I reached in to get my train-shaped piggy bank to put in my money, and a sense of deep satisfaction and contentment took over me. As a 9-year-old, this was right after a festival in Nepal called Dashain, where we receive gifts and money from our elders besides blessings. Back then, I also had a vast collection of ancient coins from Nepal that I protected dearly. Before moving to Canada, I gave it to my grandmother. I hear she has spread it over several religious pilgrimages throughout Nepal, which makes me happy to hear. Maybe that's why I have been blessed to be so lucky in life :)
I know that money is usually a sensitive topic for many people, but it is essential to talk about it. I didn't realize it back then, but I had already started forming my psychology of money. The basic gist of it was, and is to this day, to save relentlessly but not think twice about spending on something I want. Fast forward to 2020, it was the pandemic, and I was actively looking for things to do. At the time, I was in an economics rabbit hole, trying to have at least a basic understanding of how the economic machine works. I then stumbled across this book somewhere and was immediately drawn to the title. Psycology and finance combined? Sign me up!
As I started reading the book, I soon realized this would be life-changing. It spoke in a way I understood and resonated with. The first thing that came to my mind was that money is not just a tangible entity but rather lies at the center of a complex arrangement of value exchanges, resources, trust, and, most importantly, human behavior. I was reminded of Yuval Noah Harahari's Sapiens book when he talks about how in the evolution of homo sapiens, the concept of corporations, countries, and religions are just stories and social constructs. So is money. It only exists in relation to us and not in a vacuum. I forget this sometimes.
I found that this book talks about money in three major categories: freedom, greed, and time.
Here are some quotes from each type:
- Freedom: "The ability to do what you want, when you want, with who you want, and for as long as you want, is priceless. It is the highest dividend money pays."
- Greed: "There is no reason to risk what you have and need for what you don't have and don't need."
- Time: "Money's intrinsic value - this cannot be overstated - is its ability to give you control over your time."
The book was so influential, in fact, I have enacted the following changes since reading it:
1. Investing: I started investing at age 18 after understanding the magic of compound interest. It is genuinely astonishing if one can get started at an early age. The value of compounding is everywhere, but it seems especially important regarding investing. At the beginning of every month, I invest in S&P 500 index funds and a few individual stocks (for fun). I do not do this because I have a lot of money to invest but rather to build a solid investing habit early on in life. Even if it is $5, I will invest it because the practice is more important than the amount. I am trying to shape my identity in this way.
Automating investing is also a good idea.
2. Donating: On a similar note, I donate a certain monthly amount to a cause. I want to establish a giving mindset early on as well. Again, it is not about the amount but the habit. Income will progressively increase over time. Research shows that kindness is a vital happiness habit as well.
3. Reframing: As a girl, I also found it incredibly important not to run away from these concepts but rather to lean into them. Maybe because the "finance bro" phenomenon is so widely spread, I had to overcome my own psychology to educate myself.
4. Learning: Long-term thinking, developing good judgment, and an abundance mindset are critical.
5. Believing: I now firmly believe that time is more valuable than money.
These are tremendous changes just by reading a book. The book has been the most important financial book I have ever read. It points out the obvious, not so-obvious, fact that our belief systems and emotions strongly dictate our behavior regarding money. Its role in our happiness and fulfillment is essential until we reach a certain earning bracket of fulfilling our basic needs and wants (approx. $70,000 in the US), after which an increase in money does not directly correlate to an increase in happiness. The same old hedonic adaptation takes over (I highly recommend taking the online course on the science of well-being from Coursera that goes deeper into this!).
So, managing our psychology is extremely important for us emotional creatures with emotional needs since money seems to be either really important or absolutely everything.
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