Before reading The Psychology of Money, I expected more practical, low-level, specific advice, like “do X” or “put a certain amount of money into X”.
But this book is about the philosophy of how to think about money, from different points of view.
Two main ideas in the book changed how I see money:
1. Use money and income to control your time
This idea resonated with me the most.
Being rich and able to buy anything you want is not what’s worth dreaming about.
Being able to wake up in the morning and plan your day the way you want, with the people you want, is real freedom in today’s world, and that’s the goal I see for myself.
Money is the lever that can make it happen.
2. Tails
A few examples:
- Most of the profit in index funds comes from just a few companies.
- Roughly 10 stocks out of the 400-500 that Warren Buffett holds bring him his profit.
- Amazon, Netflix, and other successful companies try a lot of wild and senseless ideas. Only a few of them bring real profit, but that profit is so big that it covers all the failed attempts.
In this context, the point is to just keep investing.
What matters is doing it consistently. Then it doesn’t matter whether a single investment works out, because in the end you come out ahead.
It also reminds me of my dad’s approach to blogging. He is consistently posting, and quality comes second.
I don’t remember exactly why, but this book also motivated me to save more money, invest more consistently, and look at myself and my finances in a new way.
The Psychology of Money is short and easy to read. I recommend it to everyone.
What’s the one idea from this book that stuck with you?