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The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness
Matt Karamazov
July 24, 2025 • Estimated Reading Time: 24 minutes
The Psychology of Money, by Morgan Housel, is one of the best personal finance books I’ve ever read (out of hundreds), and it’s sold more than 8,000,000 copies since 2020, so I’m probably not alone in that opinion!
Tonight I’ve got a complete breakdown of all the key ideas from the book, action steps, takeaways, and more (all free), but he’s also got two other books I want to pass along as well.
Same as Ever is his follow-up book to The Psychology of Money, and honestly? I think it’s even better! Super underrated, in my opinion, and it’s about the things that don’t change. What people have always done and will always do.
There’s another one called The Art of Spending Money, but that one’s not out yet. It’s coming in October, and it’s one of the new releases I’m most excited about!
Another one I’m unbelievably excited for though?
The book explains (simply, but in great detail), why most businesses lose money on ads.
Essentially, they spend more getting customers than they make. The fix? Money Models.
A Money Model gets more customers to spend more money, faster, again and again. It's how Alex Hormozi built his companies, and his two previous books made me sooo much money that I can’t even imagine what this new book will do for my business.
Anyway, he’s doing a live book launch on August 16th 9am PT / 12pm ET where he’ll be teaching the 4 types of Money Models that work in any business - I’ll be there live too!
Speaking of blowing up your business with ads (in a good way), I also want to introduce you to my friend Justin Brooke.
He’s a 20-year advertising veteran and former senior media buyer for Agora who now runs Daily Edge, the daily newsletter for funnels hackers, adsmiths, and vibe marketers.
Every day he'll send you one great piece of marketing advice, ask you a thought provoking question, and give you the "Prompt of the Day" for you to steal & deploy.
I’ve been subscribed to his newsletter for six months or more, and I rarely miss it.
Sign up here (for free, obviously) if you’re interested.
And now…before our coffees get cold, let’s dive deep into The Psychology of Money!
“Definitely think about this: being good to just three people a day means you will uplift ninety human beings in one month, one thousand and eighty in one year, ten thousand eight hundred in a decade, and almost one million people by living the normal lifespan (I hope you’ll live far longer, though).
For sure, you can make that magnificent a difference. In many ways, though you may not know it, you already do.”
“We can choose to be Rich by Association or Poor by Association. Rich by Association means we surround ourselves with other success-minded people. Poor by Association means we surround ourselves with individuals who have a poverty mindset.”
Inside my private business mastermind, Creator Launch Academy, we’re tackling one nonfiction book per week and implementing its lessons inside our businesses.
This week’s book is Rich Habits, by Thomas C. Corley, a great book about the differences in habits, attitudes, mindsets, and behaviors between the rich and the poor. Click here to claim your free trial, and join our business book club for educational content creators!
After achieving my (somewhat meaningless) goal of reading 1,000 books before I turned 30, I set a new (also meaningless but cool) goal of reading 10,000 books. As of today, I’ve read exactly 1,400 books, including 48 books so far this year, and if you’re interested, here’s my full Reading List.
This Book is For:
*Everyday individuals trying to build wealth, and people who want to bypass the various (avoidable) traps and pitfalls that derail the financial progress of many others trying to do the same thing.
*Young professionals and first-time investors who want to learn the keys to lasting financial prosperity, including the value of time and compounding, emotional regulation, and world-class patience.
*High-earners who still struggle financially due to lack of knowledge or self-discipline, and who want to master the practical and psychological sides of money, so that any mistakes they may have made in the past don’t have to define their future.
Summary:
“Being able to wake up one morning and change what you're doing, on your own terms, whenever you're ready, seems like the grandmother of all financial goals.
Independence, to me, doesn't mean you'll stop working. It means you only do the work you like with people you like at the times you want for as long as you want."
Doing well with money has a little to do with how smart you are, but a lot to do with how you behave. Exploring exactly how this plays out in real life is Morgan Housel's focus here, and in this book, he covers 20 of the most important logical flaws, biases, and causes of bad behavior that make the world of money such a circus.
One of his greatest observations is that knowing what to do tells you nothing about what happens in your head when you actually try to do it, and he also explains why people make decisions with money that may seem crazy to us, but actually make perfect sense to them.
No one is crazy, says Housel, it's just that we've each learned different lessons about money depending on our worldview, how we were brought up, and the individual experiences we've had, alongside other factors.
What's more, teaching behavior is hard to do, no matter one’s intelligence level. You can think of finance and investing and everything technical that comes with it as hard skills, or skills that can be acquired through education, practice, and repetition, and the psychology of money as a soft skill; “soft” being character traits and interpersonal skills that characterize a person's relationships with other people.
