The Psychology of Money - 10 Tips to Get Wealthy
Money is such a reality in the world that can never be denied. We were taught from childhood that money can't buy happiness. Somehow, this statement never made sense because if we think pragmatically and practically, then money can indeed buy happiness. Therefore, it is not a guilt to become rich or make money to change your economic conditions. But we should be careful to avoid greed, cheating, and illegal means in this journey of earning money. Earn as much money through legal means as you wish.
"The Psychology of Money" is easily the best book written on this topic. This book is a gold standard for understanding the psychology and science behind money making. The things discussed in this book are going to sort out your financial health. This book contains path-making wisdom. So, today is a big book review.
The Psychology of Money written by Morgan Housel
James Clear, the author of "Atomic Habits" had said, "Every man of the world should have a copy of this book, The Psychology of Money". Basically, this book talks about our relationship with money. It talks about our psychological and emotional connection with money. By the way, this book is loaded with priceless wisdom, but we have selected 10 tips from it to get wealthy which are the most significant takeaways.
The Sense of Enough
Two people were gossiping at a hatchmen manager's party. One of which was Joseph Heller whose book "Catch-22" was a super hit. His friend said to Heller, "Do you know the hatchmen manager earns the money in one day that you will earn in your whole life by selling this book"? Heller gave such a reply to this question that is a big lesson about money. He replies, "Yes, I have something he will never have. I have enough". This was a mind-blowing answer. If we look at the psychology of money, one rule is very important and that is you need to know when you have enough. You should know how much money you have to earn. Otherwise, you will run your whole life on such a path that will never end. Therefore, the workout that how much money you have to earn is very important. You should have a sense of enough. You should know where your journey of making money is going to stop. Here Morgan Housel writes an awesome thing. He said, "The hardest financial skill is getting the goalpost to stop moving".
Getting Wealthy vs. Staying Wealthy
Remember, getting money and keeping money are two different skills. Getting money requires taking risks, being optimistic, and putting yourself out there. But keeping money requires the opposite of taking risks. To sustain money, you need humility and fear. You have to believe somehow in luck also because past success can't be light to repeat indefinitely. That's why some big actors, celebrities, and lottery winners become indigenous after a period of time. They go through difficult times because they think the luck that had made them rich will repeat itself. But it never happens. So, be very careful with your money management.
Controlling Your Time
The next point is one of the best and life-taking points in this book. Morgan Housel writes that controlling your time is the highest dividend that money pays. Money gives you control over your time which is one of the biggest values of money. There is nothing bigger than the freedom that money gives you. It gives you the ability what you want when you want, with who you want, and for as long as you want. Your liberty is the greatest dividend that money pays.
Spending Money
The next point is also marvelous. Morgan Housel says that spending money to show how much money you have is the fastest way to lose money. As for living in social comparison in society, remember you will never get wealthy. An expensive house, expensive car, expensive watch, expensive clothes, expensive vacations, etc will never help you. The social comparison makes a man mad. We should never fall into this trap of keeping our faces red with slaps, especially in relation to money. If one is richer than you, never waste your money on matching him. Always live below your means.
Saving
The next point seems very simple and straightforward but indeed very difficult to execute, and that is "Save". It is a big question why people don't save. The answer to it is ego. Just cover your basic needs and never let your ego get the better of you.
Saving is equal to the gap between your income and ego.
Future and Probability
Life is full of surprises and outliers. We plan but happens something else. We try our best to protect our future, but usually, it doesn't work. There is a breathtaking example. 15 billion people were born in this world between the 19th and 20th centuries, but only 7 people left a significant effect on the history and direction of the world like Adolf Hitler, Joseph Stalin, Mou Zedong, Gavrilo Princip, Thomas Edison, Bill Gates, and Martin Luther King. It means one can't predict things in life and the probability of impact is low and uncertain. Therefore, your financial health must be surprise-free. No one knows the future. One of the best examples is Covid-19 in recent years which couldn't be assessed.
Room for Errors
The most important part of every plan is planning on your plan not going according to plan. It is a very significant point. It means it is not necessary that life moves according to your plan. Sometimes you come across unforeseen circumstances. Therefore, you should be prepared for such kind of situation.
You will Change
You will change. Every human being evolves. Long-term planning is harder than it seems because people's goals and desires change over time. You think differently today from what you thought ten years ago. This is a sign of human growth. You should remain frugal and flexible concerning money. Never fixated on one thing. Change your financial planning from time to time.
You should like Risks
The next point is also very potent. You should like risks because it pays off over time. One should understand that taking risks is relatively easy but sustaining them is difficult. You have to sustain it for a long time when you take a risk, then you will be able to grow financially. Your money will start compounding and when it starts, you will be unstoppable.
The Cost of Success
The next point is defining the cost of success and being ready to pay for it. Remember that most financial costs don't have a visible price tag. Uncertainty, doubt, and regret are common costs in the finance world. They are often worth paying. View them as fees, not fines. There is uncertainty and doubt when we invest money, but if you sustain this doubt with perseverance, then it will pay off.
This is a marvelous book that should be read and re-read again and again. Remember financial independence is extremely significant in your life. It is one of the greatest blessings. When you have money in your kitty, in your bank, it gives you a tremendous feeling of independence. Remember, cash in hands serves like oxygen for independence. You feel confident and you can do anything that you aspire to.