The Psychology of Money Summary & key ideas explained

Ronald Read spent about 25 years fixing cars at a gas station in Vermont, then 17 more sweeping floors at a J.C. Penney. When he died in 2014, at 92, his town got a shock. The quiet man who, his lawyer said, would sometimes park far away rather than feed a meter left an estate of about $8 million. About $6 million of it went to the local hospital and library.

Now meet Richard Fuscone. Educated at Harvard and the University of Chicago, a senior executive at Merrill Lynch, successful enough to retire in his forties. He borrowed heavily to live large, including a house of nearly 20,000 square feet. In 2010, he declared personal bankruptcy.

Try that matchup anywhere else. Nobody expects the man with the mop to beat the specialist at the specialist's own job. With money, he can, and it happens all the time.

That puzzle is the heart of The Psychology of Money. Morgan Housel, a partner at the Collaborative Fund and a former columnist for The Motley Fool and The Wall Street Journal, argues that with money, how you behave counts for more than what you know. And behavior, unlike a formula, can't simply be learned from a textbook, however bright you are.

Read had patience. He bought solid stocks and left them alone for decades. Fuscone had expertise and no brakes.

In the next 15 minutes you'll see why sensible people make strange money choices, why time beats talent, and what wealth is actually for. It starts with a question: why does everyone else's money behavior look so crazy?