Mind Over Money: The Psychology of Money and How to Use it Better
MY RATING: ⭐⭐⭐⭐ 4/5: This book summary gave a good overview of the “psychology” but not really a lot of practical tips on the “how to use it better” part.
Michelle’s Raw Notes from the Book Summary
1. Money evokes strong feelings in all of us.
Paper money in itself is value-less.
The value is in the exchange for something “real”.
It’s a “blank check” for your dreams and aspirations.
The meaning attached to money comes from YOU.
Money itself is not the problem. It’s what we do with it.
2. We learn about money as children.
We undergo financial socialization at a very young age.
Your money blueprint may be coming from childhood.
Children observe adults behavior with money and adapt it.
Parents need to have open conversations with kids about money.
Be explicit about finances while they are still young.
What you DO is more important than what you say.
If you’re anxious about money, your kids will absorb that.
The best thing you can do for your kids financial future is get your financial affairs and mindset in order.
3. We never grow out of our fascination with physical “paper” money
Virtual money feels less real - you spend more of it.
4. We are easily irrational with money
People value credit and cash differently.
When we buy on credit, it feels less real - so we spend more of it.
We are irrationally optimistic about how much “more” money we’ll earn in the future. The best indicator for how we’ll handle money in the future is how we’re dealing with it now.
5. We’re all prone to “mental accounting” when it comes to money
Mental accounting - pinching pennies on groceries whilst overspending on drinks on vacation.
6. We need to be aware of how confirmation bias shapes our perceptions
We will see, hear, or taste what we expect to encounter.
“Confirmation bias is the tendency to seek out and prefer information that supports our preexisting beliefs. As a result, we tend to ignore any information that contradicts those beliefs.”
Having a healthy awareness of confirmation bias will help you make better decisions.
7. Money can get in the way of motivation on the job
8. Money can only help solve social problems sometimes
9. Money can make us happier but only up to a point
To enjoy our lives to the fullest, we need to SAVOR what we have, not just have them.
Questions to Ask Yourself:
What is your emotional relationship with money? What is your financial imprint from childhood?
How can you correct your relationship with money?
What financial example do you want to provide for your kids?
