21 Best Personal Finance Quotes from The Psychology of Money by Morgan Housel

The Psychology of Money by Morgan Housel is filled with gems on personal finance. If you are new to investing, wondering how you should go about “thinking” about your money, this is a book worth buying. It prompts you to reanalyze your financial strategies and question your investments. It makes you sit back and introspect whether you are following your own dream or someone else’s.

Without further ado, here are some of my favorite quotes from the book:

Go out of your way to find humility when things are going right and forgiveness/compassion when they go wrong. Because it’s never as good or as bad as it looks. The world is big and complex. Luck and risk are both real and hard to identify. Do so when judging both yourself and others.

We all think we know how the world works. But we’ve all only experienced a tiny sliver of it. An investor Michael Batnick says, “some lessons have to be experienced before they can be understood.” We are all victims, in different ways, to that truth.

Every financial decision a person makes, makes sense to them in that moment and checks the boxes they need to check. We all do crazy stuff with money, because we’re all relatively new to the game and what looks crazy to you might make sense to me. But no one is crazy—we all make decisions based on our own unique experiences that seem to make sense to us in a given moment.

If you want to do better as an investor, the single most powerful thing you can do is increase your time horizon. Time is the most powerful force in investing. It makes little things grow big and big mistakes fade away.

Years ago I asked economist Robert Shiller, who won the Nobel Prize in economics, “What do you want to know about investing that we can’t know?”

“The exact role of luck in successful outcomes,” he answered.

I love that response, because no one actually thinks luck doesn’t play a role in financial success. But since it’s hard to quantify luck and rude to suggest people’s success is owed to it, the default stance is often to implicitly ignore luck as a factor of success.

Save. Just save. You don’t need a specific reason to save. It’s great to save for a car, or a downpayment, or a medical emergency. But saving for things that are impossible to predict or define is one of the best reasons to save.

Bill Gates once said, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”

Failure can also be a lousy teacher, because it seduces smart people into thinking their decisions were terrible when sometimes they just reflect the unforgiving realities of risk.

Define the cost of success and be ready to pay it. Because nothing worthwhile is free.

At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, “Yes, but I have something he will never have… enough.”

Avoid the extreme ends of financial decisions. Everyone’s goals and desires will change over time, and the more extreme your past decisions were the more you may regret them as you evolve.

There are a million ways to get wealthy, and plenty of books on how to do so. But there’s only one way to stay wealthy: some combination of frugality and paranoia.

Define the game you’re playing, and make sure your actions are not being influenced by people playing a different game.

Gettng money requires taking risks, being optimistic, and putting yourself out there. But keeping money requires the opposite of taking risk. It requires humility, and fear that what you’ve made can be taken away from you just as fast.

Smart, informed, and reasonable people can disagree in finance, because people have vastly different goals and desires. There is no single right answer; just the answer that works for you.

Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.

A good definition of an investing genius is the man or woman who can do the average thing when all those around them are going crazy.

“It’s not whether you’re right or wrong that’s important,” George Soros once said, “but how much money you make when you’re right and how much you lose when you’re wrong.” You can be wrong half the time and still make a fortune.

The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today.”

When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead you think, “Wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think.

There is a pardox here: people tend to want wealth to signal to others that they should be liked and admired. But in reality those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired.

Spending money to show people how much money you have is the fastest way to have less money.

Academic finance is devoted to finding the mathematically optimal investment strategies. My own theory is that, in the real world, people do not want the mathematically optimal strategy. They want the strategy that maximizes for how well they sleep at night.

My Perception of Money Has Changed Over The Years

I decided to go through an experiment to see if it would add any value to my life. I have had heard of minimalism and seen a couple of videos. Though I was not ready to sacrifice every bit of materialistic pleasure in my life, I was willing to start small to see what it would do. It became an epiphany of sorts. — Photo by Karolina Grabowska on Pexels

I remember feeling ecstatic whenever I bought an expensive dress.

I remember feeling accomplished after buying an expensive laptop.

I remember feeling disappointed when my fiancé gifted me inexpensive jewelry.

My happiness was derived from things. I was money-minded. And quite disgustingly so.

