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Psychology of Money



Kirjoittanut: Aman Kumar - tiimistä SYNTRE.

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Esseen arvioitu lukuaika on 7 minuuttia.

Psychology of Money  

Introduction 

Making money and saving it is an art. Often we have seen that people have the wrong concept about money. When he has more money, he loses it because of his immoral behavior towards money. Like showing off being rich. Spending money irresponsibly in vain and the result is that on day 1 such people become bank corrupt, that is, pauper. Its main reason is that such people do not understand the value of money and they lose their money. Well, there are many ways to become rich. But there is only one way to maintain your wealth. That we should understand the value of money.

 

Everyone feels that he is not crazy in his life, he does not need much to earn money, or he knows all these things very well, but still some people invest money in share market and provident fund. “As I write this Warren Buffet’s net worth $84.5 billion. Of that, $84.2 billion was accumulated after his 50th birthday. $81.5 billion came after he qualified for Social Security, in his mid-60s (Calvin,Rossser). Some people have to do jobs just to earn money, while some people are becoming entrepreneurs in today’s time. From this we get to know that everyone has separate ways of thinking about money, yet everyone considers himself wise. The author says that everyone must understand their limits, we should also see those people who have made money even in poverty and understand how they made money?

Luck & Risk

Some people will hardly be lucky enough in terms of money, like some people are born in a rich house. The special thing about luck is that it cannot be controlled, and we cannot live because of luck to become rich. Talking about the second way, it is the matter of taking risks, some people invest a lot in business, but if the money is lost, then it becomes the biggest risk of their life. In today’s time, we should take risks with thinking and planning.

Never Enough

It is also absolutely true that money does not fill anyone’s mind, it spoils the mind of people, even after being home, they feel that there is still a lot of shortage in their life and to fulfil this greed. For this, they sometimes take wrong steps, due to which they get a lot of infamy. That is why such people should make it a goal of their life that I will earn money only up to a limit, that too by staying with my moral principles. Due to which his money will start growing by itself.

 

Confounding Compounding

In today’s time, everyone knows about compounding, only simple interest is available in more investment, for which you can take the example of Warren Buffet. They used to invest a lot of their money and choose such stocks from which there is a lot of profit.

 

Getting Wealthy vs Staying Wealthy

Many people earn a lot of money, after which in a few years they become poor again, this has happened with many celebrities and businessmen. Because at that time they did not know much about investment, they did not think about in the long term what would happen in the coming time if we did not have money, they used to spend a lot of their money and did not think about the future. They used to think that our money will never end, and this money would keep on coming, that is why it is very important to understand money in today’s time.

 

You Win

Every coin has two sides, toss it is not necessary that you win, in the same way life also has two sides, either you win or lose. But if you toss the coin again and again, you can win once. Similarly, if you keep doing any work again and again, then you will definitely win one time or the other. Similarly, if you fail in a business, then try again in a new way, by doing this you will definitely get success.

 

The power of habit book summary

 

Freedom

Who does not like freedom, everyone wants to be financially free, real earnings speak to those who give you freedom from time. Many people keep earning money throughout their life, they do not have time for themselves, they are not able to take time for their family nor for themselves. If you have money and know how to earn well, then you can also outsource your work, to know about which you must read the 4-Hour Work Week Book.

 

Man, In the Car Paradox

It is so surprising that today people have a lot of interest in materialistic things, suppose we see a luxury car, then we start praising that car but never praise the owner of that car. We never say that wow what a man? What if the same thing happens to us? If I take an expensive car, then people will also talk about my car, not about me. With this they only envy others, so never run after such materialistic things, rather invest that money in some good things, which will give you a pleasant experience.

 

Wealth Is What You Don’t See

Richness refers to what is seen like luxury cars, bungalows and branded clothes, gadgets etc. But it does not reflect wealth like investment, property, business, and savings etc. Suppose your friend’s salary is 5k as much as yours and he buys an expensive car which costs 100k Euros, then he will look rich, but now you will have 100k more than him. That is why today you have to try to become wealthy. No way to get rich

 

Save Money

You must have seen three types of people in the matter of saving, first those who do not think of saving, they think that they do not need it. There are other people who are not able to save because they do not have that much money. And the third are those people who save a lot and with the passage of time, the third type of people become very wealthy, and their old age passes very well. And the rest of the people always live in poverty and are dependent on others, that is why they start saving from today and start investing too.

