Money-related books have become more popular, raising people’s optimism about making money. It was Robert Kiyosaki’s “Rich Dad and Poor Dad” that influenced me the most and led me to frequently refer to it. The Psychology of Money is the second book.

Morgan Housel’s 247-page book, “The Psychology of Money”, explores money’s value and behaviour in a completely different light. In addition to referencing other writers, publications, and cases throughout the book, the author also mentions a lot of other cases throughout the book.

It was in the book “Never Enough” that the author told the story of Gupta, an Indian-born billionaire who dreamed of becoming a billionaire. In the end, he was incarcerated for insider trading. To summarize, the author wants to ask, “How much is too much?”.

Rather than studying interest rates, Housel suggested that people study greed, insecurity, and optimism to understand why they get into debt. You shouldn’t focus on the math of the expected returns when trying to understand why investors sell out at the bottom of a bear market; instead, you should consider how you feel when you look at your family and wonder if your investments are imperilling their future.

“Ferraris don’t generate respect”, he tells us in this book, which means people buy big houses and fancy cars because they want respect and admiration from others. It’s not the fancy house or car that people admire, it’s the object. People imagine themselves to have that object. It’s a fool’s pursuit to buy impressive items to gain admiration and respect from others – these things cannot be bought.

In addition, the psychology of money is based on “soft skills” rather than “technical skills”. In this case, Housel gives the example of Ronald James Read, who was a gas station attendant who passed away in 2014. In addition to donating $1.2 million to Brooks Memorial Library, he also donated $4.8 million to Brattleboro Memorial Hospital.

Read’s story is mentioned because he invested his money wisely and voicelessly with compound interest, despite not earning a lot.

In the book, another interesting and useful lesson is “Being rich vs. wealthy”, which states that if you are rich, you have a high income today. Being wealthy, on the other hand, is something different – wealth is not visible. It’s money you have but don’t spend. A wealthy person will have plenty of free time, possessions, and freedom in the future, but being rich is a short-term thing.

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