The Psychology of Money | Winston’s Words of Wisdom
Well, here we go again, house bound for the foreseeable. If I am honest, I quite like it. It’s nice having everyone at home and our morning run is now never missed out whatever the weather! So it’s not so bad as it may first seem. That leads me nicely to a book I have been reading – The Psychology of Money by Morgan Housel.
The Psychology of Money by Morgan Housel
As the name suggests, it is more about people’s attitudes towards money (which is relatively timeless) as opposed to any specific way to make money (which constantly changes over time).
He explores in great detail, why your attitude to money is just as important, if not more so, than your ability to make it is in the first place.
While it is quite a detailed look at investment, it also focuses on who has then held onto their wealth with some real day to day examples which are quite staggering. I also found this very timely as one of the big takeaways from the book is – those who make and keep money, stick to their plan through thick and thin.
It sounds so simple, but in practice it is just so hard to do. We often get bored of what we do, or don’t get immediate results so switch up the plan. Sounds familiar? Its real Turtle and Hare stuff. Thinking of what’s ahead of us in the coming weeks and months, are you strong enough to keep saving? Keep doing the basics at work? Not as easy to do as ‘life gets in the way’.
Also a key point in the chapter called ‘Room for Error’, he specifically says ‘leverage is the devil’, in English meaning – Debt is the Devil! Many of us think we can be clever and get ourselves in debt to buy more faster, but that can come unstuck very quickly as it did in 2008…
But most pertinently of all, the book makes the very clear point that you can plan all you want, but it’s the big unseen events that make us come unstuck. These are often events outside of our lifetime, out of our sphere or knowledge, or just freak events like 9/11 which try as you might, you can never plan for.
So the main lesson I took from it was – find something you love, do it to the best of your ability and stick to it for a long time. As that is what people we often refer to as ‘great’ often do.
Ever wonder why pictures of Freud, Darwin, Einstein, Buffet etc are all of them when they are old? As that is how long it takes to get great at ANYTHING!
Happy reading and stay safe.
Extract from the Good Reads website:
Timeless lessons on wealth, greed, and happiness doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people. How to manage money, invest it, and make business decisions are typically considered to involve a lot of mathematical calculations, where data and formulae tell us exactly what to do. But in the real world, people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In the psychology of money, the author shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important matters.
Read Winston’s other reading recommendations;
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