The Psychology of Money by Morgan Housel examines personal finance through the lens of human behavior. It’s a fresh take on a well-trod subject; many personal finance books focus on exogenous considerations: e.g. how the stock market works, how to select stocks or build a portfolio, how to time the market, etc. Housel’s focus is the relationship between people and money—with particular emphasis on the human variable of the equation. “To grasp why people bury themselves in debt you don’t need to study interest rates; you need to study the history of greed, insecurity, and optimism.”

Housel’s conviction is that behavior trumps other considerations in the pursuit of financial success. “Doing well with money has a little to do with how smart you are and a lot to do with how you behave.” Engage in the right behaviors and you are likely to succeed. Similarly, no amount of intelligence, savvy, or inside information will save you from the wrong set of behaviors.

This book could become a classic in the personal finance space. Strong focus on individual attitudes and behaviors (which are within the reader’s locus of control). Ideas and themes have broad application beyond personal finance.

Imagine a life without debt. You’d have no monthly payments on credit cards, car loans, student loans or mortgages. However, most people are in denial about their debt problems and don’t know how to fix them. The solution is the TotalMoney Makeover plan that will help you get out of debt by following seven steps: 1) Save $1,000; 2) Pay off all your debts from smallest to largest balance; 3) Build an emergency fund; 4) Invest in retirement savings; 5) Save for college with cash and scholarships instead of taking out student loans; 6) Pay off your mortgage completely so that you can live free of financial obligations later in life when you’re retired; 7 ) Invest wisely so that your money grows faster than inflation over time so it does more work for you while you do less work yourself.

Getting financially fit requires you to take a hard look at your beliefs and behaviors around money. If you’re not wealthy, the only person responsible for that is you. You’ve probably been buying into instant gratification and appearing wealthy.

If you want to be wealthy, you must work hard and save your money. No one is going to help you get rich except for yourself, so don’t expect anyone else to do it for you.

The prosperity of a nation depends upon the financial prosperity of its citizens. The book The Richest Man in Babylon by George S Clason is termed as a guide to one’s financial success. This book takes us back to an ancient city called Babylon. Babylon was known as the wealthiest city of our ancient world because its citizens were known to be the richest people of their time.

The book focuses on the reasons as why the people of Babylon were rich:

1. They appreciated the value of money,
2. They followed sound financial principles when dealing with money,
3. They created a future source of income for themselves.

According to the author, an individual’s success is measured by the amount of money he/she has, and money will only come to an individual once he/she understands the principles of it. This book is a timeless lesson because the principles of money are the same today as they were 5000 years ago.

Icarus was given a pair of wings made by his father, Daedalus. He flew with those wings until he got too close to the sun and the wax holding them together melted. Icarus fell into the sea below and drowned.

In this famous story, Icarus flies too close to the sun and his wings melt. This fable can be used as a metaphor for Long-Term Capital Management (LTCM), which dominated financial markets in the 1990s. Like Icarus, they were very successful but then went too far and crashed due to their own hubris. The key points of this passage will provide you with an important reminder that no company or person should think they are better than everyone else because it’s impossible for them to beat the market on their own.

In these key points you’ll discover why we’re not rational when making decisions; also academics might not be good at giving advice about money because they don’t have enough real world experience.

Imagine that you want to get from point A – your current financial situation to point B – financial freedom. Now, also imagine that you want to do this while you’re still young, healthy, and vibrant of energy, then you’d want to do this as fast as possible, am I right?

As you want to get there as fast as possible, would you rather choose to walk there? Without a map? To drive there in a slow tractor? Or would you rather drive a Formula One car, with the top speed of 372 km/h?

However, most people do not act like this in real life

Most people do not choose Fastlane, but the Slowlane or even the Sidewalk

• Your beliefs form your actions. Try to change your attitude to that of a fastlaner and you will see results in your personal finances down the road.
• The sidewalk is mathematically predisposed towards poverty. The slowlane is predisposed towards mediocrity, and …
• The fastlane is predisposed towards wealth. We want to stack the mathematical odds in our favor.
• A fastlane business should fulfill as many as possible of the following five commandments: control, entry, need, time, and scale.