Learnings from the Psychology of Money
I'm in Salt Lake City this entire month with friends! Nick and I will perpetually be nomad-ing it up in different cities each month this 2021. It’s the time.
Follow along on our adventures! 🙈
Monie Lessons = Life Lessons
I recently picked up The Psychology of Money by Morgan Housel. He offers 20 stories and themes on how people think about money.
If you haven't yet read it, I'm only on the 5th chapter and I highly recommend.
In his compelling introduction, the author shares two stories:
☝️First: A Tech Executive
While working at a hotel, the author met a tech executive with an insecure and childlishly stupid relationship with money. He carried a stack of $100 bills and bragged openly about his wealth. While in the hotel, he shattered a lamp. The manager asked for $500 as the cost of replacing the lamp. He responded, "Here's $5000. Now get out of my face and never insult me like that again!"
The author learned years later that the childish tech executive went broke.
✌️Second: A Simple Man
The author shares his favorite Wikipedia entry: "Ronald James Read was an American philanthropist, investor, janitor and gas station attendant."
- Fixed cars at a gas station for 25 years
- Swept floors at JCPenney for 17 years
- Bought a 2-bedroom house for $12k at 38; lived here for all hisi life
- Main hobby: chopping firewood
He died in 2014, age 92, and had a net worth of over $8M! 🤯0.01% of people who died in 2014 had a net worth of >$8M and Ronald, a man who lived a simple life, was one of them.
His secret? He saved what little he could, invested in blue chip stocks, & waited for decades until his savings compounded into MILLIONS!
- Compounding effects are powerful (more below)
- Behavior begets status. You can lose wealth just as easily as you gained it if you don't have the right habits.
Two Key Themes
I like how themes on money apply a lot to life.
Two key ones that resonated strongly:
- 🍥Compounding Effects. As illustrated above, invest early, invest often. Small amounts reap great rewards in money and in life. I like to think that my weekly habit of writing consistently compounds my growth (& hopefully adds to yours, too). That goes with all habits, so run the mile, and read that page! Today! And see how your growth compounds over time.
- 🎴Never Enough. In this chapter, he talks about how already rich millionaires straddle the lines between ethics & laws, and risk all that they have to get even richer! We're always upwards comparing ourselves such that when we hit a goal we say we've "always wanted" we compare ourselves to others to hit the next goal and the next. Even millionaires are never satisfied. Teaches a good lesson on satiating ourselves with what we have instead of risking it all.
At a party... Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money ini a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, "Yes, but I have something he will never have... enough.
👀 Nudges of the week
If not already obvious, check out Psychology of Money!
🚀 Projects of the week
We're launching the Passion Economy Stack on Product Hunt this SUNDAY, January 10! Support us on launch day. Follow me on Twitter as I live tweet our launch! 🚀