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The Psychology of Money by Morgan Housel

Rating: 8/10

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High Level Thoughts

I recently finished reading ‘The Psychology of Money’ by Morgan Housel. Rated 4.5 stars from over 13,000 views, any mentioned by many in the influencer world (eg Ali Abdaal), this book presented some honest, abet, common sense truths about how to generate wealth. My key highlights and thoughts, are below.

On the Mindset of Money

Doing well with Money has little to do with how smart you are and a lot to do with how you behave.

Morgan Housel

When most people say they want to be a millionaire, what they actually mean is “I’d like to spend a million dollars.” And that is literally the opposite of being a millionaire.

Morgan Housel

The world is filled with people who look modest but are actually wealthy and people who look rich who are living on the razor’s edge of insolvency.

Morgan Housel

There is a key distinction between generating wealth, and looking rich. Being wealthy is the money you don’t spend. Wealth is for the egoless, looking rich is for the ego. A consistent savings strategy over a long period of time with consistent investing, will make you wealthy. Warren Buffet, one of the most successful investors of all time generated the majority of his wealth, $84.2 billion dollars, after is 50th birthday, and he made his first investment at the age of 11. Compounding is a glorious thing.

As society we need to stop trying to look rich (whilst living on the edge of poverty) and start working on generating wealth. Generating wealth, frees your future self.

On Retirement

Before World War II most Americans worked until they died. That was the expectation and the reality.

Morgan Housel

What will we do once we retire? Sit in a chair all day watching the world go by until the bitter end? I feel like there is a perception in society that 35 is middle aged and 70 is the limit. Not in my eyes it ain’t. If we spent more time looking after our money (and our bodies) we’d no longer feel like we are 30, going on 70, and perhaps then we won’t have to ‘retire’ at the age of 65. At the age of 65, we could have perhaps another 30 YEARS of life in us! Start preparing our money now so we can live those years wealthy, not poor only receiving $200 a week from the government.

On Money, Wealth and Time

People who have control over their time tend to be happier in life is a broad and common enough observation.

Morgan Housel

The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money.

Morgan Housel

Wealth is the nice cars not purchased.

Morgan Housel

Saving/investing money and generating wealth gives us time freedom. Spending money to look rich doesn’t. They are two completely different skills. With the amount of consumer debt in the world, it seems like we are much more adept at the later.

On Activity Trumping Strategy

“I’ve been banging away at this thing for 30 years. I think the simple math is, some projects work and some don’t. There’s no reason to belabor either one. Just get on to the next.”

Brad Pitt accepting a Screen Actors Guild Award

Then they sat and waited for a few winners to emerge. That’s all that happens.

Morgan Housel

By the mid-1930s Disney had produced more than 400 cartoons. Most of them were short, most of them were beloved by viewers and most of them lost a fortune. Snow White and the Seven Dwarfs changed everything.

Morgan Housel

By the mid-1930s Disney had produced more than 400 cartoons. Most of them were short, most of them were beloved by viewers and most of them lost a fortune. Snow White and the Seven Dwarfs changed everything.

Morgan Housel

Focus on volume, and the results will come.

This Book in Two Quotes

Less ego, more wealth. Saving money is the gap between your ego and your income, and wealth is what you don’t see. So wealth is created by suppressing what you could buy today in order to have more stuff or more options in the future.

Morgan Housel

Independence, at any income level, is driven by your savings rate.

Morgan Housel

Rather than saving 10% of our income, we need to start saving 70%. We need to get excited about generating wealth. We need to lose the ego of looking rich. By doing so, our futures will be much, much brighter, richer, happier, and stress-free.

You can buy The Psychology of Money on Amazon, here.

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