The Psychology of Money

I'm a sucker for a book on money, and this is a good one. No new ideas, but very well articulated by the author.

The Psychology of Money

Highlights

Your personal experiences with money make up maybe 0.00000001% of what's happened in the world, but maybe 80% of how you think the world works.

Nothing is as good or bad as it seems.

$81.5 billion of Warren Buffett's $84.5 billion net worth came after his 65th birthday. Our minds are not built to handle such absurdities.

Good investing is not necessarily about making good decisions. It's about consistently not screwing up.

There are a million ways to get wealthy, and plenty of books on how to do so. But there’s only one way to stay wealthy: some combination of frugality and paranoia.

Controlling your time is the highest dividend money pays.

No one is impressed with your possessions as much as you are.

Saving money is the gap between your ego and your income.

When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead, you think, “Wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think. There is a paradox here: people tend to want wealth to signal to others that they should be liked and admired. But in reality those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired.

Spending money to show people how much money you have is the fastest way to have less money.

Aiming to be mostly reasonable works better than trying to be coldly rational.

History is the study of change, ironically used as a map of the future.

The most important part of every plan is planning on your plan not going according to plan.

Beware taking financial cues from people playing a different game than you are.