101 Quotes from The Psychology of Money by Morgan Housel

The Psychology of Money by Morgan Housel is one of the most popular personal finance books of this generation.

It’s sold over 4 million copies, and has helped people:

• Understand money better.

• Start building wealth.

• Work towards financial success.

Here are 101 of my favourite The Psychology of Money Quotes:

1. The highest form of wealth is the ability to wake up every morning and say, I can do whatever I want today.

2. When you define savings as the gap between your ego and your income, you realise why many people with decent incomes save so little.

3. Doing something you love on a schedule you can’t control, can feel the same as doing something you hate.

4. Financial success is not a hard science, it’s a soft skill, where how you behave is more important than what you know.

5. Happiness, as it’s said, is just results minus expectations.

6. When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool, but instead, you think, “wow, if I had that car people would think I’m cool.”

7. History never repeats itself, but humanity always does.

8. Every financial decision a person makes, makes sense to them in that moment and checks the boxes they need to check.

9. People with enduring personal finance success, tend to have a propensity to not give a damn what others think about them.

10. Your success as an investor will be determined by how you respond to punctuated moments of terror, not the years spent on cruise control.

11. Luck and risk are siblings, and they are both the reality that every outcome in life is guided by forces, other than individual effort.

12. It is so important to remember when judging success, nothing is as good or as bad as it seems.

13. The accidental impact of actions outside of your control can be more consequential than the ones you consciously take.

14. Not all success is due to hard work, and not all poverty is due to laziness, so keep this in mind when judging people.

15. You’ll get closer to actionable takeaways by looking for broad patterns of success and failure.

16. Bill Gates once said, success is a lousy teacher, as it seduces smart people into thinking they can’t lose.

17. As much as we recognise the role of luck in success, the role of risk means we should forgive ourselves and leave room for understanding when judging failures.

18. The hardest financial skill is getting the goalposts to stop moving.

19. Modern capitalism is a pro at two things, generating wealth and generating envy.

20. The ceiling of social comparison is so high that virtually no one will ever hit it, which means it’s a battle that can never be won.

21. “Enough” is realising that the opposite, an insatiable appetite for more, will push you to the point of regret.

22. Your best shot at keeping the most valuable things in life, is knowing when it’s time to stop taking risks that might harm them.

23. You don’t need tremendous force to create tremendous results.

24. If something compounds, a small starting base can lead to results so extraordinary they seem to defy logic.

25. Warren Buffett’s fortune isn’t due to just being a good investor, but being a good investor since he was literally a child.

26. The point is that what seem like small changes in growth assumptions can lead to ridiculous, impractical numbers.

27. Investing is about earning pretty good returns that you can stick with, and which can be repeated for the longest period of time.

28. There are a million ways to get wealthy, and plenty of books on how to do so.

29. Getting money is one thing, keeping it is another.

30. Keeping money requires the opposite of taking risks, it requires humility, and fear that what you’ve made can be taken away from you just as fast.

31. Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.

32. A plan is only useful if it can survive reality, and a future filled with unknowns is everyone’s reality.

33. The more you need specific elements of a plan to be true, the more fragile your financial life becomes.

34. Room for error, or margin of safety, is one of the most under appreciated forces in finance.

35. The idea that a few things account for most results is not just true for companies, it’s also an important part of your own behaviour as an investor.

36. 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.

37. When you accept that tails drive everything in business, investing, and finance you realise that it’s normal for lots of things to go wrong, break, fail, and fall.

38. If you’re terrific in the investing world, you’re right six times out of 10,” Peter Lynch once said.

39. You will desire less if you care less about what others think of you.

40. No one makes good decisions all the time.

41. The good jokes I see on Netflix are the tails that stuck out of a universe of hundreds of attempts.

42. When we pay special attention to a role model’s successes we overlook that their gains came from a small percent of their actions.

43. It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.

44. The ability to do what you want, when you want, with who you want, for as long as you want, is priceless.

45. People like to feel like they’re in control, and when we try to get them to do something, they feel disempowered.

46. Take it from those who have lived through everything, controlling your time is the highest dividend money pays.

47. You might think you want an expensive car, a fancy watch, and a huge house, but I’m telling you, you don’t.

48. Humility, kindness, and empathy will bring you more respect than horsepower ever will.

49. Wealth is what you don’t see, not what’s parked on the driveway.

50. We can’t see people’s bank accounts or brokerage statements, so we rely on outward appearances to gauge financial success.

