The Book That Changed My Financial Life ๐ค
Summary
TLDRIn this episode of Book Club, the host explores 12 key lessons on money from Morgan Housel's 'The Psychology of Money.' The video is divided into four parts, discussing attitudes towards money, earning it, spending it, and protecting it. Key takeaways include the influence of luck and timing on wealth, the importance of recognizing 'enough,' the power of compounding, and the value of saving. The host also emphasizes the psychological aspects of financial decisions, such as the emotional benefits of paying off a mortgage and the diminishing returns on happiness from increased income. This insightful summary encourages viewers to consider both the rational and emotional sides of managing their finances.
Takeaways
- ๐ง Different attitudes towards money can affect financial decisions, and it's important not to judge others based on their financial choices.
- ๐ Recognize the role of luck in financial success, as it often combines with skill and unfair advantages, as exemplified by Bill Gates' early access to a computer.
- ๐ฏ Learn to be content with what you have; constantly chasing more can lead to risky behavior and dissatisfaction.
- ๐ฑ Early and consistent investing can lead to significant wealth through the power of compounding, as demonstrated by Warren Buffett's wealth accumulation.
- ๐ฐ Prioritize saving as much as possible, as your savings rate is more controllable and impactful on wealth building than income or investment returns.
- ๐ซ Focus on avoiding financial mistakes rather than seeking to make large gains, as the consequences of loss can be more detrimental than the benefits of windfalls.
- ๐ Use money to buy freedom and flexibility, as these are more valuable than material possessions in contributing to happiness and life satisfaction.
- ๐ก Understand the difference between getting wealthy and staying wealthy; the former requires risk-taking while the latter requires risk-avoidance and humility.
- ๐ Avoid flashy spending to gain respect, as true wealth is often the money that remains unspent and respect cannot be bought with material possessions.
- โ ๏ธ Always leave room for error in financial planning to account for both potential changes in financial returns and emotional responses to those changes.
- ๐ฎ Avoid making extreme financial commitments based on current desires, as future goals and values are likely to change in unpredictable ways.
- ๐ Make decisions that are reasonable and consider emotional well-being, not just rational and financially maximizing choices.
Q & A
What is the main topic of discussion in the video?
-The main topic of the video is the 12 lessons about money that the host learned from Morgan Housel's book 'The Psychology of Money'.
Why should we not judge people based on their financial behavior?
-We should not judge people based on their financial behavior because everyone has different attitudes towards money, which are influenced by their own circumstances and life experiences.
How does the experience of different generations with the stock market affect their investment decisions?
-Different generations have different experiences with the stock market, which shapes their views on investing. For example, those born in the 1970s, who saw the S&P 500 increase significantly, are more likely to invest in stocks compared to those born in the 1950s, who experienced a stagnant market.
What is the role of luck in making money according to the book?
-According to the book, any outcome, including making money, is a combination of luck, skill, and unfair advantages. It emphasizes that we should not solely focus on the actions of successful individuals but also consider the broader patterns and the role of luck.
Why is it important to recognize when 'enough is enough' in terms of financial goals?
-Recognizing when 'enough is enough' is important because it helps prevent continuous pursuit of growth for its own sake and the potential negative consequences that come with it, such as engaging in risky behavior to chase more wealth.
What is the significance of compounding in building wealth?
-Compounding is significant in building wealth because it allows earnings to be made on previous earnings, leading to exponential growth over time. This is illustrated by Warren Buffet's wealth, most of which was accumulated after his 50th birthday due to the power of compounding.
What is the relationship between savings rate and building wealth according to Morgan Housel?
-According to Morgan Housel, building wealth has more to do with your savings rate rather than your income or investment returns. He suggests that savings equals income minus ego, highlighting the importance of controlling personal expenses.
Why is it advised to focus on not screwing up rather than making big gains in investments?
-Focusing on not screwing up is advised because making consistent, non-dramatic gains over time is more beneficial than trying to make big gains, which can lead to significant losses if the investments fail.
