Discussing money is not a comfortable topic if you’re from a middle-class family. Money is important. I have not seen billionaires writing books about making money, whereas the advice regarding this comes from people who really don’t have anything. This is funny and contradictory.
On reading The Psychology of Money, one of the highly recommended in my booklist (listen to this book at audible.com with a free trial ), I discovered that it doesn’t promise anything other than some simple straight common-sense advice.
So here are the 7 take away from The Psychology of Money:
- Be Humble
The author is clear about life. He tells the reader how life does not owe us anything and it’s better to be prepared for it than to act arrogantly. The most comical part is, money can just leave a person in a jiffy if it decides to. So, being obnoxious with your money might not be a good thing.
2. Save money even if you don’t want to
Psychological understanding of money than the mere intellectual understanding is the basic premise of money affairs. Many save money to buy a house or a car, but the author insists on just saving money for the inevitable shocks of life (any sort of emergencies like medical needs).
“Saving money is the gap between your ego and your income,
and wealth is what you don’t see.”
3. Does this help me sleep at night?
Investments and Savings might be a tricky topic. But the obvious lesson of Investment is that the higher the money, the higher the risk, and the lesser the risk, the lower the returns. A steady saving would be a great advantage, nevertheless. This risk is based on the individual’s appetite to face it. If you are bothered about it all the time, there is something you need to do immediately, whereas if you can sleep well without thinking about your investments or savings, then you are eventually doing something well. So ask this common sensual question ‘Will I be able to sleep well?’
4. Define the cost of success and be ready to pay for it, as nothing worthwhile is free.
Nothing is free of cost. Ultimately, time, money, and decisions all cost something. If you want a comfortable retirement, then you need to delay gratification now. If you want to be wealthy, then save and do not disturb it at any cost. Just leave it to compound. Simply put and be willing to pay. There is no such thing as a free lunch.
5. Give it time
Time is vital in money matters. If you invested now and forget it for two decades, its maturity rate would astonish you. That is the magic of compound interest. Nothing worthwhile happens immediately. It takes time, and so be willing to give it some time.
6. Be Paranoid
The author cites references of complacent companies who eventually lost. He emphasizes the fact life will turn around and keep money, one should be paranoid about keeping it. This is one of the ways to overcome the unexpected surprises of life. Be paranoid about your cash as there could be a recession or a tragedy anytime. (Doesn’t want to be so negative, but the author is right, be paranoid).
7. Define your game
How much do you want? Are you buying stuff for people’s attention? Do you do things to get approval from others? Living to please others is financial suicide. Living below your means, doing things that you love, and being content will keep you happy and healthy. And please do save for a rainy day… because rainy days will come.
Post your tips regarding money in the comments.
Hi friends we have a bookclub, and we post about various books in that group. Please join using this link. https://t.me/joinchat/PKOLL-FMPPNiOTU1
1 thought on “7 take away from Morgan Housel’s The Psychology of Money”