In this article, I will review the psychology of money, which remains one of my favorite books on money.

It’s been a long time that I have not written an article on the book review.

 So in this article, I will be reviewing the psychology of money, which is one of my absolute favorite books to start, if you want to know anything and everything about money.

In this article, I will be sharing nine lessons that I realized when I was reading the book.

I hope these lessons are as valuable to you as they are for me about money about the world and how they think about money.


Number one: Being rich is not equal to being wealthy:

Whenever we see a rich person, we know the richness, but being rich is different from being wealthy.

For example, if you see anyone driving an expensive car, you will be like, oh, what a costly vehicle. At the same time, you will never say a stupid man with such a big loan.

If you go to someone’s big house, you will be like, wow, what a magnificent spacious house; you will never say wow how many crores of loan they have taken.

You will always equate being rich to what people have and showing off, and you will fall into the same trap.

You will buy an expensive phone and an expensive car or bike as you start earning.

You will plan and go on big vacations. Start to post Instagram photos of it because you want to tell and show people that you have a lot of money that you can spend. 

Essentially when people say that I want to earn lacs or crores, they are not saying that “I want to invest it, what they are seriously saying, is that I want to make lakh or crores, and then spend in lacs or Crores.

 This is very different from being wildly wealthy, which means that whatever you are on, you have a way of making it happen without spending your time.

 You are not making that money to show to someone else, and you are making that money that is working behind the scenes. 

Your wealth is working somewhere that wealth is going into things that you don’t know if you see my article investment of 2021. 

You will notice that so many of our investments will never be visible to you.

 You will never see me in an expensive car you will see me a very small and I want to live a simple life.

 Number 2 staying wealthy is very different from getting wealthy:

A lot of people can become wealthy. So many people in America buy lottery tickets.

 There was a study in which it was said that an American spends $400 to buy lottery tickets on average.

They don’t have this kind of money even for themselves, in case of any emergency, but they will spend it in our hope that somehow that lottery ticket would change their life.

And many people win lottery tickets; by many, I mean there are, of course, a few who win lottery tickets. A study has proved that whoever wins lottery tickets very quickly goes back to the same financial stage as before winning the lottery.

They very quickly become poor.

 Because it’s easy to earn money, but to grow that money is very difficult.

Let’s take a small example; my favorite model is you earn rupees hundred and invest it in your parent’s best instrument fixed deposits which gives you a guaranteed return of 4 to 5% every year.

All the people gambling with their money in the stock market are stupid because I get a guaranteed return of 4% every year.

What you ignore is that every year, the cost of a thing increases by 5%, which is called inflation.

So the thing which cost a hundred today will cost 105 tomorrow, so the thing your Rs 100 could buy today, you will not be able to buy the same thing tomorrow because its cost would be 105.

Your money would have increased from a hundred to 104 but what ultimately has happened is that you have destroyed your money by 1%.

Every year now, it is still ok for the short-term. Still, if you keep doing this, you keep investing your money in RD or FD, hoping that it is growing and that too in a safe and guaranteed manner, then what you are essentially doing is that you are destroying the value of your money.

 So it is easy to earn money but to become wealthy with that money is difficult.

If used instead spend it on something or invest it in something which gives you 10% 15% return, maybe not every year, perhaps not that year itself, but over some time it will keep giving you that return, and that is what it means to stay wealthy, which is very different from getting rich.

Number 3: Controlling your time is the biggest wealth:

 In this book, Morgan Housel writes that money’s intrinsic value, the most incredible intrinsic value, The solid foundation of money, that cannot be overstated, is its ability to give you control over your time. 

And a lot of people are not able to understand this.  

What is the purpose of earning money? 

What is it that you are earning money for?

Psychology Of Money

If you are earning money for the sake of it because if you are acquiring it to spend on things that people are impressed by your extravaganza and show off, you are a part of a treadmill that will never stop.

You will keep running all your life because there will never come a time when somebody will tell you that you look good, and this much richness is good enough.

You will never stop!

There must be someone you want to be richer than, you want to impress them, you want to show off to them. 

But if you start making money with the true essence that you can buy your time with money, that, in my opinion, is the actual value of money. Because if you can earn so much money that now you don’t have to spend time to make money, you can spend time doing things that you want to do.

It could be your passion for a project. It could even be your work, but now you are not doing that work for money, but you are doing it because you want to work, which is the most extensive use of money.

Use the money to control your time because having control over your time is such a powerful and universal happiness.

The fourth lesson is that you will somehow never be happy in your life until you do not have control over your time. 

Morgan housel, the author of this book, says to use the money to gain control over your time because not controlling your time is such a powerful and universal drag on happiness. 

Then he goes on to say that “doing something you love on a schedule you can’t control can feel the same as doing something you hate. 

It’s so beautiful doing something you love if you are doing something that you want to do, but you are doing it in a manner that you do not control your time, then that can be the same as doing something that you hate.  

This life is so tiny that if you cannot control your time, you cannot do things you want to do. You cannot do them when you want to do them, and you cannot do them for as long as you want to do, then You will be unhappy in your entire life.