How does the true value of money relate to freedom and flexibility?
-The true value of money lies in its ability to provide freedom and flexibility. It allows individuals to control their time and options, which contributes more to happiness and a meaningful life than material possessions.
What is the difference between getting wealthy and staying wealthy according to the video?
-Getting wealthy often involves taking risks and being optimistic, while staying wealthy requires the opposite, such as humility and fear of losing what has been made. It emphasizes the importance of preserving wealth through cautious financial decisions.
Why is it suggested not to be flashy with wealth?
-Being flashy with wealth is not suggested because respect and admiration cannot be bought with material possessions. People often admire the possessions themselves rather than the person owning them, and true wealth lies in the money that has not been spent.
What does the book suggest about the importance of leaving room for error in financial planning?
-The book suggests leaving room for error to ensure both physical and emotional survival. It's important to plan for scenarios where financial returns may not be as expected and to consider the emotional impact of financial decisions.
Why should we avoid making extreme financial commitments for our future selves?
-We should avoid making extreme financial commitments because our goals, values, and desires are likely to change over time. The 'end of history illusion' suggests that we are bad at predicting how much we will change in the future, so it's wise to maintain flexibility in financial planning.
What is the final lesson about being reasonable rather than rational in financial decisions?
-The final lesson emphasizes that good financial decisions are not always rational but should be reasonable, taking into account emotional needs and personal comfort. It's important to make decisions that contribute to our well-being and peace of mind, even if they are not the most economically rational choices.
Outlines
๐ Introduction to 'The Psychology of Money'
The speaker introduces a book club series discussing 'The Psychology of Money' by Morgan Housel. The episode is structured into four parts: attitudes towards money, getting money, spending money, and protecting money. The first part addresses the varied attitudes towards money shaped by individual experiences and emphasizes the importance of not judging others based on their financial decisions. It uses the example of stock market perceptions among different generations to illustrate how attitudes can significantly impact financial behavior.
๐ค The Role of Luck and Contentment in Wealth
The speaker shares three key lessons from the book. Lesson two highlights the role of luck in financial success, using Bill Gates' early access to a computer as an example. Lesson three advises learning to recognize when 'enough is enough', cautioning against the endless pursuit of wealth and the risks associated with it, such as Bernie Madoff's pyramid scheme. The speaker relates this to their own life, discussing a decision not to move to Dubai for tax benefits, valuing stability and personal satisfaction over additional wealth.
๐ฐ Understanding the Power of Compound Interest
The speaker discusses the magic of compounding as a means to build wealth, using Warren Buffett's financial growth as an example. It explains that the majority of Buffett's wealth was accumulated after his 50th birthday due to the effects of compound interest. The speaker also emphasizes the importance of saving and the concept that savings equals income minus ego, advocating for a high savings rate as a path to financial freedom and autonomy.
๐ซ Avoiding Financial Missteps and Pursuing Freedom
Lesson six focuses on the importance of avoiding financial mistakes rather than seeking to make big gains, illustrating the point with the contrasting investment strategies of Sue and Jim. The speaker then transitions to spending money, with lesson seven emphasizing using money to buy freedom and control over time. Lesson eight contrasts the approaches needed for getting wealthy versus staying wealthy, noting that maintaining wealth requires humility and risk aversion. The speaker also touches on their own investment strategy in crypto, balancing potential gains with the need for stability.
๐ก The Illusion of Wealth and Protecting Your Money
Lesson nine warns against flaunting wealth, suggesting that respect and admiration cannot be bought with material possessions. The tenth lesson advises leaving room for error, considering both the physical and emotional aspects of financial planning. The eleventh lesson cautions against making extreme financial commitments based on current desires, as these are likely to change, a concept known as the 'end of history illusion'. The final lesson encourages making reasonable decisions over purely rational ones, taking into account emotional well-being and personal comfort.
