A Review of The Psychology Of Money

My view on Morgan Housel’s path towards “financial freedom”

Why does one question the moves of others? Why do psychological factors matter so much when investing? Is it possible to change the way in which one acts in regard to money? These questions appear a lot when reading the book The Psychology of Money. Why does someone do something the way they do? The short answer to this question is that only the person making the decision can choose their actions. 

In making this book, Morgan Housel had one goal in mind: to tell others that “doing well with money has little to do with how smart you are and a lot with how you behave.” This quote resonated with me throughout my 2 month, cover to cover journey. After the culmination of the text, I came up with three main takeaways. First, whatever one does in life should only have to make sense to themself. 

Now what does this actually mean? To me, this means that when one is tasked with completing an action or making a decision, the way in which they respond should not be influenced or altered due to the beliefs or impacts of others. One’s response should solely come from themselves. Allow for yourself to be able to think critically and be able to understand your needs. 

Second, partially negate all fear, greed, and experiences in order to be able to make smart financial decisions. Initially, I wondered, “how is that even possible?” especially since emotions weigh in on almost every decision I have ever made. In this case, it does not mean don’t follow your gut, but that when making decisions that have an influence on your life, don’t let emotions dictate how you go about your process. Emotions limit your abilities to make rational decisions. Even though the main contents of this book encompass economic and financial literacy, these lessons that one can learn from reading Housel’s book can impact other aspects of one’s life. In life, you will face many challenges and have to make many decisions that may end up hurting someone else or having a negative impact on others; Not letting emotions dictate the way in which you respond can only help you make the correct decision for your respective situation. 

Third, the way in which one acts in regard to money is controllable and able to be changed. Contrary to many people's beliefs, being financially successful has to do a lot with how you think and talk about money. The way one thinks about money can be the difference between financial freedom and economic limits. Changing one's mindset about money is the starting point. After that, it is the way one acts which can further financially separate themselves. 

Overall, this book allowed me to critically analyze what it takes to become financially free in life. Whether you are 60 or 16, it is never too late or too early to start changing your ways of thinking and acting upon money. In the future, I hope to read more financial books by Housel; however, in the time being, I will continue to allow these takeaways to seep deeper and deeper into the way I view money.

Oliver Gates ‘27

image by: Amazon