Money Archives

You Can’t Make Financial Predictions Based on the Past

Do you look to history when trying to make financial decisions? Why is trying to make financial predictions based on past events a terrible idea? In his book The Psychology of Money, Morgan Housel says that many people will study past events in order to make financial predictions. However, Housel explains, this strategy doesn’t work because history is a series of unpredictable events, and studying it will not help you predict the future of finances. Here’s why you can’t use the past to make financial predictions.

Follow Your Personal Financial Goals—Not the Herd

Where do you see yourself in the future financially? Do you have a financial goal you’re striving for? According to Morgan Housel’s book The Psychology of Money, you should know your personal financial goals, otherwise, you may find yourself making decisions that don’t align with your goals. For example, short-selling stocks may work for some people, but it wouldn’t work with a long-term compounding plan. Here’s why it’s important to follow your own financial goals.

How Much Money Is Enough?—Greed Is a Fine Line

How much money is “enough”? Is there a point at which you should stop taking risks and enjoy what you have? People who say “money doesn’t buy happiness” are wrong—money can make you happier, up to a point. However, once you make enough to live a comfortable life, money can become a trap. Some people become so greedy in their desire to keep making more that they risk losing everything they have. Here’s how to be happy with having “enough.”

What Is the Difference Between Rich and Wealthy?

Is being rich and being wealthy the same thing? If not, then what is the difference between rich and wealthy? Contrary to popular belief, being rich and being wealthy is not the same thing. Being wealthy means you have a lot of money in the bank while being rich means you have a high income. But, just because you have a high income does not mean that you use your money wisely—money can disappear as fast as it appears if you aren’t responsible. Here is why making a lot of money doesn’t mean you’re wealthy.

Money Flexing: Why You Shouldn’t Flash Your Wealth

Can money buy respect? Do you respect people who have luxurious cars or expensive houses? According to Morgan Housel, the author of The Psychology of Money, money flexing with status symbols won’t buy you respect. People may be in awe of your sports car or your Rolex, but they’re admiring the item, not you. Here’s why you should only buy something expensive if it’s for you, not to flex on others.

Why You Should Be Saving Money for Emergencies

Do you have an emergency savings fund? Why is it important to plan for financial emergencies? Many people have the mindset of “it couldn’t happen to me.” But the truth is, sudden financial emergencies can happen to literally anybody—they’re unpredictable in their nature. That’s why it’s so important to start saving for emergencies, so you’re prepared for things to go wrong. Here’s why you should plan for things to go wrong.

The Psychology of Money: Review & Critical Reception

Is Morgan Housel’s The Psychology of Money worth reading? What is the key message to take away from the book? Most of us assume financial success depends on education and intelligence. But in The Psychology of Money, finance expert Morgan Housel presents an alternate hypothesis: The key to financial success lies in understanding human behavior. Here’s our The Psychology of Money review, including background, context, and critical reception by the readers.

How We Develop Our Views on Money

How would you describe your relationship with money? Why do so many people act in so many different ways when it comes to money? According to Morgan Housel in his book The Psychology of Money, every person has a different relationship with money based on a few factors: what you live through, the financial climate, unemployment rates, etc. That’s why, no matter how much financial advice is out there, people will continue to act on what feels right to them. Here’s why subjective rationality plays a huge role in your views of money.

The Millionaire Fastlane by MJ DeMarco: Overview

What is The Millionaire Fastlane by MJ DeMarco about? Which formula is the best to achieve financial freedom and wealth? In The Millionaire Fastlane, MJ DeMarco goes over the three common approaches to finances: consumption, accumulation, and production. DeMarco discusses each approach in detail and explains which approach is the best if you want to build wealth. Continue reading for an overview of the three formulas from The Millionaire Fastlane.

Financial Optimism: The Key to Investing Success

Are you an optimist or a pessimist when it comes to money? Why does financial optimism work better than financial pessimism? In his book The Psychology of Money, Morgan Housel says that you should remain optimistic when it comes to finances and investing, no matter what others say. He outlines three reasons why financial pessimism often seems like the smartest route but isn’t. Keep reading to learn why an optimistic view on finances and investments is beneficial.