Psychology of Money

Money is a wonderful and fascinating subject which successfully grabs every one's attention one or the other day. It is among those essential things in our life, without which we can’t survive. Its alluring ability is hard to resist by the human mind and has an immense influence on us.

Talking about money, we all want to become wealthy and for that, we lend upon reading articles, blogs, ask from elders about their experiences and lessons, watch the videos on -the secret behind the success of the world's billionaire or most successful people and sometimes read bestseller books on the subject. Now, there are plenty of great books on finance, on becoming wealthy and one of them, which inspired me the most is, ‘The Psychology of Money’ written by Morgan Housel.

It is an incredible book (of around 203 pages) that teaches the reader about how humans behave when dealing with money. How pride, fear, greed, and anxiety can influence a person and make them commit a mistake when money is the subject. How longevity in investment is a crucial factor behind your success. How easily we judge someone as crazy, based upon their actions and not considering the fact that different experiences shape one's opinion about how the world works. We all know that for a successful career, hard work is significant. But there are many other factors that play a key role and one of them is luck & risk. They both are siblings, as without the other one can't be studied.

The Internet era has made earning money easy (no doubt competition is tough but you have got the opportunity and accessibility) as there are many sources available but (book states that which is valid) creating wealth is much more dependent on your saving rate rather than on your ROI. We can earn a vast amount of money in a year and spend all of it on purchasing items that we wanted or didn't want but bought because they looked attractive or due to some social comparison. What is the use of that earning which can't even support you in the future during uncertain times? Getting wealthy is not the main issue, instead staying wealthy is the gem.

Understanding the real meaning of the word “ENOUGH” in financial terms is so crucial and how small achievements earned over the years create the basis for the future big reward. It touches many other underestimated but highly valuable concepts like freedom, being reasonable, what wealth is, compounding effect, etc, with examples in every chapter which will make it easier for the reader to fathom the text.

So to sum up, this book educates about the psychology of the mind for money. It teaches not only about how to become wealthy but also inculcates how to build that behavior that will make you wealthy. And building good behavior is not that easy but is a worthwhile endeavor to accomplish, as the type of seed you sow in the present will give you that kind of fruit in the future

Some quotes from the book

• “Good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That’s when compounding runs wild.”
• “Having more control over your time and options is becoming one of the most valuable currencies in the world.”
• “Your success as an investor will be determined by how you respond to punctuated moments of terror, not the years spent on cruise control.”

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