๐ Conclusion and Additional Resources
The speaker concludes by summarizing the 12 lessons from 'The Psychology of Money' and mentions additional lessons to be covered in an extended version available on Nebula, an independent streaming platform. They also promote Curiosity Stream, a documentary streaming service, as a sponsor and offer it as a bundled service with Nebula. The speaker encourages viewers to subscribe for more content and provides a link to another video on generating passive income.
Mindmap
Keywords
๐กPsychology of Money
๐กAttitudes towards Money
๐กCompounding
๐กSavings Rate
๐กRisk Management
๐กFreedom
๐กWealth Preservation
๐กFlashiness
๐กEmotional Survival
๐กEnd of History Illusion
๐กReasonable Decisions
Highlights
Different attitudes towards money affect how people earn and spend it, and quick judgments should not be made based on others' financial decisions.
The importance of recognizing the role of luck in financial success, as demonstrated by Bill Gates' early access to a computer.
The advice to learn to say 'this is enough' and avoid constantly moving the goal post in pursuit of more.
The power of compounding in growing wealth, illustrated by Warren Buffett's net worth growth after his 50th birthday.
The argument that building wealth is more about savings rate than income or investment returns.
The suggestion to focus on avoiding mistakes rather than seeking to make big gains in investments.
Using money to buy freedom and flexibility is more valuable than material possessions.
The distinction between the strategies required for getting wealthy and staying wealthy, emphasizing risk-taking versus preservation.
The paradox of flashy spending, where expensive items often fail to bring true respect and admiration.
The importance of leaving room for error in financial planning, to account for both physical and emotional survival.
Avoiding extreme financial commitments for the future self, as our desires and values are likely to change.
Being reasonable rather than just rational in financial decisions, considering emotional needs and peace of mind.
The psychological benefits of paying off a mortgage, despite the apparent financial irrationality.
The diminishing returns on happiness from increasing income, suggesting that beyond a certain point, more money does not buy more happiness.
The recommendation to save as much as possible, even without a specific reason, to increase financial freedom.
The reminder that not everyone should invest in high-risk assets like crypto, as it's important to stay within one's comfort zone.
Transcripts
hey friends welcome back to the channel
today we're talking about 12 lessons
about money that i learned from this
fantastic book by morgan housel called
the psychology of money and that's what
we're talking about in this episode of
book club the ongoing series where we
distill and discuss highlights from some
of my favorite books and we're going to
do this in four parts we're going to
talk about lessons about our attitudes
towards money lessons about getting
money lessons about spending money and
then lessons about protecting our money
once we've gotten it part one three
lessons about our attitudes towards
money so the first lesson i got from the
book was that everyone has different
attitudes towards money and because the
way that those attitudes affects the way
that they earn and spend their money we
shouldn't be too quick to judge people
based on what they do with their own
money so let's think about people's
behavior when it comes to investing in
stocks for example if you were born in
the 1970s the s p 500 which is the index
fund that tracks the top 500 biggest
companies in the us that increased by 10
times its starting amount between age 13
and age 30 for you but if you were born
just 20 years earlier the market
basically went nowhere so these two
groups of people are going to go through
life with radically different ideas of
how the stock market works and obviously
these views are going to affect how they
behave like people born in the 1970s are
much more likely to invest in stocks
than people born in the 1950s for whom
they think the stock market doesn't
really do anything and so for example
for someone like me it can seem a bit
weird like why don't more people just
just invest in the s p 500 it just keeps
on going up why don't more people invest
in crypto but what i realized after
reading the book is that to be honest i
need to not be a dick about it because
people have different attitudes to money
depending on their own circumstances
lesson number two is don't underestimate
the importance of luck when it comes to
making money because basically any
outcome that we're going for whether
it's making money or anything else in
life is some combination of luck and
skill and unfair advantages if we take
bill gates for example now he's
obviously super talented but he was also
pretty lucky to get to go to one of the
very few high schools in the u.s that
actually owned a computer and that's
what helped him start messing around
with coding and start working on the
company that ultimately became microsoft
and so morgan's point in the book is
that we shouldn't focus too much on the
individuals we shouldn't look too
