Good Read: The Psychology of Money
Love it or hate it, most of us live in a capitalist world. If you want to survive this world, or rather get less screwed and leave the rat race early, it requires a cold hard look at our financial situation, spending habits, and overall understanding of money.
No doubt that a lot of people are good at that, whether because they "got it" early and well, or because they were repeating ingrained patterns passed over by their parents / family, or just because they educated themselves.
I come from a modest family background where those topics were never discussed and where there was no particular financial strategy in place. We had good times, but also hard times. In the end, our parents always ensured we didn't miss anything at home (in fact, the culinary side and food abundance is something I took from them), we had holidays, and we had an overall good life as kids / teens, but I wish I had read and learned earlier about proper money management skills.
Most of what I learned and achieved in this area in the past 6 years, I owe it to my financial advisor, now also a good friend whom I met randomly at a rugby club where both our kids were going. I can't be thankful enough about how he accompanied me and opened my eyes on those topics, certainly transforming my mindset and approach over these years.
Even though our household level of maturity in this area has significantly improved, there is always a lot of space for improvement, and we are not immune to the unnecessary expense here and there.
In my quest to educate myself and prepare not only myself and my wife for retirement in 20+ years, but also to ingrain healthy habits and prepare the ground for our kids, I was intrigued a few months ago by The Psychology of Money, a book written by Morgan Housel.
Let me tell you upfront that I devoured this book in less than a week, and immediately purchased a localized copy of it (in Czech) for my wife and my children.
As stated on the cover page, there are good and timeless lessons to draw from in the book. It is not a book about how you should or should not invest, but rather a book intended to explain, unsurprisingly perhaps, the psychological aspects of handling money and wealth, avoiding certain downfalls, and living a happy life.
I'm usually not a fan of business-related books, or anything that is related to personal development, but I am reconsidering my views on these topics. A good book should not just be about theory, but show tangible examples of good and bad behavior. Morgan Housel does a great job at demonstrating how various characters behave in given situations, and how behaviors are directly linked with steady wealth improvement or disastrous financial outcomes.
One aspect that I also personally appreciate a lot is how the author defines wealth, which in my view is having more than enough to lead a happy life. You may not need the latest iPhone, the most expensive luxury car, or whatever the next big thing is to be happy.
It also helps us to get things in perspective, by showing that most of the time we only impress ourselves with expensive items, and that our friends / family / visitors may not be that impressed at all. Similarly, while we may be looking at others with envy when they go around with the latest car, show us pictures of their huge estate, or enjoy expensive trips across the globe, we have absolutely no clue about what their actual financial situation may be, whether they are happy inside or not.
I find it more of a book and guideline about a philosophy of living happy with enough, filled with very good financial advice on moderation / frugality, the power of compound investments, and overall down-to-earth considerations about not being foolish when it comes to money.