The Psychology Of Money – Timeless lessons on wealth, greed and happiness by author Morgan Housel.
If you want to understand money from a perspective that would make the most sense to you as a human being, then The Psychology of Money is your book.
Simplifying what money is, what it means and how to manage it without the fancy finance jargon, this book appeals to every common person who wants to make a shift in their thought processes and behaviors money wise.
Spending money to show people how much money you have is the fastest way to have less money.Morgan Housel
On this page
The Psychology Of Money Book Structure/Format
The book consists of two parts.
Part One starts with an introduction to the book and includes 19 chapters, each explaining the point through real-life stories. These stories will aid to be eye openers and help in understanding the money behavior discussed in each chapter.
Part Two of the book is called ‘confessions’, wherein the author explains his own behavior with money. A PostScript and reference list is also present at the end of the book.
The introduction of the book sets the base for the reading, readers should not skip this by any means. It draws you in and explains the author’s interest in the topic and why he chose to write the book. It will give readers the mindset for absorbing the information coming up.
Chapters 1 to 3
Chapters 1 to 3 draw attention to our outlook towards money and how it gets shaped. It covers the broad realm of the psychology of money. Stories within the chapters provide a lot of strength to the concepts Housel is trying to make the readers understand.
These three chapters are named ‘No one’s crazy’, ‘Luck and risk’ and ‘Never enough’.
Chapter 4 to 6
Chapter 4 to 6 will be hardcore wealth talk, busting myths, clarifying basic misunderstandings about money related terminology and, most importantly, our behavior towards it. Stories and financial market patterns are also explained in simple terms. These chapters cover all things related to wealth and the real world.
Chapters 7 to 9
Chapters 7 to 9 cover probably the most interesting concepts for the regular everyday person trying to understand money. These run through how money impacts our everyday life, and the visible effects of it.
The chapters are named ‘Freedom’, ‘Man in the car paradox’ and ‘Wealth is what you don’t see’. All concepts covered in these will bring you mental peace and confidence.
Chapters 10 to 15
Chapters 10 to 15 are what will elevate your thought process about money, packed with examples and covering hardcore truths about saving, money related behaviors and how to be rational with the information you are served via market predictions, and make a plan that suits you.
These are action chapters that will make you want to use the knowledge you’ve attained so far and start a plan that’s executable for you.
Chapters 16 to 18
Chapters 16 to 18 are filled with quality warnings. Yes, warnings about how you perceive money, the financial market and the world.
It will bind together the concepts covered so far, and give you an overview of how to deal with issues confidently, and know that one size doesn’t fit all when it comes to plans and execution of plans.
By the end of this chapter, you will feel smart, and definitely not alone in your money struggles. These chapters will humble you as a human.
Chapter 19 is an epic summary, smartly written in bullet points and briefs. This will be your reference point every time you feel you have forgotten something crucial. I think this chapter was not only a good idea but also written in a manner that is actually incredibly impactful and useful to the readers.
In chapter 20
In chapter 20, which is named ‘Confessions’, Housel explains the psychology of his own money. A chapter that is well written and grounding for the reader. Do not miss the PostScript of this book. It explains the thought process of the US customer and the history behind how it came to that.
Notable Positive Features
A good self-help book is good only if it’s not pages of personal finance experiences and ideas. It has to provide strong justifiable points, and arguments backed with research. Morgan Housel delivers just that. Not only is The Psychology Of Money packed with real-life examples, it also is incredibly well researched.
Housel himself has over a decade of experience in the subject matter. The book has graphs, quotes, is organized well, and an epic conclusion chapter. The eng notes are great for further reading and research.
The first idea – simple, but easy to overlook – is that building wealth has little to do with your income or investment returns, and lots to do with your savings rate.Morgan Housel
Negatives of the book
The only negative about the book is that it’s heavily USA based. The data and examples of people are US based too. While the psychology may expand into other cultures and continents, if you’re not really aware of the musicians, businessmen, etc.
Housel uses as examples, you may need extra research to understand the gravity of those examples. The PostScript, although impactful, is also based on the behavior of the US customers’ history and thought process.
Knowledge won’t do you harm, but if you are looking for a country or culture specific book that is closer to you, then this won’t satisfy.
Housel simplifies money. It makes it easy to understand and figure out what works for you. It’s easily a must read self-help book for just money matters but basic life logic, and rightly so.
It brings to surface some solid points like; the importance of saving, being confident with your choices because of your money and how you work with it impact your life the most.
About the author
Morgan Housel is a US based, two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, and winner of the New York Times Sidney Award. He is a partner at the venture capital firm, The Collaborative Fund. Learn more about him, of the Morgan Housel official website.