closely at what did elon musk do to get
rich what did bill gates do to get rich
we should instead look at the broader
patterns that try and account for this
fact that different people got lucky at
different times lesson number three from
the book is that we should learn to say
this is enough now it's natural for us
to humans to keep on moving our goal
posts like once we achieve our goals
whether it's financial goals or career
goals or hot bot goals or pretty girl
goals we always look forward to the next
goal and generally the cycle doesn't end
because we keep on comparing ourselves
to the people who are above us in this
invisible ladder now this doesn't really
resonate with me because i've been
chasing this entrepreneurship thing
since like the age of 13 trying to make
money on the internet and started off
making basically zero money and then
slowly so slowly over time my income has
basically compounded to the point where
i am way beyond the point that any
reasonable person would say that this is
enough but what i've been finding is
that the comparator group keeps on
changing it's like when my youtube
channel was just starting out and it was
making a small amount of money here and
there it was like oh that's cool you
know it'd be cool to make maybe a
hundred pounds here and there then it
started making 100 pounds here and i was
like oh that's cool but look at those
channels that maybe have millions of
subscribers like i wonder how much money
they're making and what i like um that
morgan reminds us of is that we actually
do need to recognize when enough is
enough and not be continuously trying to
pursue growth just for its own sake and
in the book he gives a bunch of examples
of really rich people doing very dodgy
and shady things to chase even more
money like bernie madoff for example who
was already ridiculously rich but then
built this pyramid scheme to try and
become even more ridiculously rich and
ended up in prison as a result of it and
what morgan says is that it's really
about asking the question of when is
enough enough do i really need this
extra thing and there's a nice quote
where he says there is no reason to risk
what you have and need for what you
don't have and don't need and this
lesson actually applied in my life
fairly recently so my housemate sheen if
you might remember from previous videos
moved to dubai and i was strongly
thinking why don't i move to dubai and i
spoke to my accountant he was talking
about the low tax rates and all that
kind of stuff and i was thinking oh i
could wind down the company in the uk
move to dubai like not live in the uk
for three years to become tax resident
outside of the uk become tax resident in
dubai where i don't pay any corporation
tax or vat or income tax and all this
stuff and then i'd be making twice as
much money because i have to pay half as
much tax and i had all these thoughts
going in my head and it was around that
time that i read the psychology of money
and started figuring out what my values
in life and stuff and i realized that
that is just like stupid thinking i
don't need that extra money i quite like
being in the uk i like the fact that my
friends and family are here and i'd be
sacrificing a large amount of stability
here in the uk for the sake of just
chasing a little bit more money but
effectively tax avoidance in dubai and
so ultimately i decided against it um
thank you morgan for for the tip on that
front part two lessons about getting
money all right so this is obviously not
a video on how to make money from
scratch you can check out my video on
nine passive income ideas if you want
more information about that but morgan
does have some very solid chapters about
how we actually get rich so lesson four
is to appreciate the magic of
compounding so let's say i put a
thousand dollars into the s p 500 index
fund and i get a decent return of about
10 per year that'll give me 1100 by the
start of year 2 which means i'm then
earning 10 on the 1100 so that at the
start of year 3 i'll have 1 210 and as
this compounds over time you're
basically earning interest or gains only
on your interest or gains and when you
start playing with the big numbers here
the results are absolutely insane now
the example that morgan uses in the book
is warren buffett who is famously very
rich and at the time that the book was
written warren buffett's net worth was
around 84.5 billion dollars but of that
84.5 billion dollars 84.2 billion of it
actually came after his 50th birthday
and of that amount 81 billion of it came
after his 60th birthday and one of the
reasons that warren buffett was able to
get so much wealth is that he started
young and he kept going like he started
investing at the age of 10 such that by
the age of 30 he had a million dollars
in investments and then he just
absolutely kept on going well into his i
think he's like 90 something now and
there's some good maths in the book that
shows that 99.9 of warren buffett's
wealth came as a result of compounding
because he started early and he just did
it for absolutely ages and there's a
really nice quote from the book that
describes warren buffett's success with
this morgan writes that none of the 2000
books picking apart buffett's success
