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The Psychology of Money

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“The premise of this book is that doing well with money has a little to do with how smart you are and a lot to do with how you behave.”


“A genius who loses control of their emotions can be a financial disaster. The opposite is also true. 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.”


Two contrasting examples:

Ronald James Read: Gas station attendant, janitor and American philanthropist. Saved throughout his life, lived frugally and amassed an $8 million net worth at time of death. The majority of his fortune was left to a local hospital and library.

Richard Fuscone: Harvard-educated Merrill Lynch executive. Borrowed heavily and spent lavishly, got hit by the 2008 financial crisis, declared bankruptcy.


“Ronald Read was patient; Richard Fuscone was greedy. That’s all it took to eclipse the massive education and experience gap between the two.”


Two explanations that explain existence of stories like Read and Fuscone:


“Financial outcomes are driven by luck, independent of intelligence and effort.” (true to some extent)


“Financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know.” (Housel believes this is the more common of the two explanations).


Knowing how to do something is insufficient. In many situations you also need to battle against your internal emotional and mental turmoil as well which will influence or alter your planned response.

Explore the YouTube series on "The Psychology of Money" featuring our Co-founder and CEO of Elearnmarkets and StockEdge, Vineet Patawari for valuable insights.

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Michael George Knight

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