You probably know Mike Tyson, one of the greatest boxers of all time. In the late 90s, he was unstoppable. He made over $400 million during his career. And what did he do with it? He bought mansions, exotic tigers, a fleet of luxury cars, and a $2 million bathtub. Yeah, a bathtub. But by 2003, he was bankrupt. Not just broke. $23 million in debt. How does that even happen? And more importantly, why do some people earning $50,000 retire richer than people making six figures? Today, in this blog, I will share five of the most powerful insights from a book I read recently, The Psychology of Money by Morgan Hel.
Acknowledging Luck and Risk:
All right, let’s get real. You’re not fully in control of your success. We love to believe that if we just work hard enough, make the right choices, and grind every day. Success is guaranteed. But in reality, luck and risk play a way bigger role than we want to admit. Back in high school, Bill Gates had a best friend named Kent Evans. They were both insanely smart, obsessed with computers, and had huge dreams of building a tech empire together. But before they could even graduate, Kent tragically died in a mountaineering accident. And just like that, his story ended.
Meanwhile, Bill Gates went on to become, well, Bill Gates. Bill Gates also happened to go to one of the only high schools in the entire country that had a computer in the 1960s, a time when computers were rare. That one lucky break gave him a head start most people never got. Now, did he work hard? Absolutely. Was he a genius? No doubt. But would his life have turned out the same if he had been born in a different city, a different time? Probably not.
Here’s the problem. We look at successful people and think they did X, Y, and Z, so if I just do the same thing, I’ll succeed, too. But we ignore the invisible factors, the lucky breaks, the right connections, the timing. Same thing with failure. Take Jesse Livermore, one of the greatest stock traders of all time. He made millions, lost it all, made it back again, and then lost everything one final time. The Great Depression wiped him out completely. He went from being one of the richest traders in history to having nothing.
So, what’s the lesson here? Success is never 100% skill. Failure is never 100% stupidity. That doesn’t mean you should just give up and let fate decide your future. No, the point is to understand that both luck and risk exist, and they affect us all in ways we can’t predict. At the end of the day, you can’t control luck, and you can’t avoid risk completely. All you can do is make smart choices. Put yourself in the best position possible and be ready for whatever happens.
Playing the Long Game with Wealth:
We love stories of people who made it. The genius entrepreneur who turned a garage startup into a billion-dollar company. The stock trader who bet big and made a fortune overnight. The influencer who suddenly blew up and started making crazy money. But have you noticed something? A lot of those people lose it just as fast. Because getting rich and staying rich are two completely different skills.
Think about it. How many times have you heard stories of celebrities, athletes, or business moguls going from filthy rich to dead broke? Mike Tyson lost it all by 2003. Nicholas Cage burned through $150 million. Even professional investors have gone bankrupt after making fortunes.
Why? Because getting wealthy requires risk. Staying wealthy requires avoiding risk. Let me break it down. If you want to build wealth, you have to take risks. You start a business, invest in new opportunities, negotiate bigger paychecks, and take bold leaps that other people are too scared to make. You need optimism. Think about early entrepreneurs. Jeff Bezos quitting his Wall Street job to sell books online. Elon Musk dumping his PayPal money into Tesla and nearly going broke. Every great success story has a moment where they bet big.
That’s what gets you in the game. But here’s where people mess up. Once they get money, they keep playing the same aggressive game. They keep taking wild risks. They overlever. They assume the money will keep flowing in forever, and then it all collapses because staying wealthy is about the opposite mindset. Humility, patience, and knowing when to stop gambling.
The founder of FTX, Sam Bankman-Fried, is a perfect example. He built FTX. It became one of the biggest crypto exchanges in just a few years. At one point, he was worth $26 billion. But what did he do? He got greedy. He took reckless risks, overleveraged, and in 2022, he was bankrupt, arrested, and everything was gone.
Now, compare that to someone like Warren Buffett. Buffett is worth over $100 billion, but he never takes crazy risks. He hates losing money more than he loves making it. His strategy is to survive long enough, and wealth takes care of itself. He doesn’t chase hype. It’s not that you have to play defense forever, but you do have to protect your wealth long enough to let it grow.
Because the goal isn’t just to make money once. The goal is to never worry about money again. And the only way to do that is to play the long game. There’s a reason why most lottery winners go broke. They think they’ve made it, so they go all in on spending, investing in random businesses, and trusting the wrong people. They don’t realize that keeping money requires a completely different mindset.
Buying Back Your Time and Options:
All right, let’s talk about saving money. I know I just lost half of you. Oh, great. Here comes the boring stop buying Starbucks coffee thingy, but trust me, this isn’t that. See, most people think of saving money as delayed spending. Like, I’ll save so I can buy a nicer car later, or I’ll save so I can go on that dream vacation. And sure, that’s fine. But real wealth isn’t about buying more stuff. It’s about buying freedom.
Let me ask you something. What’s more valuable than money? The answer is options. Control over your time. The ability to say no when you want to. I know a guy who got stuck in a terrible job. Toxic workplace, crazy hours, boss from hell, but he couldn’t leave. Why? Because he had zero savings. He was living paycheck to paycheck, stuck in a cycle where quitting wasn’t an option.
