Housel centres his book on how human beings behave with money, shaped by the lives they’ve lived and the beliefs they carry. He explains that people often make unusual choices with money, but that doesn’t make them irrational. What feels reckless to one person might feel perfectly reasonable to another.
Some topics are too important to ignore, and money is one of them. Yet in many homes, it is often left unspoken, even though it fuels misunderstandings in families, friendships, and romantic relationships. Simply put, money is a sensitive subject. However, it is one we must discuss. Today, we’re looking at it through Morgan Housel’s perspective in his book The Psychology of Money.
Housel centres his book on how human beings behave with money, shaped by the lives they’ve lived and the beliefs they carry. In the opening chapter, No One is Crazy, he explains that people often make unusual choices with money, but that doesn’t make them irrational. What feels reckless to one person might feel perfectly reasonable to another.
Our lived experiences shape the way we see money. As Housel puts it, “The person who grew up in poverty thinks about risks and rewards in ways that the child of a wealthy banker cannot fathom if he tried.” It reminded me that when I don’t understand someone’s financial choices, it may be less about logic and more about the story behind their life.
Do you believe in luck? Or are you among those who think success comes only from hard work? I believe in luck. Much because of luck, or grace, if you will. Money is no different. Luck plays a significant role. Housel puts it beautifully: luck and risk are siblings. Every outcome in life is guided by forces beyond our effort alone.
When it comes to money, you need both the grace of luck and the courage to take risks.
Housel illustrates this through the story of Bill Gates. As a teenager, Gates attended one of the few high schools with a computer lab. There, he met his friend and future cofounder, Paul Allen. Luck opened that door, but so did their willingness to dream big and take risks. From that combination, Microsoft was born. Gates himself admits, “If there had been no Lakeside, there would be no Microsoft.”
One of the lessons that stood out for me is around the idea of “never enough”. Housel shows how dangerous it can be to keep chasing more without ever defining what enough looks like. There will always be someone richer, smarter, or more successful, and if we measure our happiness against that, we will always feel lacking.
For me, it comes down to contentment. To be happy, you have to learn to appreciate what you already have. The next big thing, whether it’s a promotion, a new car, or even more money, won’t necessarily make you happier if you haven’t found peace with what’s in front of you. Having enough means refraining from comparing yourself with others.
“The point is that the ceiling of social comparison is so high that virtually no one will ever hit it. Which means it’s a battle that can never be won, or the only way to win is to accept that you might have enough, even if it’s less than those around you.”
Housel argues that the highest form of wealth is not more money but the ability to control your time. To wake up and decide how you will spend your day, that is real richness.
When I think about it, the moments I treasure most are not tied to how much I had in my account but to how free I felt with my time. Choosing to spend a slow morning with a book, or taking a walk just because I wanted to.
Housel reminds us that saving is not just about buying something in the future; it is about preparing for the uncertainty of tomorrow. Life can change unexpectedly, and having savings gives you the freedom to face those changes without losing control of your time.
For example, much of Warren Buffett’s wealth came not only from smart investments but also from the fact that he started early. By saving and investing at a young age, time worked in his favour, allowing compounding to do its magic. “His skill is investing, but his secret is time. And that’s how compounding works,” he writes.
The Psychology of Money is a book about how to earn and keep money. It explores behaviour and mindset around money. As you reach the last page, you will see the need to pay attention to your progress, because progress happens too slowly to notice, but setbacks happen too quickly to ignore.
As you plan for your future, remember that planning is important, but the most crucial part of every plan is preparing for it not going according to plan. This book is for anyone seeking to expand their knowledge of personal finance management.
Jane Shussa is a digital communication specialist with a love for books, coffee, nature, and travel. She can be reached at [email protected].
