Lessons I learned from Psychology of Money
“Only buy something that you’d be perfectly happy to hold if the market shuts down for ten years.”
Warren Buffett
Psychology Of Money
Recently I finished reading “Psychology of Money” by Morgan Housel and ever since I have been receiving comments to write more summaries so here I am. First I would advise you to read it yourself because I might not be able write all then points (then it will become the size of the book itself i’ll just discuss a few points which I noted down while listening to the audio version ,which resonated with me the most. For someone like me who’s constantly conscious of how much to save and how much to spend(having no income sucks! I swear!!) this book came to me like a ‘farishta”(fairy/messenger of God). Jokes Apart Lets’ start.
Lessons Learned
1) Stories are the most powerful force in the economy
We have a tendency of believing anything which sounds too sweet and dreamy majorly stories of people about the one’s they know and believing. I remember a time we had homework(back in cls 5/6) and I had the confidence in my English but was a lil nervous about the homework. I had a friend who waited for me before class and used to copy my work(which was ok) but then she pointed something claiming it a mistake as she had talked with one of our friends and apparently the teacher had claimed it to be wrong and she believed it and that contagious confidence got me hard and I ended up changing my answer(later getting my answer wrong and getting a earful from ma who’s a English teacher herself). I hope this example works to convince one to think for themselves before believing others.
2) Self-Assessment
Get a good note of how you earn and how much you think before spending.
“More than your salary. More than the size of your house. More than the prestige of your job. Control over doing what you want, when you want to, with the people you want to, is the broadest lifestyle variable that makes people happy.“
The author had very well said “Life isn’t fun without a sense of enough”
3) No One is Crazy
“Your personal experiences with money make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works.”
It is true we feel crazy urges to spend the penny earned and sometime we do stupid acts and make crazy transactions but people aren’t crazy it’s just the difference of opinion and experiences.
4) Luck & Risk
“Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort. They are so similar that you can’t believe in one without equally respecting the other. They both happen because the world is too complex to allow 100% of your actions to dictate 100% of your outcomes.”
5) Getting Wealthy and Staying Wealthy
However similar they sound they both carry their unique shares of fortunes, misfortunes and stories.
“There are a million ways to get wealthy … but there’s only one way to stay wealthy: some combination of frugality and paranoia.”
6) Confounding Compounding
“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.”
7) Freedom
“The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.“
8) Man in the Car Paradox
It is honestly my favorite portion from the book.
“There is a paradox here: people tend to want wealth to signal to others that they should be liked and admired. But in reality those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired.“
Honestly no one is impressed by your possessions.
9) Saving Money
Just because you earned it, you ruthlessly spending it on useless pursuits will only damage you not others. I understood the concept more when the author shares a story where this engineer won a good fortune from his invention and littered his money such madly as if it was nobody’s buisness(it wasn’t that’s true) but as a consequence he ended penniless later in his life. So how much one earns spending it carefully is the word of the wise.
Though the list can never stop as the values provided in this book is immense so it’s more advisable to read it for yourself. Netherless I should pay my share of gratitude to youtube(Aman bhaiyas words and motivation and where he recommended reading this book) and Spotify for providing free access to this book’s audio version. Before I end I would also love to mention Kaustav’s (who is also a very good friend and supporter of my work) telegram channel 👇 https://t.me/educationalcourses786
where he provides free access to amazing content to learn various skills as well as pdfs and notes(You name it, he gets it!)
With this I sign off Bbye and Take Care!!
TC
