“The psychology of money” – or why the skillful handling of money does not only depend on your knowledge
At the outset, let me introduce the author of the book in question in a few words. Morgan Housel is an American economic journalist and author of several publications. for The Motley Fool Publishing House. His articles were also published in the Wall Street Journal. For his educational and journalistic activity, he received, for example, the Best in Business Award from the Association of American Business Editors and Authors.
If at the sound of the word “American” you roll your eyes and think “oh no, again, some kind of motivational textbook detached from Polish reality, overloaded with American optimism”, then I immediately reassure you. No, The Psychology of Money is not a motivational textbook.
There is no point in looking for magic formulas for conjuring reality, crap with the power of attraction or the powerful force of confirmation. “The Psychology of Money” is by no means a textbook with universal tips on how to handle money. .
What the hell is this book about? Well, about how our emotions, the culture we grow up in, the beliefs we take from home or social pressure influence our financial decisions . That knowledge does not always go hand in hand with final choices, which are very, very often not rational.
People have strange ways of thinking about money …
What’s the best way to talk about the psychology of money? Certainly referring to real-life stories. That is why the author decided to include 19 stories of different people, representing different property status and social strata, in the 272 pages of his book. They are a starting point for him to discuss such issues as:
- what wealth really is ,
- what does it mean to have enough
- why is it worth tame your ego,
- what is the difference between getting rich and being rich
- what is the charm of pessimism in financial management,
- how the time in which we grew up and the economic conditions prevailing on the way of investing money,
- why the role of chance in achieving personal success is so underestimated by us, and why we attribute success and success mainly to our genius and talents,
- why controlling our time is the most important dividend money can bring.
Diligence, intelligence and talent were important to Bill Gates’ career and the development of his empire, but without a streak of happy coincidences, perhaps today we would not know Windows and we would all be working on Linux… And Bill would not be one of the richest people in the world.
He made good use of the opportunity presented to him by fate, which could not be used by many millions of other, probably also intelligent and talented, young people.
What does the psychology of money say about saving?
Personally, I was intrigued by the author’s approach to saving money. In my blog, I have repeatedly emphasized the importance of setting goals in the field of personal finance . I devoted a lot of space in the entries to the issue of the analysis of short-, medium- and long-term goals. I argued that having a clearly defined goal makes it easier to mobilize yourself to act and to create a specific implementation plan.
Do you admit it’s quite a controversial approach?
It may not even sound controversial as it contradicts itself .
After all, the author in the quoted fragment does not write about anything other than the construction of a financial security cushion . And collecting buffer savings is also a goal! In fact, this is the first goal a person who has no savings should set for himself. That’s why I probably felt such a dissonance when reading Chapter 10. It is devoted to the topic of saving.
Well, why did it take me so long to read “The Psychology of Money”?
The author’s reliance on the stories of different people was an interesting move, but also a trap. It did not bind me permanently to the book, it did not draw me in for longer, that I would like to read it cover to cover in a few days.
This construction gave me the green light to postpone reading the whole thing for another day. Returning to the book, I had no need to refresh the previous chapters. How he managed to earn the equivalent of today’s $ 3 billion in one day, and what influenced that, completely ignoring reading an earlier story about Serbian scientists studying the Ice Age cycle .
The book can be safely put aside for a longer time and you will not lose anything. The following chapters are not related to each other. What’s more, at the end of each chapter, the author often made a comment like “and now we will talk about how …”, which may also lead to a situation that we will completely skip a given chapter if the announced topic is not interesting to us.
The great flexibility of this book is an asset in the busy world, but for the book itself, it can prove deadly. Because what if we postpone it and already…. We will not come back to her?
Who is the book “Psychology of Money” for, do I recommend it?
As I mentioned before – this is not a textbook on financial management. This is not a financial book . If you are looking for such content and these are the expectations of “The Psychology of Savings” – you can skip this book. A book by Marcin Iwuc or Michał Szafrański will be a better choice for you. And if you are just starting your adventure with finances – please refer to my book . The more so that the books mentioned are based on our Polish realities.
It is also not a very in-depth analysis of human behavior . This is not a psychological study in which the author cites numerous studies. It is not based on the opinions of scientists or behaviorists, and the bibliography and footnotes do not constitute an additional knowledge base. If you expect something similar, better go for Jason Zweig’s iconic position “Your brain, your money” . Here you will simply find a set of human stories which provide the author with a starting point for presenting his subjective view on specific topics.