For me, happiness was directly correlated to the brand and the cost of the product. If someone didn’t gift me something extravagant and expensive, it meant the person didn’t love me enough.

That was me in my 20s.

Now I am in my late 30s, and things have shifted. I am no longer the person I used to be. People change over the years as they come across new life-changing experiences, perspectives, and emotions. It is practically impossible to stay the same throughout your life. I would even consider a comment like “You haven’t changed at all” an insult because that would mean I haven’t evolved with the times.

Over the years, I understood that expensive things only brought me happiness for a while. After that, I was on the lookout again for my next purchase, thinking it would bring me everlasting happiness. When I figured out what was happening, a lightbulb went off.

I decided to go through a self-initiated experiment to see if it would add any value to my life. I had heard of minimalism and seen a couple of videos. Though I was not ready to sacrifice every bit of materialistic pleasure in my life, I was willing to start small to see where it would go. I started cutting back on my purchases, not looking at shopping sites, seeking solace in the simple pleasures of life – like reading a book, going for a walk outdoors, engaging with nature, and enjoying fresh, clean air.

It was an epiphany of sorts.

I never knew so much of happiness could be derived from so little – from things that cost so little.

The little things in life that do not cost much, yet have the power to bring pure happiness. Why hadn’t I indulged in life before? Why did I only indulge in things? If I had not deliberately cut back on my purchases, seeking elsewhere for my joy, I might not have discovered the inexpensive side of happiness.

I second guess all my purchases now – I look for things that are bang for my buck. I compare prices and choose products that are the most cost-effective. I ask myself a couple of questions before spending my money on anything – “Am I buying this for myself? Or to show someone else that I can buy it?“, “Do I see myself using this product 2-3 months from now, or is it just a fad?” “Do I really need this product right now? Will my life become easier with this product?” If the answers are positive, I go ahead with the purchase without hesitation.

Life has a way of grounding you. It teaches you ultimately how important it is to save or invest and not spend unnecessarily.

With minimalism came the change in thought process. I do not wish for anyone to gift me anything expensive anymore. I instead wish people gifted me something handmade. I realize now that the most valuable thing anyone can gift you is their time. And what better than a handmade gift to beautifully represent time – the time that the giver graciously spent on making the gift for you. Time is beautifully unique. Each second of your time is a part of your life that you will not get back. It becomes even more exclusive when a person dedicates it solely to you. When someone’s time is spent on you, with you, or making something for you – that undoubtedly becomes the best one-of-a-kind personalized gift that anyone could offer.

This realization about handmade gifts made me recommend the same to others. To my surprise, I found little takers for handmade gifts. This lack of enthusiasm might be because it is not easy to gift someone your time. I am a sucker for handmade gifts, though. I get misty-eyed each time I get one – this precious time wrapped with a bow.

I came to recognize boredom as an enemy to my wallet. Retail therapy happened whenever I got bored. To get rid of this habit, I began learning new, interesting things. I learned from books, classes, online videos – again, stuff that did not cost much money.

Human beings are adaptive creatures – so adaptive that our desires can expand manifold if there is enough space to accommodate them. Consider a room with furniture and décor filled up in each and every corner. The room would tend to look stuffy and closed. The room is your breathing space. The furniture – your desires. The more furniture in the room, the more stuffy it gets, the more difficult it is to navigate without tripping over something. This room is magical and will try to expand itself to bring in more breathing space, but we tactlessly keep stuffing it with more inessential things to fill the space up.

How to unstuff a stuffy room? Very simple. Remove some of the furniture. In other words, reduce your desires.

Desires can be trimmed by steering clear of things you are most likely to splurge on. For example, if you tend to spend a lot of money on shopping sites, the simple remedy is to stop browsing shopping sites. If brands tempt you, stop visiting the stores that display those brands. It might seem difficult at first, but over time, you will master the skill of avoiding materialistic temptations. Delayed gratification will become second nature. You will become a pro in saying “no” to things that you are not ready for or do not add any value or meaning to your life.

This strategy worked well for me. I can now be happy with little. I have no intention of going back to my old self. If happiness is so cheap, why even bother looking elsewhere?

