Temperament

The Psychology of Money

Morgan Housel's case that money is a behavior problem wearing a math costume.

Morgan Housel2020

The Psychology of Money argues that doing well financially has almost nothing to do with intelligence and almost everything to do with behavior, that doing well with money has little to do with how smart you are and a lot to do with how you behave.

Housel is a writer, not a portfolio manager, and it shows in the best way. This is the most readable book on this list, built out of short, self-contained stories instead of technical argument.

The goalpost that will not stay still

The idea I think about most from this book is what Housel calls the hardest financial skill: getting the goalpost to stop moving. Every income level has its own version of enough, and almost nobody arrives feeling like they reached it, because the target quietly moves the moment they get close. That is not a math problem. No spreadsheet fixes it.

Wealth is invisible on purpose

Wealth is what you don't see. The car, the house, the vacation, that is money already spent. Actual wealth is the absence of those things, sitting unspent somewhere you cannot see it.

Doing well with money has little to do with how smart you are and a lot to do with how you behave.
Morgan Housel · The Psychology of Money, 2020
The hardest financial skill is getting the goalpost to stop moving.
Morgan Housel · The Psychology of Money, 2020
Wealth is what you don't see.
Morgan Housel · The Psychology of Money, 2020
Saving is the gap between your ego and your income.
Morgan Housel · The Psychology of Money, 2020

Related in the notebook

Thinking, Fast and Slow

Temperament

Daniel Kahneman's map of the two systems making every financial decision you have ever made.

Daniel Kahneman · 2011