Top critical review
The psychology of money
Reviewed in India 🇮🇳 on 21 January 2023
The Psychology of Money" by Morgan Housel is a thought-provoking and insightful book that delves into the complex relationship between money and our emotions, beliefs, and behaviors. The author uses a combination of personal anecdotes, historical examples, and research findings to explore the psychological factors that shape our attitudes towards money and how those attitudes can affect our financial decisions. One of the key themes of the book is the importance of perspective and context in understanding our relationship with money. Housel argues that our perceptions of money are heavily influenced by the experiences and influences of those around us, and that a lack of perspective can lead to poor financial decisions. He also highlights the role of luck and chance in shaping our financial outcomes, and the importance of recognizing that success and failure are often the result of factors outside of our control.
The book also explores the role of emotions in financial decision-making, and how our emotions can lead us to make choices that are not in our best interest. Housel argues that our emotional responses to money are often irrational and that we need to be aware of these emotions in order to make better financial decisions. Having studied behavioural economics in university and the works of Thaler and Kahneman I found this section particularly interesting.
Another theme of the book is the importance of patience and long-term thinking in managing our money. Housel emphasizes the importance of setting financial goals, and the importance of staying the course in order to achieve them. He also stresses the importance of avoiding impulsive decisions and focusing on the long-term effects of financial decisions.
Overall, "The Psychology of Money" is a well-written and engaging book that provides a thoughtful and nuanced perspective on the relationship between money and our emotions, beliefs, and behaviors. The author's use of personal anecdotes and historical examples makes the book highly relatable and accessible to a wide audience. The book is recommended for anyone interested in understanding the psychological factors that shape our attitudes towards money and how those attitudes can affect our financial decisions.