Money at 30: “The Psychology of Money” Book Review
One of the things I love most about the book reviews I’ve been doing for the past several months now is that, despite writing about finance for five years or so now, I’m consistently introduced to new insights, ideas, and perhaps even some “hot takes” about money. My latest bit of consumption is no exception and, in fact, may be the most paradigm-shifting read I’ve experienced yet. Released earlier this month, The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel may already rank among my favorite personal finance books — partially because it’s so much different from the financial books I typically encounter.
With a title like “The Psychology of Money,” you might expect the material within to be dense and heady. On the contrary, the book is extremely approachable and digestible. That’s thanks in part to its structure that breaks the contents down into 20 relatively short chapters (plus an intro and a postscript). Each of these chapters finds Housel tackling a different topic, with the majority of these chapters feeling like their own isolated essays. That said, lest you lose the thread along the way, the author ties it all up in a bow by in the penultimate numbered chapter.
The book starts out with an extremely relevant and insightful look at how our experiences influence our world views — particularly when it comes to money. Titled “No One’s Crazy,” this chapter does a tremendous job of explaining how two people can come to different conclusions but neither actually be wrong. In just a dozen pages, Housel completely sold me on the premise of the rest of the book and had me hooked. Now is also a good time to mention that, while there is definitely financial advice to be found in Housel’s prose, it’s rare for the author to harp on many specifics seeing as the book’s thesis revolves around us all being different. Nevertheless, in the interest of transparency, he does recount his personal money experiences, beliefs, and strategies in chapter 20.
Throughout the book, Housel also draws distinctions between terms that might not seem so different on the surface. Riches vs. wealth, rational vs. reasonable, fee vs. fine — all are explored and explained to great effect. In every case, the author makes a solid case for the nuance in these expressions, while also detailing how each can impact your relationship with finances. On a similar note, I also appreciated the assessments of what people really mean when they say certain things about money. Easily my favorite example of this is when Housel writes, “When most people say they want to be a millionaire, what they might actually mean is ‘I’d like to spend a million dollars.’ And this is literally the opposite of being a millionaire.” This revelation may sound obvious to some but, for me, really highlights an irony that exists in personal finance.
Another one of my favorite chapters looked at the nature of optimism and why the opposite mentality typically gets the most attention. As I consider myself an optimist, I loved that this highlighted some important truths that are often overlooked. If I may say, the chapter also served as a nice pallet cleanser from the daily news grind these days.
Speaking of these unique days we find ourselves in, I was surprised to see Housel mention the coronavirus ever-so-briefly in his book. Given the lead time I expect most publications have, I really wasn’t expecting anything so up to date. That said, in a later chapter, he notes that the United States currently has record low unemployment, so not everything is up to the minute. Personally, I’m actually thankful that the crisis was mostly excluded as 2020 readers will certainly be able to insert such references on their own where appropriate.
For all the strengths of The Psychology of Money, I did have a couple of minor criticisms. One is that, at times, I felt like the subject strayed a bit from the concept of “psychology” and more toward general “do this, not that” advice. It’s not that these chapters weren’t interesting or lacked impact, but it is something that stuck out to me. The other nitpick I had is that there are a couple of moments that feel redundant or find Housel hammering home his point perhaps a tad too hard — namely in chapter 16, where I felt as though I kept reading the same refrain (although the chapter was still strong overall). Again, these are only small critiques that hardly took away from my enjoyment of the book on the whole.
When I pre-ordered my copy of The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness, I really had no idea what to expect. What I found was a deeply intriguing book that not only helped change the way I thought about money but I predict will also influence the way I write about money in the future. Needless to say, if you’re looking for a different kind of personal finance book — and one that will surely open your mind regardless of who you are — I highly recommend The Psychology of Money by Morgan Housel.