Now compare that to another friend who saved aggressively for a few years. When his job started draining the life out of him, guess what? He walked away. No stress, no panic, just I’m out. There’s a term for this, the FU fund. Basically, it’s a pile of money that lets you walk away from bad situations. Your job sucks, you don’t have to stay. Your landlord raises your rent, you have options. Toxic relationship, you can walk away without worrying about rent. And you don’t need to be a millionaire for this. Even having 6 months of savings can put you in a completely different position in life.
Most people who say they can’t afford to save actually can. It’s just that saving isn’t exciting. Spending is fun. You get a new car, people notice. You post it on Instagram, and everyone hypes you up. But saving, no one sees it. No one claps for you because you quietly transferred $500 into your emergency fund. Most people think getting rich means buying expensive things. But in reality, the richest people in the world focus on buying back their time because the best thing money can buy is not needing more of it.
The Power of Undisplayed Net Worth:
Back in 2014, there was a janitor named Ronald Reed. Regular guy, worked at a gas station, then as a janitor, drove an old beat-up car, wore the same clothes every day, nothing flashy at all. People probably thought he was barely scraping by. Then one day, he died at 92 years old, and left behind $8 million. Everyone lost their minds. Where did this guy get $8 million? Turns out, while others were flexing, Ronald Reed was quietly building wealth. No one saw his wealth because it was invisible.
Wealth is the money you don’t spend. It’s the freedom you’re building, the investments growing quietly in the background, the peace of mind that comes from knowing you’re financially secure, even if nobody else sees it.
Think about it. When someone pulls up in a brand new Ferrari, what do we assume? Damn, that guy must be loaded. But we don’t actually know that. All we know is he spent $300,000 on a car. What we don’t see is how much he actually has left. He could be drowning in debt for all we know. Look, I’m not saying don’t buy nice things. You should enjoy your money, but flexing for others at the cost of your future that’s a losing game.
If you take just one thing from this, let it be this. Looking rich and being rich are two completely different games. Looking rich is easy. Swipe a credit card, finance a car, buy expensive clothes. Anyone can do that. Being rich, that’s about what you don’t see. If you ever wonder why some people make six figures and still struggle while others make way less and retire early, it’s because of this one simple difference. Some people buy things, others buy freedom.
Wealth is not your income. Wealth is not your car. Wealth is the money you didn’t spend. That’s why guys like Warren Buffett still live in the same house he bought in 1958. Not because he can’t afford a mansion, but because he values freedom over flexing.
The Psychology of Financial Sticking Power:
Let’s get one thing straight. Money isn’t just numbers, it’s feelings. And that’s where most personal finance advice completely misses the point. See, a lot of experts talk about money like it’s just cold, hard math. If you just invest in X, cut Y expenses, and save Z% of your income, you’ll be financially set.
But here’s the truth. We’re not robots. We’re emotional creatures. And when it comes to money, being reasonable is more important than being perfectly rational. And yeah, sure, that’s technically true. But people don’t make financial decisions based on spreadsheets. They make them based on emotions.
Let’s say you’re investing. What is the most rational thing to do? Put all your money in the stock market and never touch it. But what happens when the market crashes? Your emotions take over. You see your portfolio drop by 40% and suddenly that logical plan doesn’t feel so logical anymore. You panic. You sell. And congrats, you just locked in your losses. That’s why most investors fail. Not because they don’t know what to do, but because they can’t handle the emotions that come with it.
Understand the difference between reasonable and rational thinking. Rational thinking is that this investment strategy has the highest return over 50 years, so I’ll stick to it no matter what. While reasonable thinking is that this strategy makes sense, but I know I’ll panic in a downturn, so I’ll leave some money in cash to feel secure. See the difference? One is perfect in theory, the other works in real life.
Warren Buffett, arguably the greatest investor ever, doesn’t have the highest-returning strategy. He doesn’t invest in high-risk, high-reward things like crypto or speculative tech stocks. Why? Because he invests in a way that lets him sleep at night. He stays reasonable, not just rational. That’s why he’s still in the game after 60-plus years.
Story Time:
Here’s a quick story. I had a friend who was obsessed with finding the best investment. He spent hours researching stocks, reading every finance book, and trying to optimize every dollar. But you know what happened? He was so overwhelmed by all the choices that he never actually invested. He got stuck in analysis paralysis.
Meanwhile, another friend just put money into a simple index fund and never looked at it again. Guess who made more money? The one who actually did something. Find what works for you.
Conclusion:
Money is not just math, it is mindset, emotion, and the tiny choices you repeat every day, and once you understand how luck, patience, freedom, and behavior shape your financial life, you stop trying to look rich and start building the kind of quiet wealth that actually lasts.
FAQs:
1. What is the main idea behind the psychology of money?
It shows that behavior shapes wealth more than income.
2. Why do rich people still go broke?
They take big risks even after they have enough.
3. What does real wealth look like?
It is the money you save, not the money you show.
4. How does saving buy freedom?
It gives you options and control over your time.
5. Why do emotions affect financial decisions?
Because fear and excitement often override logic.
6. What helps people stay wealthy long term?
Patience, caution, and consistent habits.