This behavior is not akin to being a miser. It is about finding a way that is more sustainable. A route to happiness that anyone and everyone, of any income level, can attain without emptying their pockets.

An Ode to 11 Thought-Provoking Life Quotes from Julian Barnes’ The Sense of An Ending

The Sense of An Ending by Julian Barnes is a slow burner. It is the first time I took to a Booker Prize winner, enjoying it thoroughly from start to finish without my interest wavering or feeling unnecessarily overwhelmed. It was not grim at all, and that took me by surprise, for I was expecting a story as gloomy as the title. I was hooked to the mystifying story arc and character sketches. Even more amusing was how the characters spoke – sometimes comical, sometimes pessimistic, sometimes a bit aggravating (as intended).

Several instances and dialogues in the book offer a different perspective on life and its various eccentricities. I have listed some of my favorite lines below.

“History is the certainty produced at the point where the imperfections of memory meet the inadequacies of documentation.”

“He was too clever. If you’re that clever, you can argue yourself into anything. You just leave common sense behind.”

“He thought logically and then acted on the conclusion of logical thought. Whereas most of us, I suspect, do the opposite: we make an instinctive decision, then build up an infrastructure of reasoning to justify it. And call the result common sense.”

“Some Englishman once said that marriage is a long, dull meal with the pudding served first.”

“History isn’t the lies of the victors, as I once glibly assured Old Joe Hunt; I know that now. It’s more the memories of the survivors, most of whom are neither victorious nor defeated.”

“There were some women who aren’t at all mysterious but are only made so by men’s inability to understand them.”

“It strikes me that this may be one of the differences between youth and age: when we are young, we invent different futures for ourselves, when we are old, we invent different pasts for others.”

“But time … how time first grounds us and then confounds us. We thought we were being mature when we were only being safe. We imagined we were being responsible but were only being cowardly. What we called realism turned out to be a way of avoiding things rather than facing them. Time … give us enough time and our best-supported decisions will seem wobbly, our certainties whimsical.”

“The question of accumulation – you put money on a horse, it wins, and your winnings go one to the next horse in the next race, and so on. Your winnings accumulate. But do your losses? Not at the racetrack – there, you just lose your original stake. But in life? Perhaps here, different rules apply. You bet on a relationship, it fails; you go on to the next relationship, it fails too: and maybe what you lose is not two simple minus sums but the multiple of what you staked. That’s what it feels like, anyway. Life isn’t just addition and subtraction. There’s also the accumulation, the multiplication, of loss, of failure.”

“Because just as all political and historical change sooner or later disappoints, so does adulthood. So does life. Sometimes I think the purpose of life is to reconcile us to its eventual loss by wearing us down, by proving, however long it takes, that life isn’t all it’s cracked up to be.”

“I had a friend who trained as a lawyer, then became disenchanted and never practised. He told me that the one benefit of those wasted years was that he no longer feared either the law or lawyers. And something like that happens more generally, doesn’t it? The more you learn, the less you fear. ‘Learn’ not in the sense of academic study, but in the practical understanding of life.”

An Ode to Self Driving Cars – Because, Let’s Face It, Some Of Us Hate Driving

I can’t wait for driverless cars.

I know it might not happen while I am still alive, but that doesn’t stop me from dreaming.

I hate driving, especially in traffic. I have given up on driving altogether in the city I live in – because the place is not exactly a driver’s paradise with its bumper-to-bumper traffic and the lack of parking space.

My location is equipped with good public transportation – I am able to catch an Uber or an autorickshaw the moment I step out of my house. So at the most, I take my car out maybe once every month.

I would like a driverless car for the following reasons though:

I can let my car take all the headache (or should I say bumperache?) of finding a parking slot. Or I can order it to go right back home, if there are no parking slots available anywhere.
Heck, I wouldn’t even need to own a car if there are driverless robocabs hovering nearby. This is what Zoox has in mind – not to sell robo cars but to offer them as taxis.
My elderly mom could go on a solo trip without depending on anyone.
People with disabilities would be able to travel on their own.
People who hate driving can avoid driving! Whaaaat? You thought everyone liked driving? Tsk tsk.

