Do You Know Your Money Blind Spots? The Psychology of Money

Ever left a book on your bedside table for weeks, hoping it might somehow absorb into your brain while you sleep? Us too. That’s why we’re launching a monthly series where we break down the best insights from books we love — and think you will too.

We’re kicking things off this month with The Psychology of Money. The release of Morgan Housel’s third book has us revisiting his original work and its simple but thought-provoking ideas.

First, know your story

Most financial advice focuses on numbers — budgets, rates, returns. But The Psychology of Money reminds us that the real drivers of our financial choices are the stories we tell ourselves.

Money decisions happen in real life, influenced by family history, personal experience, and emotion. As Housel puts it, “The next is accepting that what’s rational to one person can be crazy to another.”

In other words, what looks irrational from the outside often makes perfect sense within the context of someone’s past.

The Stories We Inherit

Our financial worldview starts long before we receive a steady paycheque. It’s shaped by what we observe growing up — how our parents talked about money, what they feared, and what they valued. Maybe you saw money as a source of stress, or as a sign of security, or as something tied to status.

These experiences form mental shortcuts that influence every financial decision we make as adults. “We all do crazy stuff with money, because we’re all relatively new to this game, and what looks crazy to you might make sense to me,” Housel writes.

The problem isn’t that these stories exist — it’s that we rarely question them. When assumptions like “property always goes up” or “the stock market is rigged” go unexamined, they quietly shape what we see as possible or sensible.

Blind Spots and Context

The same experiences that give us confidence can also limit our perspective. Housel illustrates this by comparing two people born twenty years apart: someone born in 1950 lived through two decades of weak stock returns and may still distrust equities, while someone born in 1970 saw a market boom and may assume optimism is always justified.

He writes, “Your personal experiences with money make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works”.

Recognising that gap between experience and reality helps explain why equally intelligent people can reach very different conclusions about money. Each person’s view is internally logical — just incomplete.

Why “Reasonable” Beats “Rational”

If our financial behaviour is shaped by experience, is rational decision-making even possible? Housel suggests not entirely — and that’s fine. “Aiming to be mostly reasonable works better than trying to be coldly rational,” he writes.

Being reasonable means making decisions you can live with — not just those that look optimal on paper. Paying off a low-interest mortgage might not maximise returns, but if it reduces anxiety and brings stability, that’s a sound choice. The goal isn’t perfect efficiency; it’s sustainability with who you are.

Rethinking Your Financial Story

Understanding your financial narrative isn’t about judgement or shame, it’s about clarity. Once you know which beliefs are shaping your decisions, you can decide whether they still make sense for you today.

Everyone’s financial journey has a mindset behind it — a way of thinking that shapes how you plan, save, and take risks. Which financial archetype best reflects where you are right now?

• The ambitious gambler

• The careful planner

• The cautious dreamer

• The opportunist

• The passive saver

• The risky adventurer

• The savvy strategist

• The secure pragmatist

  
  

Moola Money’s free financial archetype assessment was designed for the purpose of seeking information to guide you towards your goals. It helps you identify the beliefs and patterns driving your behaviour, and consider new frameworks that might better align with your goals.

Because the clearer you are about your story, the better positioned you’ll be to make choices that are not just logical — but genuinely right for you.