6/11/2025 (Updated: 2/2/2026) - Wealth
Why do some people save obsessively while others live paycheck to paycheck? Why do smart people sometimes make irrational money decisions? And how can understanding our own emotional relationship with money make us better investors?
These are the kinds of questions explored in The Psychology of Money by Morgan Housel, a book that’s become a must-read for anyone interested in how people really think about wealth, risk, and financial freedom.
At SouthState, our Wealth Advisors don’t just focus on investment strategies and portfolio performance, we’re equally invested in understanding the people behind the numbers. We want to understand your experiences, fears, goals, and core beliefs about money. That’s why two of our senior leaders, Donna Murray, CFP®, ChFC, and Sara Johnson, CTFA, recently read and reflected on Housel’s insights. As financial advisors, they know helping someone build a stronger financial future means more than analyzing spreadsheets – it means understanding psychology.
Here are four key takeaways from The Psychology of Money that Donna and Sara believe every investor, and every advisor, should keep in mind.
A person’s unique life experiences can shape how they perceive the world and their place in it. This includes their relationship with money. A person that grew up in a secure and financially stable household will likely have different feelings about wealth than an individual whose family may have lost everything during a recession. It’s these experiences, mostly when we were young, that shape our spending habits and how we make investment decisions when we are adults. A decision that seems ”crazy” to one person may make complete sense to another because of what they know or think about the world.
This concept reminds us that financial advising is not one-size-fits-all. Empathy is just as important as the strategy when it comes to guiding your investing and retirement planning. Understanding the relationship you have with money helps us develop a financial plan tailored just for you.
When you think about a person you believe to be successful, you may think it is purely the result of hard work. The fact is, both risk and luck play a large part in someone’s success or failure. Take Bill Gates for example; his success in the world of computer technology can be attributed to his keen business sense, but it can also be tied to his luck as a young man of attending one of the few high schools at that time to have a computer. Imagine what Bill Gates’ path would have been had he not been exposed to computers while he was a student.
Whether your risk tolerance is high or low, using the right combination of investment strategies is key in helping you reach your financial goals. Success or failure often depend on forces outside our individual control. However, a financial plan with clear, specific objectives is the most effective way to prepare you for ”luck” when opportunities arise.
Financial freedom looks different for everyone. For many, the highest form of wealth is the opportunity to wake up every morning in control of your time and your own schedule. In Housel’s book, he says freedom is ”the ability to do what you want, when you want, with who you want, for as long as you want.” The goal of financial planning and being focused on your future is to give yourself the freedom to choose how you spend your time; after all, that control over your life is what equals success.
The age you want to achieve financial freedom will largely influence the actions needed to get you there. Your target age is important because it defines the amount of time we have to help you reach your financial goals. It often requires saving and investing more today in order to have more flexibility in the long-term.
Being wealthy and looking wealthy are two very different things. It’s not uncommon to have an impression of someone’s wealth based on the type of car they drive or the size of their house, because these are tangible items we can see. ”Spending money to show people how much money you have is the fastest way to have less money,” says Housel. Wealth is better represented by the decisions made to not spend money on those material items and instead, by making decisions to plan for your future wealth.
The plan for your future wealth should include the right combination of investment and retirement strategies. We know, by many of the concepts shared within this book, that this plan will be different for everyone. Our goal is to be your trusted partner in helping you create the wealth you need to support the lifestyle you want to live.
We hope the few concepts we shared will inspire you to learn more. The Psychology of Money by Morgan Housel is full of additional short stories that can be helpful for all of us. Taking into consideration key insights from this book, we can better understand the factors that influence our decisions about how we handle our money.
The connections that exist between our emotions and financial behaviors are difficult to ignore. These concepts remind us that people have been shaped differently by their experiences or lack of helpful information. But one thing remains the same: planning is the cornerstone of everyone’s financial future, and SouthState is focused on being your partner in reaching those goals.
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