another.’ And all other principles which talk about ‘what is enough’, ‘Compounding’, ‘Luck and risk’, contribute to this part of learning financial management.

Chapter 6: Tails, you win

If you are involved in the business of investing, you must accept the fact that not every of your investment is going to get you an impactful return. Consider tails as your investments or efforts that turn out to be one in a thousand profitable results. Housel quotes it as ‘You can be wrong half the time and still make a fortune’.

Chapter 7: Freedom

Owing to the research of Angus Campbell, a psychologist, we come to know that the dominating factor affecting a person’s happiness is the ability to control one’s time. The chapter states that knowing to control one’s time (freedom) is the highest dividend money could pay you.

Chapter 8: Man in the Car Paradox

A man owning an expensive car seems cool to everyone and everyone wants to be like him. This is the paradox… No one cares one bit about who’s the owner but they are surely attracted to the idea of owning a car, seeming cool, and using the man as a prop to inspire their desire. Housel argues if that’s the idea of riches to you, it is wrong.

Chapter 9: Wealth is what you don’t see

Clearly a justification for chapter 8! Suppose you actually buy a car after seeing someone else showing it off. Note your bank balance or the amount you possess after you buy the car is less than before buying it. Hence, in a way, all you did was lose some money.

Chapter 10: Save Money

Chapter 10 states a lesson from the last two chapters. Save more, spend less, and become rich. Quoting from the book, ‘Spending money to show people how much money you have is the fastest way to have less money’.

Also Read: Can’t Hurt Me Summary | Cant Hurt Me, Cant Hurt Me Audiobook

Chapter 11: Reasonable > Rational 

The chapter educates its readers that being rational, that is, keeping a calculative approach towards your money matters, doesn’t always turn out well. You often need to make reasonable choices which means, decide based on your experience how some returns could turn out. The chapter features a story explaining how a psychiatrist could cure a then-incurable disease by inducing fever by being reasonable.

Chapter 12: Surprise!

In this chapter, Housel argues that we should not always try to predict our future or plan for it based on our history. This is where the lesson ‘No One’s Crazy’ also comes to play. The next chapter explores that if not judged by the past then how exactly one subject to planning should.

Chapter 13: Room for Error

Expect returns from the future less than what they should and you will always be ahead of assumptions. This attitude teaches you to have room for errors you could make while predicting things, eventually giving you a lesson on appropriate investing.

Chapter 14: You’ll Change

No one can tell you about your choices or interests after a few years from now. Hence, avoid making extreme financial decisions on the spot. Keep your investments and planning contemporary.

Chapter 15: Nothing’s Free

The world of investing can be erratic. Most people try to avoid this uncertainty by hopping out of business when the market is falling and returning when it’s about to flourish. Such a way is not successful for everyone. Those who get through the losses might consider it a waste of money and yet others might consider it the fees of return.

Chapter 16: You and Me

You are suggested to follow your own path because you don’t know of the intentions, ideas, or interests of other investors. Hence, trying to follow them can take you to doom.

Chapter 17: The Seduction of Pessimism

The idea of expecting less of something is pessimism. Housel says pessimism is, in every way, better than optimism, in financial matters. Or in fact, true optimism is expecting things to turn out bad and being surprised when they don’t.

Chapter 18: When You’ll Believe Anything

Housel says that you might believe anything when you want something to be true. Such an attitude, though, is not wise enough when it comes to financial matters. For justification of this chapter, try recalling the concepts mentioned previously in this article, like pessimism, nothing’s free, and room for error. They teach you how to coop when things go wrong.

Concluding ‘The Psychology of Money’ Book Review

The non-fiction book teaches its readers to effectively deal with money such that they can have possession of their money for a long comfortable time. The book features lots of great investors, money makers, and financially educated people and their stories for us to learn how they became what they are. Not forgetting to add all about all those inspiring and definitive quotes for people to keep a summarized lesson in their minds, the author’s efforts are genuinely appreciated.

In conclusion of ‘The Psychology of Money Book review’, I’d say the book could be admired in a million possible ways for the never-getting-old money lessons it provides. Quoting Morgan Housel’s words once again, ‘Manage your money in a way that helps you sleep at night’, the readers get another beautiful idea. Despite the fact of who you are, a person in their 20s, 40s, or 60s, these timeless lessons are going to be insightful for everyone out there, working or not. Hence, it’s a recommended read.

Frequently Asked Questions:

Q. What is in The Psychology of Money?

The Book Psychology of Money comprises eighteen short stories, practical and real-world stories holding examples, situations, and learning related to business and of course, finance.

Q. Is The Psychology of Money a good read?

The book teaches its readers to effectively deal with money such that they can have possession of their money for a long comfortable time. So it is a must read book.

Q. What is the main theme of psychology of money?

Achieving money and managing it are two different things.

Q. How many pages is The Psychology of Money?

253 pages

Exit mobile version