The Psychology of Money by Morgan Housel showcases how our financial decisions are influenced and taken based on our behavior and emotions. And, have less to do with calculations done on excel spreadsheets.
Things to Remember
Social Comparision is pointless. What is visible to you about another is their house, cars, etc. What you are not aware of is their wealth, EMIs, Loans, Debts. Being rich and being wealthy are two different things.
Being rich is dependent on one's salary and lifestyle. Being wealthy is about delaying instant gratification. Living a lifestyle well below your means. Investing and growing your money. The timeline has to be long.
What we end up doing is keep on increasing the lifestyle expenses. We don't have a sense of what is "enough". The goal post of "enough" keeps moving. For money to work for you that goal post of "enough" has to be stopped.
Money buys you independence. Money buys you freedom. You can control your time, decide whom to work with when to work. When not to work. For this, to work you have to understand your benchmark of "enough".
Live below your means. Have a high savings rate. Life emergencies don't knock on the door while coming.
Everyone is playing a different game. A game that you are completely unaware of. What might make sense for them. Might not make any sense to you.
When you are influenced by the success of Big shots say suppose Warren Buffet and similar. You have no clue of what worked for them. Tails drive everything.
Love doing your work. But, doing something you love on a schedule you can't control can feel the same as doing something you hate.
No one else is so obsessive about your possessions as much as you yourself are. No one is thinking about how many houses you own, how many cars you have. And, all other materialistic possessions that you can think of.
What is of value is quality friendships, being part of something bigger than themselves, and spending quality, unstructured time with their children. "Your kids don't want your money(or what your money buys) anywhere near as much as they want you. Specifically, they want you with them".
Take it from those who have lived through everything: Controlling your time is the highest dividend money pays.
"The idea is that you have to take risk to get ahead, but no risk that can wipe you out is ever worth taking."
Avoid a single point of failure. A good rule of thumb for a lot of things in life is that everything that can break will eventually break. So, if many things rely on one thing working, and that thing breaks, you are counting the days to catastrophe. That's a single point of failure.
The biggest single point of failure with money is a sole reliance on a paycheck to fund short-term spending needs, with no savings to create a gap between what your expenses are and what they might be in the future.
Nothing in the world is free. Everything might not come with a price tag. But, that doesn't mean that you are not paying for it. When the price is not in terms of money. You might be paying in terms of time.
Every job looks easy when you're not the one doing it because the challenges faced by someone in the arena are often invisible to those in the crowd.
What the book has made me think?
Before one is at a stage when money actually is buying you freedom. To earn that money the price that you are paying is with your time. A lot of people never come to a stage where money is buying them freedom. Chase for more is endless.
Living in an uncertain world where the only thing constant is change. Figuring out the self-definition of enough is difficult.
Youtube and social media is not the place to learn anything finance-related. Period. A lot of what is spoken lacks context. A person out there might be teaching you to invest your money in a non-liquid asset before saving for the rainy day.
More to think about when you are a citizen of India. You pay the Government of India before you put food on your table. You are not getting any social security in return. There is income tax to pay, there is tons of indirect tax you pay.
My opinion on the book?
In the time and age of information abundance, social media, and the likes of youtube. When there is no lack of contextless advice. What is written and the way it is explained is gold. It will also make you re-think where your life is going. What you are after?