Lessons from “Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness” By Morgan Housel

On Wednesday, March 12, 2025, we hosted our first-ever Indianapolis-based Women’s Financial Book Club. It was a brave new beginning to connect with women in a new geographic location.

We have a five-fold purpose that guides our quarterly gatherings:

Create a safe space for women to ask financial questions.
Educate women about money issues they commonly avoid
Empower women in the Bloomington area to make financial decisions.
Encourage our current attendees to begin their own book clubs to spread knowledge and support the women in their lives.
To relax and have a little fun!

If #4 listed above, resonates with your desire to build community and learn from other women in your life, use the key quotes below and download the PDF of the discussion questions at the bottom of this page.

Quotes from Chapter 1: No One’s Crazy

Every decision people make with money is justified by taking the information they have at the moment and plugging it into their unique mental model of how the world works. (p 18)
It should surprise no one that many of us are bad at saving and investing for retirement. We are not crazy. We're all just newbies. (p 21)

Quotes from Chapter 2: Luck & Risk

The line between ‘inspiringly bold’ and ‘foolishly reckless’ can be a millimeter thick and only visible with hindsight. (p 32)
Studying a specific person can be dangerous because we tend to study extreme examples...The more extreme the outcome, the less likely you can apply its lessons to your own life, because the more likely the outcome was influenced by extreme ends of luck or risk. (p 33)
Failure can be a lousy teacher, because it seduces smart people into thinking their decisions were terrible when sometimes they just reflect the unforgiving realities of risk. (p 34)

Quotes from Chapter 3: Never Enough

At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, “Yes, but I have something he will never have…enough.” (p 37)
There is no reason to risk what you have and need for what you don't have and don't need. (p 41)
Modern capitalism is a pro at two things: generating wealth and generating envy. (p 41)

Quotes from Chapter 4: Confounding Compounding

The big takeaway from ice ages is that you don't need tremendous force to create tremendous results. If something compounds—if a little growth serves as the fuel for future growth—a small starting base can lead to results so extraordinary they seem to defy logic. (p 49)
…good investing isn't necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can't be repeated. It's about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That's when compounding runs wild. (p 53)

Quotes from Chapter 5: Getting Wealthy vs. Staying Wealthy

There are a million ways to get wealthy…but there’s only one way to stay wealthy: some combination of frugality and paranoia. (p 57)
A plan is only useful if it can survive reality. And a future filled with unknowns is everyone's reality. (p 63)
Room for error—often called margin of safety—is one of the most underappreciated forces in finance. (p 64)

Quotes from Chapter 6: Tails, You Win

It is not intuitive that an investor can be wrong half the time and still make a fortune. It means we underestimate how normal it is for a lot of things to fail. Which causes us to overreact when they do. (p 72)
Anything that is huge, profitable, famous, or influential is the result of a tail event—an outlying one-in-thousands or millions event. And most of our attention goes to things that are huge, profitable, famous, or influential. (p 73)
Forty of the companies in the [Russell 3000] index were effectively failures. (p 75)

Quotes from Chapter 7: Freedom

More than your salary. More than the size of your house. More than the prestige of your job. Control over doing what you want, when you want to, with the people you want to, is the broadest lifestyle variable that makes people happy. (p 84)
Using your money to buy time and options has a lifestyle benefit few luxury goods can compete with. (p 84)

Quotes from Chapter 8: Man in the Car Paradox

People tend to want wealth to signal to others that they should be liked and admired. But in reality those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired. (p 93)
If respect and admiration are your goal, be careful how you seek it. Humility, kindness, and empathy will bring you more respect than horsepower ever will. (p 94)

Quotes from Chapter 9: Wealth is What You Don’t See

Wealth is financial assets that haven’t yet been converted into the stuff you see. (p 98)
The only way to be wealthy is to not spend the money that you do have. It’s not just the only way to accumulate wealth; it’s the very definition of wealth. (p 98)
The world is filled with people who look modest but are actually wealthy and people who look rich who live at the razor’s edge of insolvency. (p 100)

Quotes from Chapter 10: Save Money

Wealth is just the accumulated leftovers after you spend what you take in. And since you can build wealth without a high income but have no chance of building wealth without a high savings rate, it's clear which one matters more. (p 105)
One of the most powerful ways to increase your savings isn't to raise your income. It's to raise your humility. (p 106)

Quotes from Chapter 11: Reasonable > Rational

You're not a spreadsheet. You're a person. (p 113)
It may be rational to want a fever if you have an infection. But it's not reasonable. (p 115)
A rational investor makes decisions based on numeric facts. A reasonable investor makes them in a conference room surrounded by co-workers you want to think highly of you, with a spouse you don’t want to let down, or judged against the silly but realistic competitors that are your brother-in-law, your neighbor, and your own personal doubts. (p 116)
The historical odds of making money in US markets are 50/50 over one-day periods, 68% in one-year periods, 88% in 10-year periods, and (so far) 100% in 20-year periods. (p 118)

Quotes from Chapter 12: Surprise!

