My Favorite Quotes from The Psychology of Money by Morgan Housel

The Psychology of Money is the personal finance book you didn’t know you needed to read. Morgan Housel has a knack for stripping away fluff and seeing the world and the people in it for what it is. He distills his observations down in a way that will cause you to rethink how you think about money.

  • “Ordinary folks with no financial education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence.”

  • “[F]inancial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know.”

  • “[K]nowing what to do tells you nothing about what happens in your head when you try to do it.”

  • “Money is everywhere, it affects all of us, and confuses most of us.”

  • “[T]he first thing I learned after the financial crisis was that no one could accurately explain what happened, or why it happened, let alone what should be done about it.”

  • “People do some crazy things with money, but no one is crazy.”

  • “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.”

  • “Every decision people make with money is justified by taking the information they have at the moment and plugging it into their unique mental model of how the world works… every financial decision as person makes, makes sense to them in that moment and checks the boxes they need to check.”

  • “Few people make financial decisions purely with a spreadsheet.”

  • “Dogs were domesticated 10,000 years ago and still retain some behaviors of their wild ancestors. Yet here we are, with between 20 and 50 years of experience in the modern financial system, hoping to be perfectly acclimated.”

  • “Modern capitalism is a pro at two things: generating wealth and generating envy.”



  • “[T[here’s only one way to stay wealthy: some combination of frugality and paranoia.”

  • “[G]etting money and keeping money are two different skills.”

  • “A good definition of an investing genius is the man or woman who can do the average thing when all those around them are going crazy.”

  • “The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today…. The ability to do what you want, when you want, with who you want, for as long as your want, is priceless. It is the highest dividend money pays.”

  • “Money’s greatest intrinsic value – and this can’t be overstated – is its ability to give you control over your time.”

  • “[D]oing something you love on a schedule you can’t control can feel the same as doing something you hate.”

  • Knowledge workers: “We’re constantly working in our heads, which means it feels like work never ends.”

  • “When most people say they want to be a millionaire, what they might actually mean is ‘I’d like to spend a million dollars.’ And that is literally the opposite of being a millionaire.”

  • “Wealth is an option not yet taken to buy something later.”

  • “[O]ne of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.”

  • “You can save just for saving’s sake.”

  • “Savings without a spending goal gives you options and flexibility, the ability to wait and the opportunity to pounce.”

  • “What’s often overlooked in finance is that something can be basically true but contextually nonsense.”

  • “Experiencing specific events does not necessarily qualify you to know what will happen next.”

  • “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 you think your expenses are and what they might be in the future.”

  • “[P]eople are poor forecasters of their future selves.”

  • “Bubbles form when the momentum of short-term returns attracts enough money that the makeup of investors shifts from mostly long term to mostly short term.”

  • “Optimism is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way.”

  • “Investing is one of the only fields that offers daily opportunities for extreme rewards.”

  • “Part of the reason forecasting the stock market and the economy is so hard is because you are the only person in the world who thinks the world operates the way you do.”

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