are titled this guy has been investing
consistently for three quarters of a
century but we know that that's the key
to the majority of a success it's just
hard to wrap your head around that maths
because it's not intuitive lesson number
five is to try and save as much as you
can even when you don't have a specific
reason to save morgan writes that
building wealth has little to do with
your income or investment returns and
lots to do with your savings rate so we
naturally think that saving is basically
income minus expenses but morgan says
that the other way of thinking about it
is that savings equals income minus ego
and this is quite interesting i think
it's an interesting way of looking at
our expenses like if i look at my own
spending how much of that spending is
actually necessary and how much of it is
based on ego i don't know maybe you can
decide and he also talks about how
really our savings rate is the only
variable in this equation that we can
really control like i can't really
control how much money i'm making i
can't to extend but not really i can't i
can't at all control the returns of the
stock market or the returns of bitcoin
or the returns of the real estate market
but i can absolutely control how much
money what percentage of my income i'm
saving myself and there's a related
point that i came across from uh biology
who was interviewed in tim ferriss's
podcast recently where he says that if
you can have a very high savings rate
and you can keep your own personal
expenses very low like you need little
money to survive and thrive then it
actually gives you a lot more freedom in
life because there are a lot of people
that are tied to jobs that they don't
necessarily enjoy because they now have
lifestyles that require them to have
that high income from the job that they
don't necessarily enjoy and kind of the
point is what's what's the point of
being miserable in your job for 80 000
hours of your life kind of for most of
the time that you spend alive what's the
point of being miserable in that for the
sake of having a fancy house and having
a fancy car it's probably not worth the
trade-off and so really if we can just
lower our personal expense rate increase
our personal savings rate in you know
whatever fashion we can uh that gives us
more anti-fragility more freedom more
autonomy to kind of do more of the
things that we actually want lesson
number six from the book is to focus on
not screwing up rather than on making
big gains so let's imagine two investors
sue and jim sue invests one dollar into
the stock market every single month no
matter what whereas what jim does is
that he invests money into the stock
market as it's going up and then he
sells his stocks as it's going down and
he's trying to play the market in that
sense this is what sue's portfolio looks
like over time and unfortunately this is
what jim's portfolio looks like over
time and the reason why sue ends up
better off than jim is not because she
made big gains it's because she
consistently did not screw up by selling
her stocks in like a downturn and the
other interesting point here is that
when it comes to thinking about how
we're spending and investing our money
getting it wrong is a lot worse for us
than getting it right because if we lose
money we can then no longer go back into
the game and we actually have
consequences on our life whereas if we
make twice as much money or twice as
much as that or twice as much as that
like there are significant diminishing
returns to the value of extra money that
we get and so morgan's point basically
is you know to like think about the long
term and try not to lose money rather
than thinking oh my god i need to chase
that next ponzi scheme or that next oh
you know dogecoin is going to the moon
therefore i'm going to put stuff in
there it's far more important to just
focus on not screwing up and not losing
money and doing that consistently over
time so that you can actually benefit
from compounding all right let's turn to
part three which is lessons about
spending money and then lesson number
seven is use money to buy freedom and he
talks about how really the true value of
money is in the flexibility and the
optionality that it gives us rather than
the fact that it helps us buy a fancy
house or a fancy car he writes that
money's greatest intrinsic value and
this cannot be overstated is its ability
to give you control over your time using
your money to buy time and options has a
lifestyle benefit that few luxury goods
can compete with and the reason for this
is that at the end of the day we all
just want to be happy and live a happy
and meaningful life and tons of studies
have shown that your income has
significant diminishing returns on your
personal life satisfaction or happiness
from life and that beyond a point
depending on who you ask it's around
about 75 000 in the u.s beyond a certain
point more money stops buying you
further increases in happiness and so
ultimately given that time is our most
valuable non-renewable resource we can
always make more money but we can never
make more time using our own money to
buy extra time to buy our freedom is a
very good use of that money rather than