Change is difficult, I know. And scary. History is a key witness to such skepticism and cynicism evoked by changing circumstances. Every new discovery or invention is met with stubborn resistance. For example, the automatic elevator. Did you know elevators used to be manually lifted before? When the automatic elevators were invented, many were adamant about not using those strange machines. Too dangerous, they said. Sounds familiar? Now we know how that story ended.

It is the story of many automated machines. Some still face flak even if they are widely in use.

Let’s take the case of automatic transmission cars. They are everywhere now. Many prefer to drive an automatic instead of a manual – it makes life easier. No stress of shifting gears, you just need to concentrate on the road. Yet, there was, and still is, a lot of resistance towards teaching new drivers how to drive using an automatic car. I know many new drivers who would prefer to learn in an automatic because they have no intention of driving a manual transmission car in the future. Once you start driving an automatic, there’s no going back. For two reasons – 1) You become accustomed to driving an automatic. 2) You end up forgetting how to drive a manual. So what was the need of teaching such drivers how to drive a manual, anyway? Many learn driving with only one intention – that of traveling from Point A to Point B; not to learn the intricacies and technicalities involved with changing gears. But as mentioned before, change is difficult. When there are alternative automated solutions, we still tend to prefer the conventional methods.

Human beings in general are terrible drivers, even if most believe otherwise. It is impossible to get a 360-degree view of our surroundings, something a machine can do effortlessly, so we cannot really blame ourselves for our mishaps. We end up speeding when we are not supposed to, we drink and drive when we are not supposed to, we get distracted easily by the smallest of things, we make clumsy mistakes that can cost lives, and yet… we have trouble trusting machines.

Self driving cars have a long way to go before they become available to the public. Preparations are in full swing – like in the case of Waymo (Google’s self driving car), which was recently tested on urban terrains.

If driverless cars are approved, I would be first in line – provided it is affordable. Did I say affordable? If only wishes were horses. Till then, I will make do with ogling small, cute cars.

An Ode to Staying Unmarried Forever

I am in my late 30s, and I might never get married.

Initially, I wanted to. I terribly did. When I was in my teens, I never pictured myself as an unmarried woman with no children. In my dreams, I had a dashing husband, the cutest of kids, and all the usual, regular mush coated with a sugary sweetness that had the full potential to make anyone diabetic.

Then life happened.

Life happens for everyone of course, but for me, my journey took a complete U-turn from what I expected.

I did not get a dreamy husband.

I was not a dreamy wife.

I did not get any dreamy children.

My fairy tale turned out to be a horror story in disguise.. and I got divorced.

I thought my life was going to end. How is a woman in her late 20s going to live without a husband? It used to hurt initially. The thought that life would be so unfair, blessing others with the good things in life while I was left with nothing but despair, was too much for me to fathom. A desolate soul in search of a deeper meaning in the form of marital status – that was me.

In hindsight, I never enjoyed my marital life – if you take away the husband part of it as well. The regular chores, and the responsibilities, made me think, “Is this what I am going to do the rest of my life?” I had no time for hobbies, things that mattered to me, my work, or anything that kept me alive, active, and fulfilled. Marital life is indeed a busy world, and you should not step into it unless you are ready to take on the responsibilities, compromises, and adjustments that come with cohabitation.

I was never ready for it.

Within a few years of my divorced life, I realized how much I was adjusting and compromising in my married life. When I left the relationship, it was as if a chain was broken, and I finally attained wings to fly. This freedom felt like finally finding water in a desert. My thirst, however, did not get quenched. Instead, I found it ever-increasing. The thirst to enjoy the things I want, the thirst to not be answerable to anyone for the first time in my life, the thirst to just be. It was liberating, it was extraordinary, and it felt like love. I never knew love in the form of freedom. I thought love could only be found in people. It took a break from one kind of love for me to discover another. The type of love that I had never experienced before because all through my life I was told: “marriage is important.”

I never realized a woman could live without getting married. I have seen others living a content life without tying the knot, but I used to look at them with compassion. The thought that marriage is mandatory and the only thing that can make a woman happy was so ingrained and indoctrinated in me that any other way of living was callously dismissed.

