The Psychology of Money

We generally make financial decisions based on our world perspective and past experiences.

Therefore, it isn't necessary that you and I will manage our money in a similar fashion.

This summary will help you learn how various factors influence how people look at money and what we can learn from them.

Let's start by understanding that:

Your Mileage May Vary

Thousands of finance books have tried to streamline financial planning with advice supposed to work for everyone.

But, this doesn't always work out.

Here's why:

Our worldviews and past experiences are different.

What you've witnessed growing up might be vastly different from what I've been through.

People growing up during a recession with money troubles are likely to develop a conservative approach to handling money.

They realise that a good day can quickly turn into a bad one when you cannot make rent or food.

On the contrary, people who have had a comfortable upbringing with little to no money troubles tend to be more aggressive with their money.

They've seen money as something that is there to be spent.

And the lack of severe money issues dilutes the effect of risk for these types of investors.

Now, what's the takeaway here?

Take every financial advice with a pinch of salt.

You don't have to follow every piece of advice to the letter. Or blindly copy someone else financial strategies.

What works for them isn't guaranteed to work for you.

Understand how you feel about money and overall investing.

Do you have an aggressive mindset or a conservative one?

Tweak the advice to match your perspective and expectations.

How Much is Enough?

$1 million or $100 million?