Morgan Housel is a partner at The Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal, but The Psychology of Money came out of nowhere to sell more than eight million copies since 2020, and the original article from which the book originated has also been read more than a million times.
Clearly, the themes in this book speak to something vitally important in human life, and Housel’s simple, accessible breakdown of the ways in which we all think about and handle money resonated with massive numbers of people all over the world.
In this book breakdown, we're going to be looking at why gaining control over your time is one of the highest dividends money can pay, and the parts that luck and risk play in the formation of our strategies for life. We're going to investigate the impact of desire on our financial planning, and why you should aim to be "mostly reasonable," as opposed to being coldly rational when it comes to making financial decisions.
We're also going to be working on making you "antifragile" by making sure you eliminate any “single points of failure” that currently exist in your life, and I'm going to be introducing you to one of the most effective investment strategies ever devised, otherwise called: "Shut Up and Wait."
Perhaps most importantly, we're going to try to understand the financial perspectives of others, and what their previous life experiences and current circumstances may have taught them about how money works.
Having been born in the 1990s, inflation means nothing to me (or at least it didn’t really affect my psychological development, from childhood to today), but to someone born in the 1960s, it may still be a clear and present danger that they're all too familiar with.
Forty percent of Americans also say that they couldn't come up with $400 in an emergency. Yet, on average, the lowest-income households in America spend $412 a year on lottery tickets(!), four times the amount of those in the highest income groups.
Put the two together, and it's the same people spending $412 on lottery tickets that couldn't come up with $400 in an emergency - which probably seems crazy to you and I.
But you probably aren't in that income group. So it may take some work to understand why those people think that buying lottery tickets is a good idea. And it’s not necessarily because they’re dumb. As Housel says, we can imagine the internal dialogue of at least some of those people going like this:
"We live paycheck-to-paycheck and saving seems out of reach. Our prospects for much higher wages seem out of reach. We can't afford nice vacations...Much of the stuff you people who read finance books either have now, or have a good chance of getting, we don't.
Buying a lottery ticket is the only time in our lives we can hold a tangible dream of getting the good stuff that you already have and take for granted. We are paying for a dream, and you may not understand that because you are already living a dream."
I promise that the book, and this breakdown, are much more upbeat than the previous paragraph, but that's the kind of psychological insight that The Psychology of Money can provide you with, not to mention the specific strategies and recommendations that are likely to help you feel much better about money, amass much more of it, and invest it much more intelligently.
While you're reading it, you're also likely to experience waves of sanity and clarity just washing right over you. I'm mixing my metaphors here, but go ahead and grab your paddle and let's head for the circus!
Key Ideas:
#1: Behavior is More Important Than Intelligence
“Imagine how much harder physics would be if electrons had feelings.”
Behavior and intelligence are two absolutely different things. Someone who's incredibly bright, yet has zero patience and is prone to emotional waves and crashes is going to do a lot worse in the stock market - and with money in general - than someone who is perhaps less bright, but who does certain things well.
Geniuses go broke every day, and being intelligent is no defense against bad luck and risk. In many ways, we create our own luck - and stack our own probabilities - by the actions we take.
Where the stock market is concerned, sometimes the best thing you can do is nothing. Just wait. It'll go back up. As of this writing, there has never been a 20-year period in history where the market has lost money, so if you just keep dollar-cost averaging over time, then, historically, you have a 100% chance of making money.
It's the geniuses who freak out when their portfolios drop 25% and sell everything who end up losing money when the market recovers naturally.
#2: The Hardest Financial Skill
“The hardest financial skill is getting the goalpost to stop moving.”
It's the nature of desire to keep slipping away from us. Once we get what we used to want, we often find that there's something else that we want next, just waiting for us over the next ridge.
Naval Ravikant, the legendary investor, tries to limit the number of desires that he has operating in his life at any one time, and he recognizes his main desire - whatever it is - to be the "axis of my suffering."
Whenever you desire something, it's like agreeing to be unhappy until you get what you want. And I mean, we go around desiring things all day, and then we wonder why we're unhappy!
Morgan Housel is right on with his assessment as well: one of the hardest things you'll ever do is to decide when enough is enough. And you really have to do this if you want to be sane.
In a world that's always telling you that you aren't quite enough as long as you don't possess this thing, you have to be intentional about planting those goalposts firmly in the ground and not backing down an inch.
#3: The Fastest Way to Have Less Money
“Spending money to show people how much money you have is the fastest way to have less money.”
This one Key Idea has been pretty much tattooed on my brain ever since I first read The Psychology of Money, and it's informed so much of my financial thinking forever after. If you keep just this one short sentence at the top of your mind, you're going to make much better financial decisions than 99% of the population.
