Decoding ‘The Psychology of Money’: A Non-Privileged Perspective

“We all want the complicated world we live in to make sense. So we tell ourselves stories to fill in the gaps of what are effectively blindspots.”

 

Those were the words I quoted from the book I just recently read. Psychology of Money by Morgan Housel. I’ve heard about the book since last year and saw a lot of people talking about it on TikTok and I’ve been wanting to have this book in my hand ever since. Just earlier this month, when I visited a bookstore to get me another book I wanted to have, I saw this one for the first time on the shelf since it’s always been on an “out of stock” label. 

Why did I desire this book so intensely? I think we all can agree that we do recognize the complexities of our relationships with money, and the prospect of a book offering guidance is an irresistible lure. So the thought that a book could maybe help you with it makes you want to have it as soon as possible. In my case, it’s the “psychology” word before the word of money itself that intrigued me. 

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Why you might ask

When we talk about money most of the time we think of numbers and other numbers that give enough impact to make some particular number doesn’t work to solve another endless number. It is a rare behavior that we would give enough credit to any aspect that influences those numbers. And this book—with its title—was a promising handy guide to help us understand it all. At first, in my case.

 

Respecting The Author

As a writer myself, I would first pay my regards, respect and sincere thank you to Morgan for writing this book. The book that I would tell my students to read if I were a professor. The book that I would push the education department in the government to put as a mandatory handbook in every freshman class in college of every major in the country if maybe one day I have a place in that say.  Or dare I say, this should be taught in school early. Junior high, perhaps. The book I would tell everyone to read. No doubt.

 

But…

I know it would be rude for me to say it like any other reviewers wrote the title of their reviews, “I watched Old so you don’t have to”, or “I have dinner at this restaurant so you don’t have to”, or specifically, there is this article that wrote “I read The Psychology of Money so you don’t have to”. But that’s what I’m trying to do in this probably might be my longest post in this blog. I read this book and here I am talking about it so you don’t have to. 

On the very cover of my copy, it’s written “over two million copies sold”. Well, that’s a fact. But I’m not sure if everyone was having the same thought as mine when they decided to buy a copy. But at least now, 2 million more people understand more about “The Psychology of Investing”. 

 

What???

Yes. There you go, I’ve said it; The Psychology of Investing. 

I was super excited and maybe expecting a little too much from the book when on the opening Morgan tells a story of two different people with different backgrounds and how they spent their money. It ended up obviously different between both dudes. But what got me hooked here is my expectation paid on the first few pages because this is what I’m looking for; the experience, background,  and the difference it made when it comes to money tales. On the page 5, he wrote;

Finance is overwhelmingly taught as math-based field, where you put data into a formula and the formula tells you what to do, and it’s assumed that you’ll just do it.

…

It’s not that any of these things are bad or wrong. It’s that knowing what to do tells you nothing about what happens in your head when you try to do it.

Now, tell me if that’s not a promising line to read?

 

Now the review

Simply put, I would say that the title of the book is too broad for the content it handles. Maybe “The Psychology of Money for People Without Poverty Trauma and People With Enough Privilege to Tackle The Investing World” would be a perfect title.

I said what I said. And just like what I said in the early part of this article, everybody should read this book. It’s a good one. But it would be a perfect one if the author of this book put this two missing link from the equation that’s written on the title of the book; Generational Poverty—that in my experience always inherit another level of trauma— and Circumstances.

I once saw this sentence somewhere; Good driver might get into an accident because of another stupid driver’s recklessness. The same works about money. When I read this, I went into silent mode for quite long minutes thinking that this is a perfect way to explain everything about money. This thought process is something that I secretly expect coming when I read this book. I genuinely thought there would be a chapter or a paragraph even to specifically talk about this ‘accident’.

It did, finally when I got to the latter part of the book. But it was explained as “uncertainty’ and the writer applied the case a little too much about investing. And when he did write about “room for error”, it sounds like he was referring to it as “huge pile of hard cold cash stacked in the cabinet” because all the examples and the logic provided, again, are not non-privileged friendly. 

