Lessons Beyond Numbers: A Review of The Psychology of Money by Morgan Housel

At CMG Advisory we strongly believe in self education and this includes reading books that assist us in making informed decisions and how the world works.

This week I read the book the Psychology of Money by Morgan Housel that was recommended to me by a client. This book has been the subject of many praises and how it looks into how humans behave in relation to the concept of money.

Below is an overview for you to read and consider reading the book at your own leisure. What the book offers in a sentence money success is more about behavior, time, and perspective than mastering complex math or chasing the hottest investment ideas.

The core themes the book covers and why they matter to small business owners, investors and employees are summarized below:

• Wealth is what you don’t see: The book reframes wealth as what you save and defer consumption into the future, not what you own or display. This subtle shift nudges readers toward building genuine financial security through discipline and patience.

  
  

• Luck & risk, frequently underappreciated: Housel emphasizes the role of luck in success and the omnipresence of risk. Acknowledging both helps guard against overconfidence in good outcomes and fatalism in bad ones.

  
  

• Compounding isn’t just a math concept; it’s a behavior concept: The most powerful force in money is time, lived through consistent saving and wise risk-taking. The book repeatedly anchors this idea in real-world stories.

  
  

• The power of reasonable, not rational, decision-making: People often make “good enough” choices that compound well over time, while perfect optimization can backfire due to discipline, taxes, or unforeseen events.

  
  

• Personal finance is deeply personal: Different life circumstances—income volatility, career changes, family responsibilities—reshape what “optimal” looks like for each person.

  
  

• Avoiding costly mistakes greater than chasing perfect returns: Housel argues that avoiding big mistakes (like overpaying for assets in a bubble, or withdrawing at the wrong time) yields better long-run results than chasing spectacular forecasts.

Who should read this book (YOU! :-))

• Newcomers seeking a mental framework for money.

• Experienced investors wanting to reflect on biases and behavior.

• Anyone who wants to align financial choices with long-term goals and values.

Key takeaways (highlights you can apply)

• Practice frugality and avoid lifestyle creep even as income grows: True wealth is the ability to live on less than you earn and save the rest.

• Think in time horizons: Long-term planning beats short-term optimization. Be patient with investments, and avoid knee-jerk reactions to market noise.

• Get your ego out of money decisions: The best investors aren’t always the smartest—often they’re the ones who stay disciplined and avoid catastrophic mistakes.

• Align money with your values: Frame your financial choices around what matters most to you (security, freedom, family), not what society says is impressive.

• Build a buffer: Sufficient savings reduce stress and allow you to take calculated risks when opportunities arise.

• Beware the illusion of control: Markets are unpredictable; diversify, stay humble, and prepare for the unknown.

  
  

Practical takeaways (you can try this week)

• Start a “days without unnecessary spending” log for a month to see where small purchases add up.

• Set a 1-page personal finance philosophy: your goals, risk tolerance, and the non-negotiables in your life.

• Create a simple emergency fund target (e.g., 3–6 months of essential expenses) and automate the basics of saving toward it.

• Reflect on a recent money decision and identify whether emotion or data driven the outcome; note one adjustment to improve next time.

Bottom line The Psychology of Money isn’t about beating the market; it’s about cultivating the right relationship with money.

By highlighting humility, patience, and sensible risk, Morgan Housel invites readers to build wealth not just as a number, but as freedom, security, and peace of mind. The book is an easy read and for professional readers you should be able to breeze through it within a week.

If you require assistance in setting the goals or review your current state of affairs contact us at admin@cmgadvisory.co.nz or your senior advisory team.