The Psychology of Money

People are poor forecasters of their future selves.

Long term planning is essential but, things change, both the world around you, and your own goals and desires.

It’s hard to make enduring long-term decisions when your view of what you’ll want in the future is likely to shift.

At every satge of our lives we make decisions that will profoundly influence the lives of the people we’re going to become, and when we become those people, we’re not always thrilled with the decisions we made.

Some of the most miserable workers I’ve met are people who stay loyal to a career only because it’s the field they picked when deciding on a college major at age 18.

The odds of picking a job when you’re not old enough to drink that you will still enjoy when you’re old enough to qualify for social security are low.

Sunk costs—anchoring decisions to past efforts that can’t be refunded— are a devil in a world where people change over time. They make our future selves prisoners to our past, different, selves. It’s the equivalent of a stranger making life decisions for you.

From “The Psychology of Money” by Morgan Housel

Full of wisdom. I’m enjoying this book so much…

This book really influenced and changed my judgment and view on how things really are.

Things like luck (randomness) and risk; and how much they influence our lives and how we should make judgment calls when inferring outcomes. Outcomes are indeed guided by forces other than individual effort as Morgan states.

“Luck and risk happen because the world is too complex to allow 100% of your actions to dictate 100% of your outcomes. You are 1 person in a game with 7 billion other people and infinite moving parts. The accidental impacts of actions outside of your control can be more consequential than the ones you consciously take”

We never know what’s around the next corner and all we can do is to play with the odds. Continuously improving our skills and the philosophies we live by can increase our odds of success.

“You have to plan on your plan not going according to plan. Room for error lets you endure a range of potential outcomes, and endurance lets you stick around long enough to let the odds of benefiting from a low-probability outcome fall in your favor.”

Just 2 of many(20+1) topics that are covered in this concise masterpiece.

I took notes from the majority of lines. Outstanding work Morgan Housel. In my top 3 list.