He also talks about how reality changes and all we need to do is accept it. I thought to myself, oh I have this new ability lately, to accept things as it is because it is what it is. I kept saying “Oh I’m on the right track”, in every paragraph because of how much I believed in this book. When Morgan talks about pessimism in chapter 17, I feel proud of myself because just a couple weeks back my therapist told me my pessimist side is my self-defense mechanism, so I have the very tools I need to have a better relationship with money. But sadly the author keeps talking about all aspects in the favor of investing. 

 

This is where I got disconnected

I came from a small family in the small village of West Sumatra Indonesia with a long track of roller coaster ride in financial situations. My father was a cop with low wages that to get all his 4 kids to school, he never kept his official letter of his employment in hand—here in Indonesia, all governmental employees can use that letter as collateral for a long term loan—because all his life, my father support our family with the help of that loan. Would my father ever consider investing in that typical lower-middle class  Indonesian life? We would all be lucky enough if our parents could save.

But when I am an adult myself earning my own paycheck every month and letting a friend introduce myself to investing, I did try to invest with diverse stocks in my portfolio. Spoiler; it ended up empty because here and there back then I needed to sell all the stocks because I was in urgent need of cash to pay for my sister’s college tuition. Did I regret it since all the stocks I had would’ve grown bigger by now if I hadn’t sold it? No. I’d rather have no investment than having monthly debt to pay. 

I wouldn’t lie, a lot of words and phrases, facts and all the stories told in the book are really good examples and explanations of how the world works and how it impacted our money situation. But it wouldn’t hurt if the book consisted more of applicable and relevant topics for people who don’t even understand what investing is. While I do have a soft spot for numbers, especially when it comes to finances, I admit I felt overwhelmed by the book’s mathematical and percentage-heavy content. Because again, I was expecting a little too much of the ‘psychology’ work from the book not knowing that later on I would be confused by the investing terms and all the stocks’ names from the US. It is good that a lot of facts are now in my possession. But I just don’t know if those facts can now be used in my life. 

 

I did SAVE

Everyone needs the basics. Once they’re covered there’s another level of comfortable basics, and past that there’s basics that are both comfortable, entertaining, and enlightening.

…

When you define savings as the gap between your ego and your income you realize why many people with decent incomes save so little.

…

Savings can be created by spending less. You can spend less if you desire less. And you will desire less if you care less what others think of you.

Those two sentences sound perfectly wise at first glance. But when your upbringing gave you some poverty trauma and most of the time circumstances are not so nice to you, you questioned the sentences because in my mind it sounds irrelevant and a little exclusionary. First, not everyone that’s not saving is spending all their money for flexing because they care too much about what other people think. Secondly, not everyone is privileged enough to have all their earnings for themselves. And the third one, a lot, I mean it, really, a lot of people from developing countries—if not everywhere around the globe—would be lucky if their earnings  are enough for their monthly expenses (and that for the basic needs only). So the case is, it’s not that people don’t want to  save their money or that they recklessly spend more than they have to because they just want to impress others, it’s what happens when you live in a world where the rich get richer and the poor are buried deeper in poverty.

 

The real take

After all, as Morgan explained multiple times in the book, people have different histories, experiences, and different games. Morgan wrote the book based on his own histories, background and experiences. But as a reader that got hooked to the book because of the title, it’s not my fault that I was expecting it to be more relevant to my (and most other peoples’) life. It’s also not my fault if I want it to be more relatable to my “spreadsheet”. 

Despite my perception that the book caters more to ‘The Psychology of Money for Those Without Generational Poverty and Its Associated Traumas,’ I maintain my admiration for this book. I would give an easy 4 stars out 5. And I will read it back and use it as my very handbook when I have my money situation sorted and able to invest in the near future. For now, it earns a place on my bookshelf, and I’ll eagerly recommend it to friends. After all, expanding our knowledge never hurts. I’m glad that from the theme range of my bookshelf, I finally have one collection that talks about finance and it’s the very “The Psychology of Money” that I had always wanted and now it’s there.

But in our journey through the enigmatic realms of finance and psychology, let’s contemplate this: Can true wealth be measured in more than dollars and cents? What if it’s about the profound impact we have on the world and the lives we touch?

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