Financial Blues to Financial Brilliance

Book Excerpts: "The Psychology of Money" by Morgan Housel.

There are many things we wish we knew early on in life, and one of it is having the right mindset and knowledge about money and finances. We all have moments where managing money feels like a tightrope walk without a safety net. But what if understanding the psychology behind our financial decisions could transform our approach to money?

Here are some key insights from the book "The Psychology of Money" that provides guidance on how to achieve financial success.

#1. What You Do with Your Money: Financial success is less about how much you earn and more about how you manage what you have.

#2. Impact of Upbringing and Mindset: Your approach to money is shaped by your upbringing and mindset, not the current economy. Different economic backgrounds lead to different financial decisions. This means everyone makes financial decisions differently based on their unique perspective. Yes, we are not irrational or crazy; our financial behaviors are shaped by our past experiences. Understanding this can help us make better decisions.

#3. Luck vs. Risk: Luck and risk are often indistinguishable and are influenced by a very thin line and timing. Focus on patterns rather than specific individuals, as success and failure can be misleading teachers. Don't blame yourself and avoid judging failures harshly.

#4. The Power of Compounding (Warren Buffett’s Secret): Start investing as early as possible. Consistent investing over a long period is crucial. The secret to Buffett’s success is not just skill, but time.

# 5. Getting Wealthy Vs Staying Wealthy: Getting wealthy and staying wealthy require different skills. The key is to survive through market ups and downs. Live below means. How much you earn you will never build wealth unless you can put a lid on how much fun you can have with your money right now. Control current spending to have more options in the future.

#6. True Financial Freedom-Control Over Time: True wealth is the ability to have tome on hand and to do what you want, when you want. Saving money grants you this freedom and flexibility, allows you slack to pursue the things you want to do.

#7. Room for Error: Always have a margin for error in your plans. Don’t rely solely on past trends, as unexpected events can alter the course of the economy. Plan for uncertainty and surprises.

#8. Managing Expectations: Understand the concept of "never enough." Avoid greed to prevent hasty decisions.

#9. Detachment/Nothing Lasts Forever: Don’t become overly attached to any particular asset or investment. Flexibility is key.

# 10. Sensible Investing: Invest in index funds, maintain a reasonable lifestyle, and save for the future.

Age old wisdom: SAVE, SAVE & SAVE: Life is full of surprises. Saving without a specific purpose can act as a hedge against unexpected events. If you are the kind who don't believe in amassing wealth, you can always give away to the less privileged!

Financial goals and desires vary widely. There is no single right answer in finance, only what works for you. Happy learning and growing!