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Cover of The Psychology of Money
B1 · 2,844 words · English

The Psychology of Money

Morgan Housel

The author explores the influence of psychology on financial decisions, emphasizing that success in finance is not solely determined by technical knowledge but is also deeply affected by our emotions, biases, and personal experiences with money. The book examines various aspects of the psychology of money, including the role of emotions, cognitive biases, and the impact of social comparison, urging readers to reflect on their own attitudes toward money and make more mindful and satisfying financial choices, ultimately leading to long-term financial well-being.

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Words you’ll meet

The words readers of this text looked up most, each with its meaning and the line it comes from.

financial / fəˈnænʃəl /adjective

Relating to money or the management of money

Housel emphasizes that being aware of these emotional triggers is key to avoiding common financial pitfalls.

monetaryeconomicfiscalpecuniary

crucial / ˈkruːʃəl /adjective

of great importance

The behaviors and attitudes toward money play a crucial role in our financial decisions.

essentialcriticalvital

wealth / wɛlθ /noun

an abundance of valuable possessions or money

He accumulated a considerable wealth.

affluencefortuneriches

compelling / kəmˈpelɪŋ /adjective

Evoking interest, attention, or admiration in a powerfully irresistible way

The book tells a compelling story of love and loss.

fascinatingenthrallinggripping

decisions / dɪˈsɪʒənz /noun

Choices or judgments made regarding financial matters

Making sound financial decisions is crucial for long-term stability.

financial planninginvestment strategiesbudgeting

emphasizing / ˈemfəsaɪzɪŋ /verb

Giving particular attention or importance to something

The speaker was emphasizing the importance of education.

highlightingstressingunderlining

encourages / ɪnˈkʌrɪdʒ /verb

to give someone confidence

The work encourages introspection.

urgepromoteinspire

behaviors / bɪˈheɪvjərz /noun

The way in which someone conducts oneself or behaves; the way in which someone acts

Our financial behaviors are influenced by life experiences.

actionsconducthabits

psychology / saɪˈkɒlədʒi /noun

The scientific study of the human mind and its functions, especially those affecting behavior in a specific context

The Influence of Psychology on Financial Decisions

Behavioral ScienceCognitive ScienceSociology

finance / fɪˈnæns /noun

relating to the management of money

She has a finance degree.

economicsinvestmentbanking

risk-averse / ˌrɪsk əˈvɜːrs /adjective

disinclined or reluctant to take risks

If our early experiences with money were fraught with stress or scarcity, this could lead to a risk-averse approach in adulthood.

cautiousprudentconservative

overstated / ˌoʊvərˈsteɪtɪd /verb

expressed too strongly

The importance of this discovery cannot be overstated.

exaggeratedemphasized

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