Quote
“Doing well with money has a little to do with how smart you are and a lot to do with how you behave.”— Morgan Housel, in The Psychology of Money (2020) · The Psychology of Money →
Why it was said
Morgan Housel states this in the introduction to The Psychology of Money and spends twenty short chapters defending it, with stories of janitors who died rich and executives who died broke.
What it actually means
Finance is taught as a branch of mathematics, and Housel's observation is that the mathematics is easy and the behaviour is hard. Staying invested through a crash, spending less than you earn for decades, not comparing yourself to the neighbour with the boat: none of it requires intelligence and all of it requires temperament. The sentence explains why smart people lose money and ordinary people keep it, and why the Money road spends its first Station on behaviour before any number.
How to use it
- 1Write the last three money decisions you regret and check whether any of them was a knowledge problem.
- 2Automate the behaviours that matter, saving and investing, so that temperament is not tested every month.