In 2020, Morgan Housel published The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness—a book that has sold more than four million copies, and has now been translated into more than 50 languages. Housel’s book doesn’t tell you what to buy or sell. Nor does it tell you how to invest your money. You’ll find no get-rich-quick schemes here. Instead, Housel examines the psychology–or behavioral traits–that subtly but powerfully shape our financial decisions and lives. As he told the New York Times, “The premise of this book is that doing well with money has little to do with how smart you are, and a lot to do with how you behave, and behavior is hard to teach, even to really smart people.”
In the short videos above, Housel presents some of the key concepts explored in The Psychology of Money. Along the way, he explains why money, if managed properly, can help you achieve greater independence and control over your life. And that depends, he argues, on seeing “wealth” in a certain way. Real wealth, he explains, is invisible. “Wealth is the money you don’t see. Wealth is the money that people have not spent. Wealth is the homes people didn’t buy. It’s the cars people didn’t purchase. It’s the jewelry people didn’t get. Wealth is money you don’t spend. [It’s the money] you’ve saved up, which gives you independence and control over your time, allowing you to live life on your own terms.
Other ideas explored in the videos include:
- The importance of keeping your expectations in line with your income, and keeping a healthy sense of what’s enough;
- Understanding that investing and volatility go hand in hand, and learning to live with the psychological pain that volatility inflicts on investors;
- Realizing why time plays such an important role in investing, allowing investments to compound over years (it’s why Warren Buffett has made the vast majority of his wealth after the age of 60), and,
- Recognizing that budgeting efficiently and increasing your savings rate will make the greatest contributions to your wealth–likely more than what you’ll make through investments.
You can pick up a copy of The Psychology of Money here.
