Book Review: The Psychology of Money

Reviewer: Wekulo K.

Title: The Psychology of Money: Timeless Lessons on Wealth, Greed, and HappinessAuthor: Morgan HouselDate of Publication: September 8, 2020Publisher: Harriman House

Category: Personal Finance/Behavioural Economics with elements of Psychology and History

Price: Ksh1,995

You will also like:

• "Your Money or Your Life" by Vicki Robin and Joe Dominguez

• "Atomic Habits" by James Clear

• "Thinking, Fast and Slow" by Daniel Kahneman

• "Die With Zero" by Bill Perkins

• "Simple Wealth, Inevitable Wealth" by Nick Murray

• "A Random Walk Down Wall Street" by Burton Malkiel

In "The Psychology of Money," Morgan Housel presents a collection of 19 short stories exploring the complex and often irrational ways people think about money. Drawing from his background as a financial journalist, Housel eschews traditional finance models in favour of examining the behavioural and psychological aspects that drive financial decisions. The book challenges conventional wisdom about wealth accumulation, arguing that financial success depends less on what you know and more on how you behave. Through engaging anecdotes and clear prose, Housel illuminates how personal history, risk tolerance, and worldview shape our relationship with money more profoundly than mathematical formulas or investment strategies.

Housel's core ideology centres on the belief that financial decisions are deeply personal and influenced more by psychology than by spreadsheets or economic theories. He advocates for a behavioural approach to finance that prioritises contentment, reasonable financial goals, and long-term thinking over the pursuit of extraordinary returns or keeping up with others. His philosophy blends elements of stoicism, behavioural economics, and historical perspective to create a framework for making peace with money while building sustainable wealth. 

Who should read this book?

This book is ideal for readers who feel overwhelmed by traditional finance literature or who struggle to align their financial knowledge with their actual behaviour 

"Getting money requires taking risks, being optimistic, and putting yourself out there. But keeping money requires the opposite of taking risks. It requires humility, and fear that what you've made can be taken away from you just as fast."- Morgan Housel