Lessons From The Psychology of Money That I Missed the First Time Around

I’ve noticed this many times. Reading the same book at different life stages somehow teaches different lessons, because you’re coming at it from a different perspective, and with new experiences to apply the concepts to.

You’ll notice it most when you re-read something from 20 or 30 years ago. But sometimes — as with this re-read for me — even a few years makes a difference. I last read this book around four years ago, but things have changed for me since then. Here’s what’s resonating with me on this read.

Keep It Simple

When the student is ready, the teacher appears, and this particular student is ready to simplify everything. It’s been my theme for the year, and I’m doing pretty well with it. Last time I read this book, I didn’t want simple. I wanted to stretch myself, and for some reason I thought that the best way to do this was in different directions.

I wanted diverse investments, lots going on, fingers in many different pies. I had a business where I was constantly falling prey to Shiny Object Syndrome. My husband and I had spent years buying and flipping property after property. Life was complicated.

Now I want to be like Housel. He lives in a paid-off house and invests mainly in index funds, thereby beating the returns of 82% of individual investors (without the stress of a more active investing strategy).

The Joy of Paying Down Debt

For a long time I didn’t carry any debt, and I may even have been arrogant enough to skip that section (in this and other books) first time around. Now I have a better idea of what it’s like to get into (and out of) debt.

The process of paying down debt (and putting things in place to manage it) doesn’t sound sexy, and it isn’t. But it can be surprisingly freeing, and I actually love the way it’s covered in this book.

If you have debt to manage and want to take a measured, practical, guilt-free look at what to do about it, this book helps.

Saving for the Sake of It

As part of my simplification strategy, I’m taking a new approach to saving. I’ve always been a big believer in setting goals, especially savings goals. I used to love those bank accounts that let you save into ‘pots’. One for travel, one for your house deposit, one for your wedding, etc.

Housel advocates saving regardless of whether have a specific goal (or goals). The simpler the savings plan the better. Just pay yourself first (as almost every financial guru advises), and watch your savings grow. It’s not what used to work for me, but it’s what works for me now.

We’re Lied to (a lot) About What It Takes to Make Money

As Housel stresses:

Don’t get me wrong. This is not news to me. I’ve known way too many people who are living well on inherited wealth (or cultural capital) and definitely too many who’ve worked hard their whole life for very little return.

It’s the last two words of the above quote I had difficulty applying. I’ve always told myself that if things aren’t going my way, I just need to work harder, even though I would never give that advice to anyone else on the planet. I’m harder on myself than I am on anyone else, so those two words were probably my biggest takeaway during this re-read.

My advice to you today isn’t to follow the same steps I am. In fact, the point I’m making is perhaps the opposite. I’m fond of saying that personal finance is personal. It is different for everyone. What’s worth considering is that it’s often (very) different for 40-year-old you and 20-year-old you (or even 50-year-old you and 54-year-old you).

Have a favorite book about personal finance that you haven’t read for a while? I advise a re-read. There may be new lessons that you simply weren’t ready to learn back then.