Not only will spending money recklessly on luxury items drain your bank account and scuttle your future prospects like nothing else, but it's also just completely counterproductive, as Morgan Housel explains.
He calls it the Man in the Car Paradox, and the gist of it is that we hardly ever actually look at the people driving really nice cars and think that they’re really cool people. We only see the car and think how cool other people would think we are for owning it.
Even if you do end up buying some insanely expensive car, hardly anyone is going to care about you specifically; they're going to be thinking about themselves, and how much other people would "respect" them for having one just like it! You can see how crazy this is. I know Morgan Housel says that "no one is crazy," but this is pretty damn close.
Not only that, but owning expensive things doesn't really tell you anything about the true financial status of the person displaying those things. It's not like they have a digital readout of their bank balance next to their license plate. All you really know about someone who drives a $100,000 car is that they have $100,000 less than they used to...or $100,000 more in debt.
The bottom line is that the people who will admire you for the stuff you own are not the kinds of people you want to admire you, and you can save yourself a ton of hassle, stress, not to mention money, by just avoiding that whole circus.
Book Notes:
“None of the 2,000 books picking apart Buffet's success are titled This Guy Has Been Investing Consistently for Three-Quarters of a Century. But we know that's the key to the majority of his success. It's just hard to wrap your head around that math because it's not intuitive.
There are books on economic cycles, trading strategies, and sector bets. But the most powerful and important book should be called Shut Up and Wait. It's just one page with a long-term chart of economic growth."
“Money’s greatest intrinsic value - and this can't be overstated - is its ability to give you control over your time. To obtain, bit by bit, a level of independence and autonomy that comes from unspent assets that give you greater control over what you can do and when you can do it."
“When most people say they want to be a millionaire, what they might actually mean is 'I'd like to spend a million dollars.' And that is literally the opposite of being a millionaire."
“Every bit of savings is like taking a point in the future that would have been owned by someone else and giving it back to yourself."
“The historical odds of making money in U.S. markets are 50/50 over one-day periods, 68% in one-year periods, 88% in 10-year periods, and (so far) 100% in 20-year periods. Anything that keeps you in the game has a quantifiable advantage."
Action Steps:
#1: Give People a Break
I try to give most people the benefit of the doubt. We're all trying to live our lives under conditions of uncertainty, limitation, and imperfection, and I think that many, if not all people are just doing their best.
That's one of the biggest takeaways from this book, I believe, too. No one is crazy - they just look crazy to us - and maybe with a little more (or a lot more) empathy and understanding we could eventually learn to live with each other.
#2: Strive to Be “Mostly Reasonable”
One of the major themes of this book is that what makes sense to you might look crazy to someone else who grew up with different experiences or a different upbringing, but neither one of you is crazy. You don't always have to do the exact perfect thing in every financial situation, especially if it delivers more peace of mind to act in some other way.
There are a ton of possible examples I could give, but for one thing, different people will have different ideas about how much money they need to have saved up in order to feel "secure." Maybe it's "reasonable" to have 6 months of emergency expenses covered, but if you'd feel better with 1 year's worth - or 1 month's worth - then that's the perfect answer for you.
#3: Play Your Own Game
There are many "good games" that you could play in life, and it helps to carefully delineate exactly which "game" you are playing.
Are you playing the "fame and fortune" game? That one's pretty competitive, and you should know what you're getting into. Or maybe you're playing the "be the best dad you could possibly be" game? That one's infinitely more winnable, because it's completely internal. There's literally no one who could compete with you in that game, and you can set the victory conditions yourself.
People everywhere will try to convince you to play their game, but don't fall for that shit! Don't even start playing a game you don't want to keep playing for a long, long time, and make sure that you know exactly what you're getting into and what exactly you're willing to do in order to win.
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OK, that’s it for now…
I’ve got plenty more excellent book recommendations coming your way soon though!
And if you want to learn how I’ve built an audience of 160,000+ followers across social media, became a full-time creator, and how I’m rapidly growing my audience and my profits in 2025, join us inside Creator Launch Academy and that’s exactly what I’ll teach you — we’d love to have you in the community!
With that said, I hope you enjoyed this edition of The Reading Life, and enjoy the rest of your day!
Until next time…happy reading!
All the best,
Matt Karamazov
P.S. Whenever you're ready, here are two more ways I can help you:
Content Creators: Book a 1:1 call and I’ll help you hit $5K/month with a plan tailored to your business (If the link works, I can still fit you in this month).
Join Creator Launch Academy, my mastermind for educational content creators building real revenue and real freedom.
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