51. It’s not hard to spot rich people, they often go out of their way to make themselves known.

52. The world is filled with people who look modest but are actually wealthy and people who look rich who live at the razor’s edge of insolvency.

53. Building wealth has little to do with your income or investment returns, and lots to do with your savings rate.

54. Wealth is just the accumulated leftovers after you spend what you take in.

55. A high savings rate means having lower expenses than you otherwise could, and having lower expenses means your savings go farther than they would if you spent more.

56. Spending beyond a pretty low level of materialism is mostly a reflection of ego approaching income, a way to spend money to show people that you have, or had, money.

57. Savings can be created by spending less, and you can spend less if you desire less.

58. You can save just for saving’s sake, and indeed you should.

59. Saving is a hedge against life’s inevitable ability to surprise the hell out of you at the worst possible moment.

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

61. When you don’t have control over your time, you’re forced to accept whatever bad luck is thrown your way.

62. A question you should ask as the range of your competition expands is, how do I stand out?

63. Intelligence is not a reliable advantage in a world that’s become as connected as ours has, but flexibility is.

64. Having more control over your time and options is becoming one of the most valuable currencies in the world.

65. Margin of safety is raising the odds of success at a given level of risk by increasing your chances of survival.

66. Do not aim to be coldly rational when making financial decisions, aim to just be pretty reasonable.

67. Acting on investment forecasts is dangerous, but I get why people try to predict what will happen next year.

68. Things that have never happened before happen all the time.

69. History helps us calibrate our expectations and study where people tend to go wrong.

70. Realising the future might not look anything like the past is a special kind of skill that is not generally looked highly upon.

71. Most of our attention goes to things that are huge, profitable, famous, or influential, and when most of what we pay attention to is the result of a tail, it’s easy to underestimate how rare and powerful they are.

72. The Intelligent Investor is one of the greatest investing books of all time.

73. Recent history is often the best guide to the future, because it’s more likely to include important conditions that are relevant to the future.

74. General things like people’s relationship to greed and fear, how they behave under stress, and how they respond to incentives tend to be stable in time.

75. Specific trends, trades, sectors, causal relationships about markets, and what people should do with their money are always examples of evolution in progress.

76. You have to plan on your plan not going according to plan.

77. The wisdom in having room for error is acknowledging that uncertainty, randomness, and chance, are an ever-present part of life.

78. The best way to achieve extreme happiness is to aim low, says Charlie Munger.

79. The idea is that you have to take risks to get ahead, but no risk that can wipe you out is ever worth taking.

80. A good rule of thumb for a lot of things in life is that everything that can break will eventually break.

81. Some of the most miserable workers are people who stay loyal to a career only because it’s what they picked when deciding on a career at 18 years old.

82. The trick is to accept the reality of change and move on as soon as possible.

83. Everything has a price, and the key to a lot of things with money is just figuring out what that price is and being willing to pay it.

84. Like everything else worthwhile, successful investing demands a price.

85. Why do so many people who are willing to pay the price of cars, houses, food, and vacations try so hard to avoid paying the price of good investment returns?

86. I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large number of people.

87. Extremely good and extremely bad circumstances rarely stay that way for long because supply and demand adapt in hard-to-predict ways.

88. We need to believe we live in a predictable, controllable world, so we turn to authoritative-sounding people who promise to satisfy that need.

89. The more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true.

90. There is no greater force in finance than room for error, and the higher the stakes, the wider it should be.

91. I don’t know what I don’t know, so I am just as susceptible to explaining the world through the limited set of mental models I have at my disposal.

92. Hindsight gives us the illusion that the world is understandable, it gives us the illusion that the world makes sense, even when it doesn’t make sense.

93. Risk is what’s left over when you think you’ve thought of everything.

94. Expecting things to be bad is the best way to be pleasantly surprised when they’re not.

95. 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.

96. Studying something specific can be dangerous because we tend to study extreme examples, like billionaires or CEOs, and extreme examples are often the least applicable to other situations, given their complexity.

97. Even the most impressive people are packed full of horrendous ideas that are often acted upon.

98. It’s not the person who has less, but the person who always craves more, that is poor.

99. There’s only two ways to stay wealthy: frugality and paranoia.

100. History offers a rough guide of what tends to work, but it is not, in any way, a map of the future.

101. Freedom is the highest dividend money pays.

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