 

Reasonable or Rational

Some people focus only on thinking and do not work in implementing that work and in the end, they are not able to do anything, they try to bring perfection in every work, if there is a slight lack in any work, then that work leaves the work at that. You should do better than this whether the plan you have made will work for you or not. It is better to start thinking about starting any startup, even if there is a slight shortage in your work. Similarly, invest in the stock market as soon as possible, anyway there are ups and downs in it but later you get very good profit.

 

Surprise

Our whole life runs in a surprise, where and at which point we get what surprise, no one knows, we should always be ready for surprise. In the same way, we can get to see many surprises regarding money, career and business. The way a business goes down in its off-season and then rises again when the season comes. Similarly, if someone makes a fraud in the business, which you do not know, then your business can be drowned at any time, that is why one should always be alert in life.

 

Room for Error

In the matter of money in life, everyone makes an error, but we should learn a lot from this. To avoid such mistakes, you should keep reserve cash with you, do not spend or invest all the money at once. Like Waren Buffet says – Cash is the king. That is why you must always have funds for tough times.

 

You Will Change

From time to time all human beings keep on changing, a spoiled child can go ahead to become a wise person and a sensible child can go ahead to become a crooked person too. Similarly, whatever dreams or plans you have made today, it is not necessary that they will be fulfilled or not, but in future we can do something better. You do not have to live in your past, your future is not decided by how many bad marks you have got in your school, college. The smallest business of today’s time can go ahead and earn crores of rupees as much as a single job profession cannot earn in the whole life.

 

Nothing Free

You must have heard that money is made from money, in today’s time nothing is made for free, if you want to do something big, then do a job in the beginning. Many successful people also did small jobs in the beginning, used the same money to train themselves, then they became successful people today. Similarly, to start any business, a little money is required, in the beginning start the business in a few thousand and then later you can scale-up it.

 

You and Me

Money is never earned or spent alone, you must take the help of others. Even if you are of introvert nature, you still have to learn to deal with others. Give as much importance to yourself as you give to others and learn to respect people. Good and intelligent people are hungry for respect you should never show your ego.

 

The Seduction of Pessimism

It is good to be optimistic, but it is not good to be blind optimism, it will drown you. If a student does not study and thinks that I will pass, then it is difficult to do so, similarly if someone does not have any talent and thinks of achieving anything, then it is also impossible to do so. That is why it is especially important to have pessimism, you must see what is difficult and what is easy and then work on your skills accordingly. That is why you must maintain a balance between optimism and pessimism, then only you will be successful.

 

When You Will Believe Anything

There is always something wrong with our hearing, seeing, and understanding power, as many people believe whatever they hear in the news to be true. While most of them are manipulated, much news are published wrongly in the newspaper, so do not blindly trust everything.

 

All Together Now

In this chapter, the author has summarised all the things mentioned so far and has also given some important tips. You should always be humble, polite, honest. You should not have an ego at all. Do not take any such wrong decision that will spoil your financial condition, decisions should be such that you get mental peace. Learn to value time, no one becomes rich suddenly. Learn to accept failures and never give up. You should have the habit of investing. Get financially free as soon as possible.

 

Conclusion

You do not have to spend all your earnings on fun, you should stop unnecessary expenses completely. Learn how to find happiness at low prices, like workouts, reading, music, dancing, etc. Let us do a little planning for the future, you must do a financial plan, funds for your family and children. This financial skill can also be understood from the example of Warren Buffett. Along with Warren Buffett, there must have been many other investors like him. Yet why didn’t anyone else have a net worth like Warren Buffett. Because of gradually increasing wealth he survived for a long time. He saw about 14 successions in his 75-year investing period. But he did not panic. Don’t let yourself burn out. No matter how many lucrative deals he had to give up for that. Never put his reputation at stake. Which was his biggest business strategy. It was his survival and his wealth. Only this survival gave him that time. Which other people did not get. At the same time, he showed his magic. Then the formula called compounding made his net worth so tremendous.

 

References

Calvin,Rossser  https://calvinrosser.com/notes/psychology-of-money-morgan-housel/

 

 

Morgen Housel & Howard Marks, 2020

https://www.planetayurveda.com/traditional-books/the-psychology-of-money-by-morgan-housel.pdf

 

 

 

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