Lesson number 5 know what is enough:

 If you keep chasing money continuously, then, believe me, they will never come a time when you will say, ‘that’s enough! no more!’ 

Because we don’t know how much we have got to chase and for what we have got to hunt.  

An essential exercise that I will love all of you to do is it doesn’t matter what your age is, how young are you, think of your entire life, think of everything that you want to do, each and everything that house or car, or luxuries, all that you would need, and make a list of all those things, and the price or the amount that they cost today,

And based on that, try to calculate how much money you would need in life.

When you do this exercise the first time, when I did this exercise the first time, I was surprised at how small that amount was. I used to think that I would need crores of rupees to live my life comfortably, but I realized that I did not need many crores but just a few crores.

If I remove a lot of things that I had written just for its sake, I would not even need crores; I would be happy with Lakhs also.

And that is something which I realized much later in life, but when I did, it was liberating because now I know that I am not running on a treadmill, where all I have to do is keep running, and nothing will come through.

 Money doesn’t control your ideologies and your emotions and passions two words, life to achieve more and more, not to prevent you you are truly free in your life.

Number 6 luck is significant:

and it is a must many times we feel that somebody worked hard and reach somewhere. Somebody didn’t do anything, so they did not progress in life, but luck is so important in life; it’s tough to figure that out because it’s tough to figure the importance of uncertainty and the role played by it.

That is why we tend to dismiss luck, but luck cannot be rejected.

At the same time, I know that some people generate luck as a discipline in their lives.

 I will give you an example. I often talked about cold emailing, where you write an email or message to someone who doesn’t know you, but you need something from them. It could be a job; it could be a referral, it could be a mentorship, it could be guidance, it could be an internship, anything at all.

Now, if you write a cold email, you write to one person, then it’s entirely possible that you would not get a reply. That’s fine if you are right to two; it may give the same probability.

But if you write a cold email every day, I cannot guarantee that you will get a reply to that email or not, but I can ensure that if you send a hundred emails, you will at least get five answers for sure. 

I don’t know which ones. That will be luck. But those five emails can change your life. Those five replies can change your life, which is the power of luck, but if you organize it that way.

That is why I keep saying that doing something through which the probability of you getting lucky increases, which will be the surest way to bring luck in your life because it is essential.


Number 7 Live below your means. 

Especially for those who are in their 20s, nobody expects you to be rich in your twenties.

Nobody expects you to have a lot of money, yet we try to show off during the most in our 20’s because we believe that that is how people will give us respect, that is how you will earn our care, and that is wrong.

 If you live with less than what you earn in your 20s, or for that matter, ever in life, you will be able to make a lot more of your life. And that will not be about, “Oh, life is too short, live it today, who knows what will happen tomorrow.”

 We will be there tomorrow; we will spend our day today being happy as against chasing what we think is happiness.

There is a big difference! We will be happy today against chasing happiness that gives us the illusion that we will be sunny tomorrow.

 And that means you have to spend today at the moment, but you continue to make that living below your means.

 Number 8: No investment is worth losing your sleep.

 If you invest your money in anything for it to grow, but that it takes away your restful sleep, then it’s not worth it. It is not worth it! 

So all the people who have invested in crypto, that too not in good coins, just random coins, meme coins, which fluctuate in the way that they are 30% down in one night, 40% down in one night, or 20% up in one night.

All of that high and low that gives you anxiety makes you feel stressed is not worth it.

What would you do with that money?

How much happiness could that money give you if you have lost your sleep over that investment? 

Don’t make investments where you will lose your sleep.

the most powerful lesson that I got from this book is:

Number 9 save as much as you can

 But you will have to change your perspective towards saving. 

We think that saving means income – expenses.

Often we say that we get rupees hundred as a salary as our income, whatever it is, and from the rupees, 80 is our expense, and we will invest the remaining 20.

That is the wrong way.

 I think of saving as NEED minus EGO! Interesting, what does it mean? Needs are essential, which you cannot do without.

Your EMI, your electricity, your water bill, your food expense, all your accounts, these are things that you need to spend on to live your life.

But another thing comes after this: ego, and another name for ego are your desires.

That excellent phone, that expensive sweater, that incredible car, those fancy shoes, each and everything that you are buying to fulfill some of your desired egos so that you feel great about yourself, you feel that you have arrived. 

When you take out your ego expenses from whatever is left in your needs is your savings.

And your savings will increase as much as your ego will reduce, and your savings will increase as much as it will decrease.

So it would help if you were in a position where you control your needs, reduce your ego, and increase your savings.

And if you are then deploying that to create wealth, not to be rich, to build wealth, then you are on the right track to the rich, my friend.


 These are the nine lessons which I have learned from the psychology of money, which is a great book, and I would highly recommend it to anybody who wants to know and understand money, not in terms of where to invest money, where to buy and where to sell, it is not a technical guide for you to invest money it is the best psychological understanding of what money means to us in our lives and how important it is.

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