Why did it take a divorce for me to find freedom? The answer might be that the people in my vicinity finally stopped pressurizing me to get into something I was not comfortable with i.e., marriage.

Note the usage of the word “unmarried” instead of “single.” A good relationship is like a cherry on the cake. It is a bonus—a plus. But I feel if a relationship is what makes you feel “complete,” then it would mean that you are lacking otherwise. This is far from the truth. We should celebrate individuality as much as coupledom, if not more. In the end, it all boils down to choice. There is never really one single right path. But you should have the complete freedom to choose the path you desire.

My dream is no longer marriage. It feels like I have seen the other side, and now I choose the other side – the path less taken. My dream is now to selfishly enjoy my freedom till the end of life. To those wondering how the path is – it is not easy. It is definitely not easy. You always have this big FOMO because everyone around you is following a path entirely different from yours – they find someone they love, they marry, and they live happily(?) ever after.

What happens when you don’t marry? For a reclusive person like me, it is a journey of self-discovery, freedom, and fulfillment. For another, it might be that of melancholy. It truly is subjective. But it is a life that is definitely worthy, liveable, and sustainable.

To end this with the ever-famous lines by Robert Frost:

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by, And that has made all the difference.

The Best Quotes from Rumi’s Little Book of Life

Rumi has a way with words. His love for all things divine and spiritual is like a medicinal balm for a tired soul. I am always swept away by his verbal dexterity and his nonchalant aura. He has the power to induce both transcendence and melancholy in a single frame and you are left craving for more by the end of each couplet.

There is a neat little book available for Amazon Prime subscribers for free called “Rumi’s Little Book of Life.” It is a quick read filled with wisdom, dreamy poetry, and wonder. An enchanting journey that takes you through Rumi’s ruminations on life (see what I did there?).

Here are a few of my favorite quotes from the book.

Why do you seek water when you are the stream?

Indulging our pride, we run after every fleeting image.

How odd that being so unimportant we cultivate such grand illusions.

The intellect is luminous and seeks justice so why does the dark ego prevail over it? Because the ego is at home in the body while the intellect is only a visitor, the ego-dog at his own door is like a lion.

Embrace sorrowful thoughts for they sweep the house of your heart clean, scatter the withered leaves, and pull out the twisted roots, preparing the ground for the new shoots of joy. What sorrow takes away from the heart it replaces with something better. Without the fury of thunder and lightning the plants will be scorched by the sun. Be grateful for all you receive, good and bad alike, for it may be a gift from the treasury of Spirit that will bring the fulfilment of your most secret desire.

You carry a basket full of bread, yet you beg for crumbs from door to door. You are up to your knees in water, yet you beg for a drink from everyone you see. Why are you so blind and stubborn? Beg at the door of your heart instead.

My heart whispered, “Do not be so concerned, in the midst of people I am like a gold coin hidden in the dust, but even gold cannot find buyers unless it is brought out from the depths of the mine into the light.”

The night is blind to the glory of dawn man is blind to the glory of the lover. He who complains of burning is not a lover for the lover’s heart is constantly on fire.

Of the rain at night no one is aware for every soul is asleep. Yet the freshness of the rose garden in the morning is evidence of the rain that no one saw.

Many pass their lives deprived of love unaware that their heart is dark and narrow where the sun never penetrates. A grave is better than such a heart.

The body is like a pot with the lid on. Lift the lid to see if it is filled with the Water of Life or the poison of death. Focus on the contents and you will become a master focus on the pot and you will be misguided. Your eyes only see the body while the spiritual eye perceives the soul.

My heart twisted with passion in the fire of your words. Now I see what I saw as fire was only ice what I saw as water, only a mirage and our story, an old forgotten dream.

There are hundreds of religious books yet they are all one chapter, there are a hundred different holy places yet only one altar. All roads lead to the one House from one seed a thousand ears of corn emerge. There are many kinds of food and drink with one purpose only, to feed. The eyes of hunger are greedy, when satiated with one kind of food all others become repulsive to your heart. I dissolved as a grain of salt in your Sea of Serenity. Nothing remained, no faith, no certainty, no doubt. In my heart a star was born and inside all worlds dissolved.