Personal finance books available to consumers are a mixed bag — some big names who have no background in finance, except being successful in a different career, have written books giving advice on finances.
People with no financial credentials have built empires on publishing and speaking on finance. Academics with extensive financial expertise have written wonderful books about finance, but some are a bit difficult to wade through.
Morgan Housel is a journalist who has reported on finance, and taken a thoughtful and intentional approach to his family’s earning, saving and investing. In his book, “The Psychology of Money,” he has reached the perfect blend of good journalistic research with academic concepts and research.
Ideas are explained in understandable terms without being condescending. Housel avoids a one-size-fits-all approach or promising a secret sauce that will magically make you rich over night that is common in many personal finance books. He instead explains general concepts and emphasizes the importance of making decisions that make sense for you rather than following the herd.
He also explains the negative effect emotions can have on finance. Greed, panic and a sense of infallibility all can cause negative financial outcomes. Housel gives multiple examples from recent history and people he has known where ego and emotion play a role in good and bad outcomes.
If you’re looking for help on a specific issue that applies to only to you, you probably won’t find it in a book written for mass audiences. This is also true of books on self help and politics.
A better strategy is to use personal finance books for an overview and to understand important concepts. After that, you can do additional research about your particular situation or hire a professional to customize strategies and solutions for you.
Missteps can have big consequences —especially with monetary issues — so working with a professional with a philosophy and approach compatible to yours is a good strategy. Housel shares how he has and continues to manage his finances, and is adamant that his strategy works for him because it’s designed for him and his family.
He also stresses that his is not the only workable approach, but the emotional peace his approach gives him and his wife is a vital element of why they manage their money the way they do.
As the title of the book suggests, our attitude, fears and background about money shape how we manage our finances. That doesn’t mean we’re at the mercy of those elements. Self-awareness of our financial hopes and fears can give us the perspective to wisely approach our relationship with money.
Whether you’re a financial novice or a money maven, Housel’s book is an enjoyable and informative read.
Linda Leitz is a certified financial planner and can be reached at linda@peaceofmindfin.com.
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