Applied Lessons (The Psychology Of Money)

How I apply the lessons I have learnt from the book to my personal life.


5/21/202310 min read

person holding pencil near laptop computer
person holding pencil near laptop computer

In this article, I will share how I have applied the valuable lessons I learned from the book "The Psychology of Money" to my personal life.

On Seduction of Pessimism

I have always had a pessimistic outlook on life, constantly anticipating the negative outcomes before considering the positive.

Saying "no" has become my default response.

I used to view optimistic people as overly naive, including my wife Niki, who always sees the good in others despite being tricked before. However, I have come to realize that her optimistic nature is a beautiful quality. People are naturally drawn to her, confiding in her and finding joy in her presence.

She radiates positivity like the sun.

Reading "The Go-Givers" helped me understand where my wife's optimism comes from. Seeing the good in others allows us to see the good in life.

Although I am still in the process of adopting this mindset, I now understand that optimism is not about ignoring negative outcomes or refusing to acknowledge them. It's about believing that the odds of a good outcome are in our favor over time, despite setbacks along the way. This perspective resonates with me and helps me shift my mindset towards optimism.

But let's be honest, embracing optimism can be challenging for a born pessimist like me. It's like trying to convince a cat that water is fun. You're met with skepticism and a few skeptical glares.

However, I've come to appreciate the power of optimism, even if it sometimes feels like I'm speaking a different language from my inner pessimist. WIP.

On When You'll Believe Anything

On the other hand, when it comes to pursuing endeavors, I've always been overly confident and underestimated the effort required.

It's like I have a perpetual case of "optimismitis," where I believe that success will magically fall into my lap without putting in the necessary work.

From MLM schemes to creating YouTube videos, I've had my fair share of over-optimistic ventures.

I even thought that my business degree would instantly transform me into a financial wizard or that taking a massage certificate would make me an instant masseur with a booming business. Oh, the delusions of grandeur!

Housel's book opened my eyes to the dangers of such overconfidence. He highlighted how we tend to believe stories that overestimate the odds of our desired outcomes.

I was so fixated on YouTube videos with millions of views that seemed easy to replicate, conveniently ignoring the hundreds and thousands of other videos with little to no views.

I neglected the importance of factors like trends, video production quality, clickbait, and yes, even dumb luck. In hindsight, my videos sucked, the topics were no longer popular, and my content lacked inspiration.

But at the time, I had no bandwidth to admit any of that. I simply declared, "YouTube isn't for me!" and moved on.

Housel's reminder to calm down and realistically assess the odds of success hit me like a much-needed reality slap. It's all about putting in the effort and being willing to learn from failures.

On Tails, You Win

The chapter truly inspired me. It's no secret that most successful people have faced their fair share of failures before achieving greatness. And let's be honest, the idea of failing repeatedly isn't exactly appealing.

I mean, who wants to keep stumbling in the dark before finding success? It's like playing a never-ending game of pin the tail on the donkey, except the donkey keeps moving and laughing at you.

But Housel's examples of great investors like Buffett, companies like Disney, and the ever-adventurous Amazon reminded me that failure is a necessary part of the journey.

So now, I've embraced a new mantra in my life: "Just keep trying, even if you feel like a donkey with a blindfold."

I'm writing articles, regardless of the topic, knowing that most will not be winners. I'm planning to try making videos even though I suck at it. I'm looking out to start small businesses, understanding that not all of them will thrive. But that's okay.

You see, I've learned that failure isn't the end of the world; it's a stepping stone to success. Like Mark Manson mentioned in his book “The subtle art of not giving a f**k”, that you need to pursue negative experience in order to get positive experience.

Each failure brings me closer to figuring out what works and what doesn't. It's like playing a game of trial and error, where the errors are just as important as the successes. They provide valuable lessons and help me course-correct along the way.

But I must admit, there are times when failure feels more like a slap in the face than a stepping stone. It's like getting a pie thrown at you, leaving you dazed and covered in whipped cream.

In those moments, I remind myself of the famous quote by Thomas Edison, who said, "I have not failed. I've just found 10,000 ways that won't work." If Edison can maintain his optimism after thousands of failed attempts at creating the light bulb, then I can certainly handle a few setbacks.

On Reasonable > Rational

white and brown human robot illustration
white and brown human robot illustration

There was a period when my wife and I contemplated whether to fully pay for our house or invest the money as suggested by financial books and experts.

Many people in Singapore believed it was acceptable to take a 2.6% HDB loan (Housing Development Board) or a bank loan that usually offers lower interest rate (more volatile) and use the intended funds for other investments, such as buying a private property for rental income or investing in stocks.

However, we decided to prioritize paying off our house for two reasons.

Firstly, we are risk-averse individuals and couldn't find any safe investments with higher returns. We preferred the peace of mind that came with owning our own home.

As the book mentions, it may have been considered a foolish financial decision, but it was the best decision for our personal well-being. We don’t want to worry daily whether the investments we have bought are doing well.

