The Psychology of Money

Since being published in 2020, Housel’s “The Psychology of Money” has become a bestseller in the financial self-help genre, selling over two million copies.

This book’s approach to money advice differs from that of many other classics in the genre. For example, The Science of Getting Rich by Wallace D. Wattles and The Richest Man in Babylon by George Samuel Clason both urge the reader to follow specific rules, which the authors claim are guaranteed to increase their wealth. Wattles insists that people must be creative and not competitive, while Clason teaches that everyone should save 10% of their income and make consistent investments with other funds.

Rather than advocate for specific investment strategies, stock holdings, or savings rates, Housel keeps his advice broad and flexible. Indeed, a main theme of his work is that everyone has a different relationship with money and a different foundation for their personal short- or long-term plans. Housel explicitly acknowledges that there is no one-size-fits-all guide for finance that will be appropriate for everyone. He persistently questions the wisdom of generic advice, arguing that different people have different priorities and goals, especially at different stages of life.

Many books in the financial self-help genre glamorize wealth and insist that anyone can become wildly wealthy and enjoy the material luxuries that such wealth affords. For example, M. J. DeMarco’s book The Millionaire Fastlane describes long-term wealth strategies that favor savings and long-term investments as “financial enslavement” and condemns “financial asceticism,” which he believes is unnecessary and unproductive (vii). DeMarco claims that he can teach the reader how to become independently wealthy at a young age so they will never have to work again and can enjoy luxurious material possessions.

In contrast, Housel’s work also stands out in this genre because of his grounded and realistic tone. He advises the reader to avoid dissecting specific characters as financial heroes and to instead focus on realistic outcomes for themselves based on more general patterns of success for everyday people. He does not sensationalize certain wealthy people, or even wealth in general. This approach grounds the reader in realism rather than excites them with a guarantee of becoming extremely wealthy. Housel’s perspective mirrors that of Vicki Robin’s bestselling book Your Money or Your Life, since he questions America’s consumerist culture and the role that overspending plays in creating financial stress. Rather than adding to one’s freedom and quality of life, Housel believes that spending a large portion of income on status symbols and luxury goods is generally unsustainable and is actually more likely to decrease your wealth—and therefore your independence, too.

Housel cites psychological studies in The Psychology of Money to provide nuance as well as evidence for his analysis. Housel’s journalism background is evident in his balanced analysis of the personal side of finance, readily acknowledging his own biases in the subject. His approach makes The Psychology of Money an exploration of finance based on actionable and evidence-based recommendations, rather than a sensational manifesto like some other popular financial self-help books.