An overreliance on past data as a signal to future conditions in a field where innovation and change are the lifeblood of progress. (p 123)
The most important economic events of the future—things that will move the needle the most—are things that history gives us little to no guide about. They will be unprecedented events. (p 128)
The further back in history you look, the more general your takeaways should be. General things like people’s relationship to greed and fear, how they behave under stress, and how they respond to incentives tend to be stable in time. (p 133)

Quotes from Chapter 13: Room for Error

The pundit who speaks in unshakable certainties will gain a larger following than the one who says “We can't know for sure,” and speaks in probabilities. (p 139)
Room for error… [is] often viewed as a conservative hedge, used by those who don't want to take much risk or aren't confident in their views. But when used appropriately, it's quite the opposite. (p 140)
Having a gap between what you can technically endure versus what's emotionally possible is an overlooked version of room for error. (p 141)
You can plan for every risk except the things that are too crazy to cross your mind. And those crazy things can do the most harm, because they happen more often than you think and you have no plan for how to deal with them. (p 144)

Quotes from Chapter 14: You’ll Change

Imagining a goal is easy and fun. Imagining a goal in the context of the realistic life stresses that grow with competitive pursuits is something entirely different. (p 150)
Long-term financial planning is essential. But things change — both the world around you, and your own goals and desires. (p 151)
Regrets are especially painful when you abandon a previous plan and feel like you have to run in the other direction twice as fast to make up for lost time. (p 152)

Quotes from Chapter 15: Nothing’s Free

Most things are harder in practice than they are in theory. Sometimes this is because we’re overconfident. More often it’s because we’re not good at identifying what the price of success is, which prevents us from being able to pay it. (p 158)
The question is: Why do so many people who are willing to pay the price of cars, houses, food, and vacations try so hard to avoid paying the price of good investment returns? (p 162)

Quotes from Chapter 16: You & me

Bubbles form when the momentum of short-term returns attracts enough money that the makeup of investors shifts from mostly long term to mostly short term. (p 169)
Bubbles do their damage when long-term investors playing one game start taking cues from those short-term traders playing another. (p 171)
Rising prices persuade all investors in ways the best marketers envy. They are a drug that can turn value-conscious investors into dewy-eyed optimists, detached from their own reality by the actions of someone playing a different game. (p 172)
We call everyone investing money “investors” like they’re basketball players, all playing the same game with the same rules. (p 173)

Quotes from Chapter 17: The Seduction of Pessimism

Optimism is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way. (p 177)
If a smart person tells me they have a stock pick that’s going to rise 10-fold in the next year, I will immediately write them off as full of nonsense. If someone who’s full of nonsense tells me that a stock I own is about to collapse because it’s an accounting fraud, I will clear my calendar and listen to their every word. (p 179)
…pessimists often extrapolate present trends without accounting for how markets adapt. (p 183)
…progress happens too slowly to notice, but setbacks happen too quickly to ignore. (p 184)

Quotes from Chapter 18: When You’ll Believe Anything

The more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true. (p 193)
…there are so many financial opinions that once you pick a strategy or side, you become invested in them both financially and mentally. If you want a certain stock to rise 10-fold, that’s your tribe. If you think a certain economic policy will spark hyperinflation, that’s your side. (p 195)
Wanting to believe that we are in control is an emotional itch that needs to be scratched, rather than an analytical problem to be calculated and solved. The illusion of control is more persuasive than the reality of uncertainty. So we cling to stories about outcomes being in our control. (p 200)

Quotes from Chapter 19: All Together Now

Go out of your way to find humility when things are going right and forgiveness/compassion when they go wrong. (p 207)
Become OK with a lot of things going wrong. You can be wrong half the time and still make a fortune. (p 208)
Smart, informed, and reasonable people can disagree in finance, because people have vastly different goals and desires. There is no single right answer; just the answer that works for you. (p 210)

Quotes from Chapter 20: Confessions

The difference between what someone suggests you do and what they do for themselves isn’t always a bad thing. It just underscores that when dealing with the complicated and emotional issues that affect you and your family, there is no one right answer. (p 214)
Comfortably living below what you can afford, without much desire for more, removes a tremendous amount of social pressure that many people in the modern first world subject themselves to. (p 216)
We own our house without a mortgage, which is the worst financial decision we’ve ever made but the best money decision we’ve ever made. (p 216)
Beating the market should be hard; the odds of success should be low. If they weren’t, everyone would do it, and if everyone did it there would be no opportunity. (p 218)

If you are interested in participating in a future financial book club or want support to host your own Women’s Financial Book Club, reach out to Dawnetta Cooper. To download a copy of the discussion questions, click the link below:

Discussion Questions From "The Psychology of Money"

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