The Psychology of Money

As part of my career exploration this summer, I am reaching out to meet with people who have experience in the wealth management field. One person I met this summer was Josh Harris at Coldstream Wealth Management. Coldstream is an employee-owned and independently operated wealth management company based in Seattle, WA. After meeting with Josh, he recommended that I read "The Psychology of Money" by Morgan Housel. It holds timeless lessons about wealth and financial responsibility. It helped me realize that wealth isn't just about earning but also about behavior and perspective. Here are some key takeaways:

1. Time is a friend to the wise but an enemy to the impatient (i.e. smart people save their money and benefit from compounding interest, whereas impatient people spend beyond their means and pay exorbitant interest to credit card companies, hurting their credit scores and long-term success. 

2. Our personal experiences greatly shape our financial beliefs (i.e. being around people who live responsibly helps us to learn good habits and vice versa)

3. Always overestimate the bad things that are going to happen, save not for what you expect to happen but for what you don’t (i.e. everyone should ALWAYS budget with a “money buffer” that allows you to weather those unexpected occurrences such as layoffs, car accidents, etc)

I highly recommend this book to anyone wanting a deeper understanding of the true essence of money and wealth. 

If you have other book recommendations, I’d love to hear them – just leave them in the comments below.