spending it on pointless luxury crap
that we don't actually need lesson
number eight is that getting wealthy is
very different to staying wealthy now
here morgan writes that getting money
requires taking risks being optimistic
and putting yourself out there but
keeping money requires the opposite of
taking risks it requires humility and
fear that what you've made can be taken
away from you just as fast and i was
kind of thinking about this as i was
thinking about like basically these days
how much of my investment portfolio to
take out of stocks in real estate and
just put into crypto so crypto is
obviously highly volatile and could go
up significantly i have reasonably high
conviction that it will um but i still
have a decent chunk of savings in
investments in stocks and shares and in
real estate and reminding myself that
right now my aim is not to continue to
make more money my aim is actually to
keep the money that i have and grow it
slowly that means i want to be nicely
diversified across these different asset
classes and so i do have a fairly
significant chunk of my portfolio i
think like 30 or 40 30 probably 30 in
crypto more on that in a future video
coming but i am not withdrawing all my
stock market returns and all of my kind
of real estate investments to put money
into crypto that would be a bad decision
and even though it might go up it's like
if it goes down then that will
significantly negatively affect my life
in a far greater way than if it just
goes up 10x or goes to the moon for
example lesson number nine from the book
is don't be a flashy so morgan
writes to his son you might think you
want an expensive car or a fancy watch
and a huge house but i'm telling you you
don't what you want is respect and
admiration from other people and you
think that having expensive stuff will
bring it it almost never does especially
from the people that you actually want
to respect and admire you now there's
two main reasons for this and the first
one is the man in the car paradox the
idea is that people buy fancy cars and
mansions and stuff because they think
that this will get them respect and
admiration from other people at the end
of the day like if i'm driving the news
tesla around people will think that i'm
cool and rich and that kind of stuff but
what people don't realize is that people
don't actually admire the person with
the fancy cora house instead they're
just admiring the fancy kara house
itself and imagining themselves having
that tesla or having that mansion so
buying expensive things to gain respect
from people never actually works because
respect and admiration can't be bought
and the second point he makes about this
is that there's no point being flashy
about the money you're spending because
true wealth is actually the money that
you have not spent and then we turn to
part four which is how to protect your
money once you've got it any amount of
money any amount of money at all needs
some level of protection and so lesson
10 here is to leave room for error now
broadly there are two bits to this idea
of making room for error the first part
is making sure that you can technically
survive if your future returns are not
very good so let's say i've got some
money and i'm banking on it going up by
seven percent i really should have a
plan like if it does not go up by seven
percent if it goes up by four percent or
three percent or two percent or even if
it goes negative i should be able to
survive that likelihood but the second
point is that it's not just about the
physical survival it's all it's also
about the emotional survival and would
we want to live that kind of lifestyle
so for example let's say you work your
job and you save up two years worth of
expenses so you can quit your job and
become a full-time youtuber for two
years and give that a go in theory
you're telling yourself that you have
two years worth of runway so that if
worst case scenario you don't succeed as
a youtuber then two years down the line
your savings will run out and you can
just get another job but what you're not
taking into account there is the
emotional pain of seeing your savings
whittle down over time and it might just
be that as you burn through 50 of your
savings at that point you start to feel
emotionally psychologically scarred and
you just quit and go back to your day
job because you couldn't handle the fact
that you lost 50 of your savings and
you're not succeeding on youtube just
yet so the point that morgan is making
in the book is that we need to make room
for these kind of emotional decisions
and the way that we behave as humans
when it comes to money which is why it's
called the psychology of money is that
we act not necessarily in like fully
rational economic logical terms but we
also have to take our emotions into
account lesson number 11 is to try and
avoid extreme financial commitments for
your future self and this is speaking to
the kind of person that says you know
what i know that i'm never going to buy
a house therefore i can afford to splash
money when i'm when i'm young or someone
who says you know what i know i'm never
going to have kids and therefore my
expenses can be super high because i
know i don't have to save for the kids
