The Psychology of Money

In The Psychology of Money, Housel acknowledges the personal nature of financial management and urges the reader to recognize their own unique influences, biases, and goals. He claims, “People from different generations, raised by different parents who earned different incomes and held different values, in different parts of the world, born into different economies […] learn very different lessons” (14). For instance, he emphasizes the generational differences that can have a lasting impact on someone’s perception of money, banking, and the economy. He cites a study by economists Ulrike Malmendier and Stefan Nagel that identified clear generational differences in investors’ behavior. Housel explains, “The economists found that people’s lifetime investment decisions are heavily anchored to the experiences those investors had in their own generation— especially experiences early in their adult life” (16, emphasis added). People of the same generation may also view money differently depending on their nationality. For example, Housel contrasts people who endured the impoverished post-war years in Germany with the average American from that time, who enjoyed a healthy economy. He explains, “No one should expect members of these groups to go through the rest of their lives thinking the same thing about inflation. Or the stock market.