The Psychology of Money Quotes

“Plan to survive reality. Future filled with unknown is everyone’s reality.”
― Morgan Housel, The Psychology of Money

“Everything has a price, but not all prices appear on labels.”
― Morgan Housel, The Psychology of Money

“More than 2,000 books are dedicated to how Warren Buffett built his fortune. Many of them are wonderful. But few pay enough attention to the simplest fact: Buffett’s fortune isn’t due to just being a good investor, but being a good investor since he was literally a child. As I write this Warren Buffett’s net worth is $84.5 billion. Of that, $84.2 billion was accumulated after his 50th birthday. $81.5 billion came after he qualified for Social Security, in his mid-60s. Warren Buffett is a phenomenal investor. But you miss a key point if you attach all of his success to investing acumen. The real key to his success is that he’s been a phenomenal investor for three quarters of a century. Had he started investing in his 30s and retired in his 60s, few people would have ever heard of him. Consider a little thought experiment. Buffett began serious investing when he was 10 years old. By the time he was 30 he had a net worth of $1 million, or $9.3 million adjusted for inflation.16 What if he was a more normal person, spending his teens and 20s exploring the world and finding his passion, and by age 30 his net worth was, say, $25,000? And let’s say he still went on to earn the extraordinary annual investment returns he’s been able to generate (22% annually), but quit investing and retired at age 60 to play golf and spend time with his grandkids. What would a rough estimate of his net worth be today? Not $84.5 billion. $11.9 million. 99.9% less than his actual net worth. Effectively all of Warren Buffett’s financial success can be tied to the financial base he built in his pubescent years and the longevity he maintained in his geriatric years. His skill is investing, but his secret is time. That’s how compounding works. Think of this another way. Buffett is the richest investor of all time. But he’s not actually the greatest—at least not when measured by average annual returns.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“one of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.”
― Morgan Housel, The Psychology of Money

“Richard Feynman, the great physicist, once said, “Imagine how much harder physics would be if electrons had feelings.” Well, investors have feelings”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“At every stage of our lives we make decisions that will profoundly influence the lives of the people we’re going to become, and then when we become those people, we’re not always thrilled with the decisions we made. So young people pay good money to get tattoos removed that teenagers paid good money to get. Middle-aged people rushed to divorce people who young adults rushed to marry. Older adults work hard to lose what middle-aged adults worked hard to gain. On and on and on.48”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“Modern capitalism is a pro at two things: generating wealth and generating envy. Perhaps they go hand in hand; wanting to surpass your peers can be the fuel of hard work. But life isn’t any fun without a sense of enough. Happiness, as it’s said, is just results minus expectations.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“Be careful who you praise and admire. Be careful who you look down upon and wish to avoid becoming.”
― Morgan Housel, The Psychology of Money

“doing well with money has a little to do with how smart you are and a lot to do with how you behave”
― Morgan Housel, The Psychology of Money

“Yes, but I have something he will never have... enough”
― Morgan Housel, The Psychology of Money

“The hardest financial skill is getting the goalpost to stop moving.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“some lessons have to be experienced before they can be understood”
― Morgan Housel, The Psychology of Money

“Comfortably living below what you can afford, without much desire for more, removes a tremendous amount of social pressure that many people in the modern first world subject themselves to. Nassim Taleb explained: “True success is exiting some rat race to modulate one’s activities for peace of mind.” I like that.”
― Morgan Housel, The Psychology of Money

“The customer is always right” and “customers don’t know what they want” are both accepted business wisdom. The line between “inspiringly bold” and “foolishly reckless” can be a millimeter thick and only visible with hindsight.”
― Morgan Housel, The Psychology of Money

“To make money they didn’t have and didn’t need, they risked what they did have and did need. And that’s foolish. It is just plain foolish. If you risk something that is important to you for something that is unimportant to you, it just does not make any sense.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“But there’s only one way to stay wealthy: some combination of frugality and paranoia.”
― Morgan Housel, The Psychology of Money

“The End of History Illusion is what psychologists call the tendency for people to be keenly aware of how much they’ve changed in the past, but to underestimate how much their personalities, desires, and goals are likely to change in the future.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“And since you can build wealth without a high income, but have no chance of building wealth without a high savings rate, it’s clear which one matters more.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“The only way to be wealthy is to not spend the money that you do have. It’s not just the only way to accumulate wealth; it’s the very definition of wealth.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“You might think you want an expensive car, a fancy watch, and a huge house. But I’m telling you, you don’t. What you want is respect and admiration from other people, and you think having expensive stuff will bring it. It almost never does—especially from the people you want to respect and admire you.”
― Morgan Housel, The Psychology of Money

“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. Tails drive everything.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“Being swayed by people playing a different game can also throw off how you think you’re supposed to spend your money. So much consumer spending, particularly in developed countries, is socially driven: subtly influenced by people you admire, and done because you subtly want people to admire you. But while we can see how much money other people spend on cars, homes, clothes, and vacations, we don’t get to see their goals, worries, and aspirations. A young lawyer aiming to be a partner at a prestigious law firm might need to maintain an appearance that I, a writer who can work in sweatpants, have no need for. But when his purchases set my own expectations, I’m wandering down a path of potential disappointment because I’m spending the money without the career boost he’s getting. We might not even have different styles. We’re just playing a different game. It took me years to figure this out. A takeaway here is that few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing different games than you are.”
― Morgan Housel, The Psychology of Money

“A good rule of thumb for a lot of things in life is that everything that can break will eventually break. So if many things rely on one thing working, and that thing breaks, you are counting the days to catastrophe. That’s a single point of failure.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“Compounding doesn’t rely on earning big returns. Merely good returns sustained uninterrupted for the longest period of time—especially in times of chaos and havoc—will always win.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“Therefore, focus less on specific individuals and case studies and more on broad patterns.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“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.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“we tell ourselves stories to fill in the gaps of what are effectively blind spots.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“Before we go further we should define what optimism is. Real optimists don’t believe that everything will be great. That’s complacency. 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.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“Intelligence is not a reliable advantage in a world that’s become as connected as ours has. But flexibility is.”
― Morgan Housel, The Psychology of Money: Timeless lessons on wealth, greed, and happiness

“The correct lesson to learn from surprises is that the world is surprising.”
― Morgan Housel, The Psychology of Money