college fund or whatever now this is
kind of a bad thing because even if you
are very sure that that's how you want
to live your life chances are you are
not correct and that you actually will
change your mind at some point further
down the line psychologists call this
the end of history illusion it's the
idea that when you ask people how much
they've changed in the last 10 years
we're pretty good at describing how
we've changed but if you ask people to
predict how much they're going to change
in the next 10 years then we're really
bad at doing that and we think that we
are broadly the people we are now are
roughly the same as the people that
we're going to be 10 years from now and
so given that we are really bad at
predicting how our own goals and values
and desires are going to change over
time and given that we're kind of hoping
that unless the crypto thing really goes
to the moon and fiat currency completely
dies we're still going to need money to
make decisions 10 years from now we
should keep that in mind we shouldn't
make extreme financial commitments to
ourselves right now we shouldn't blow
all our money for this you know lift
fast die young because by the time
you're approaching the whole day young
thing you might realize actually i kind
of want to live for another 40 years and
now you have no money and it's kind of a
bit of a struggle and then lesson number
12 is to be reasonable rather than
rational and the point that morgan's
making here is that sometimes good
decisions are not always rational but
they are reasonable and that we have to
remember that we're ultimately emotional
creatures with emotional needs not just
like rational economic machines making
the absolute perfectly logical decision
i think this lesson is what i really
took home because before reading the
book i could not imagine why anyone
would bother paying off the mortgage on
their house it just seemed like a dumb
thing to do like why would you do that
you can borrow money from a mortgage
relatively cheaply if you stick that
money in stocks and shares it will grow
faster than the rate of the thing of the
mortgage if your inflation happens over
time the more value of the mortgage does
that goes down all of these like
rational economic reasons for not paying
off the mortgage on your house but i
completely discounted the fact that
there is a lot of emotional niceness to
having paid the mortgage on your house
you feel like you have this house that
you can now live in without paying a
mortgage you feel a sense of security it
helps you sleep better at night and so
if you can and you're in that privileged
position and you want to put down a cash
payment to pay off the deposit on a
house yes technically it's kind of
irrational it's not the most
economically financially like legit
decision to maximize your returns but if
it's the thing that helps you sleep at
night that is the thing that matters
because ultimately if we're playing this
game of you know getting and protecting
and earning and continuing to retain our
money rather than losing all of it we
have to also optimize for the things and
the decisions that will help us sleep at
night and so maybe you might watch one
of my crypto videos or you've got a
crypto bro friend who says oh my god you
should be putting 100 of your money into
crypto but if that helps you sleep worse
at night don't do it put however much of
your money into crypto as a as you are
personally comfortable with and that
will be reasonable even if it's not
fully rational so those are 12 lessons
about the psychology of money there are
actually a few more i think three more
that i've got in my script but this
video is getting very long and so those
lessons are going to be in the extended
version of this video which is available
over at nebula now if you haven't heard
nebula is an independent streaming
platform that's built by me and a bunch
of other creator friends and on nebula
we can put things like very very very
long videos about books like this
without worrying about how they're going
to perform in terms of the youtube
algorithm it's also the place where i
release exclusive content like clips
from my old deep dive series live advice
from cool people are from all around the
world and also my workflow series where
i talk through how i use apps like
notion and rome in an anal amount of
detail that i don't normally do on these
youtube videos now if you want to get
access to nebula then the best thing you
can do which is actually a reasonable
and rational way to spend your money is
to sign up to curiosity stream who are
very kindly sponsoring this video
curiosity stream is the world's leading
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know about the psychology of money and
you want to learn how to make money then
check out this video over here which is
nine passive income ideas and talks
about how at the time i was making 27
000 per week from these different
sources of passive income and hopefully
that'll give you some ideas for how you
can make money by yourself anyway thank
you so much for watching do hit the
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and i'll see you hopefully in the next
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