You’ll be forgiven if you’ve never heard of Ronald Reed. Reed barely made the headlines, even though he had a net worth of over $8 million when he died quietly at the age of 92 in 2014. His life was so modest and routine that few would have guessed his phenomenal financial success.

Especially if they knew his day-to-day business.

After being the first in his family to graduate from high school and hitchhiking to college every day, Reed spent most of his 30 years fixing cars at a small gas station. After that, he swept the floors as a janitor at his JC Penney, which he worked for 17 years. His friends remember that his main hobby was chopping wood.

Not a Forbes-worthy profile, but as Morgan Howell advises us in his witty book The Psychology of Money, it is often said that wealth is invisible. increase.

The secret to Reid’s success was not the product of “Wall Street wisdom,” but Depression-era values. His success was the product of perseverance and prudence.

Hausel begins writing a highly insightful bestseller by contrasting Reid’s approach to life and finance with its polar opposite. Harvard-educated Merrill Lynch executives foreclosed on the last of three lavish mansions after going embarrassingly bankrupt the same year Reed died. .

The latter’s life was characterized by greed, the former by good old fashioned values ​​and not going overboard. But his domineering counterpart faced the limits of his life and always wanted more. He was never satisfied.

As the title of the book suggests, money is as much psychology as strategy. Consciously or unconsciously, we have to think about how we think about money. In doing so, we find that our beliefs about money are inextricably linked to our values.

As such, Housel has tough orders in store, but he lives up to the promise of the title very well. Readable for the fluidity of its narrative and the charm of Malcolm Gladwell’s work, his delightful book has memorable characters, surprising stats, and material that no one seems to have unearthed despite its availability. Full of insight.

Hausl has written about finance for years, including for The Wall Street Journal, so he brings a journalist’s eye to what’s important to his research. allowed). He also has a talent for storytelling. Each of his 20 chapters in the book is structured in narrative form and tells micro-narratives that add to the larger, new picture of financial foresight.

What sets Housel’s work apart from surplus fundraising books is its focus on how we tend to think about money. If you’re looking for advice on which stocks to pick or whether to invest in a fixed annuity, I’d suggest looking elsewhere (although by the end of the book you’ll find some very good It does not deny that advice will come out). Hence the inclusion of “Psychology” in the title of the book.

In this case, the psychology at work is very much a matter of perspective. That is, it takes into account our attitudes towards stocks, bonds, inflation and the whole act of saving. And these habits of mind are often a product of living circumstances and are usually very limited.

Housel, for example, shows that our views on stock investing are very likely shaped not by research or analysis, but by when we were born and during our formative years.

If you were born in 1950, you probably have a rosy image of stock investing, having watched the market soar during your growing years between the ages of 13 and 28. If you were born in the 1970s and are in your teens – and into adulthood when the stock market is flattening – you’re naturally more likely to dislike investing in stocks.

And the same circumstantial factors that Housel shows largely shape how we view inflation (or, more specifically, how real a concern it is for us as individuals).

All of this should be a little sobering for those of us trying to make rational decisions about things as important as our hard-earned cash.

This ties into a larger point that Hauser makes throughout the book and deftly returns at the end. We are very likely unaware of the limits of our own knowledge and concepts. We often want something to be true to the extent that we ignore clues, suggestions, or even facts that lead us to step back and reconsider our opinions. -Plan quick cuts, or simply don’t think about retirement savings until it’s too late.

But when it comes to family finances, all of this can have disastrous consequences, or at least severely limit the potential for financial freedom and the benefits it can bring.

Mr. Housel offers refreshing, unobtrusive advice and displays humble self-esteem.

One point he made and resonated with this reader is that we don’t always make the most rational financial decisions, but at least we make the most rational decisions. If so, that’s fine. Housel explains this by his and his wife’s decision to buy the home with cash instead of a low-interest mortgage. It was a difficult decision to justify purely on the spreadsheet numbers alone, but it was the one the couple felt most comfortable with. there is. Amen.

Similarly, wise advice comes in the form of avoiding extreme financial behavior. (Sometimes a financial bootcamp-like activity seems justified, for example, when you turn 50 and suddenly realize you need to start saving for your retirement.) “Golden ratio.”

The most successful courses of action will be sustainable in the long term. And the more extreme financial behavior you take, the less likely you are to sustain it, even if you are thrifty. Burnout is an all too real risk.

Much more financial wisdom can be found in Hauser’s paper. That you have to plan for things that don’t go as planned. Some are not financially worth the risk. The (financial) past cannot be expected to repeat itself. and so on.

As such, Housel’s book, alongside gems such as John Bogle’s Enough, is as much a book of financial wisdom as it is of strategy. This makes for a great overview that complements his more to the point how-to money books such as Dave Ramsey’s Total Money Makeover. Fortunately, the two jibe well.

This is the kind of book I wish I had read decades ago. A thoughtful high school graduate, college student, or just about anyone.

My advice is that the sooner the better.