Secondly, we wanted the security of having a roof over our heads that we owned outright, even if it's only for 99 years in Singapore.

The decision was based on our desire for stability and the understanding that owning our home provided a sense of security and stability that outweighed the potential financial gains from alternative investments.

Interestingly, the decision turned out to be financially beneficial during the COVID-19 pandemic. Many individuals are having problems financing their housing loans due to loss of jobs or lower income.

It is especially bad for those who opted for bank loans instead of HDB loans as they found themselves struggling with increased interest rates. Those who are using bank loans (HDB loan interest stays the same regardless of market) often see a three times increase in their monthly payments.

Let’s put things into perspective.

At an interest rate of 3.9%, for those who purchased condos worth $1.35 million with a maximum loan of 75%, the interest payments could reach $39,000 per year, or $3,250 per month. A substantial portion of these payments goes towards interest rather than the principal loan amount.

Additionally, it's expected that housing loan interest rates will continue to rise, as Singapore's housing rates are closely tied to US interest rates.

Thus, our decision to prioritize fully paying for our house not only provided peace of mind but also protected us from the potential financial burden caused by fluctuating interest rates.

On Room For Error

The pandemic served as a wake-up call, highlighting the importance of having room for error in our financial planning.

It is a time when prices decided to go on a roller coaster ride, taking our wallets along for the wild journey.

Suddenly, the cost of noodles went from a humble $3.50 to prices that would make your eyes water faster than those spicy noodles themselves.

We're talking $4.50, $5.50, and even a staggering $8 for some minced meat noodles with soup (small portion!). It's like noodles thought they were lobster or something!

And it didn't stop there. Basic food items like rice and eggs joined the inflation party too, giving us all a taste of what it feels like to be in a financial funhouse. The prices were climbing faster than a monkey scaling a skyscraper.

But amidst this chaotic price frenzy, one thing became clear - inflation is no joke and that widely accepted notion of a cozy 2% inflation rate is certainly a joke. It's like inflation decided to show off its muscles and prove that it can pack a punch when it wants to.

Niki had been diligently contributing to our CPF, dreaming of a retirement where we could rely on a monthly payout of around $7,000. It sounded like a nice chunk of change to live comfortably.

But then, reality hit like a ton of bricks. When we factored in a 4% inflation rate (assuming it remains stable), that $7,000 in the future shrunk faster than my hopes of becoming a professional football player.

By the time I turned 65 and could access my CPF payout, that $7,000 had transformed into a meager $2,625.82!

Sure, it might be enough for basic survival, as long as I had the grace of good health and no major medical expenses.

But let's face it, life has a way of throwing surprises at us, and medical expenses are like sneaky ninjas, waiting to pounce when we least expect it.

And let's not forget that our dear government holds the power to determine when we can actually withdraw our CPF funds.

Considering how the average Singaporean’s lifespan is increasing. they might decide to play a little game of "Keep the Money Locked Up," raising the withdrawal age and shaking up our plans like a snow globe.

Oh, the joys of uncertainty!

So, my friends, this realization hit us like a butt slap to the face. CPF should be part of our safety net, but we need more than just that. We need backup plans, additional sources of income (which I am currently working on), and maybe a side hustle or two.

Because when it comes to our financial future, a little room for error goes a long way.

grayscale photo of man wearing goggles
grayscale photo of man wearing goggles

On Save Money

Saving money, ah, the great quest of responsible adulthood. It's like embarking on a treasure hunt, except the treasure is your hard-earned cash, and the map is a carefully crafted budget spreadsheet. But hey, it's all worth it when you see those numbers grow, right?

So here we are, always diligently saving at least 50% of our salaries. However, prior to reading the book, we faced a dilemma.

We had accumulated a significant amount of cash in the bank, and the consistent financial advice is that the money in the bank would lose value over time.

Nobody wants to see their money turn into a wilted lettuce leaf.

Our annual income is modest. In fact, in Singapore, we are considered to be a low-income family.

Our savings mainly consisted of those trusty government bonds that we could withdraw with just one month's notice.

They provided a certain level of security, but when it came to emergencies, they were about as useful as a chocolate teapot.

After gaining a deeper understanding of the concept of saving and its importance, I realized that we should keep more money readily available in the bank.

My aim now is to maintain at least $30,000 (our family monthly spending is around $2000) in cash as an emergency fund.

This would provide us with a safety net and the ability to tide over any unexpected financial challenges, such as if my wife were to lose her job.

On You'll Change

Such as the joys of parenthood, where your heart grows three sizes bigger and your wallet... Well, let's just say it starts to resemble a dried-up raisin.

But hey, who needs money when you have those precious little bundles of chaos and cuteness running around?

After the arrival of our two adorable mini-humans, my priorities and perspectives took a wild rollercoaster ride.

Suddenly, saving every penny and being as frugal as a squirrel in winter didn't seem as important as it once did. I mean, let's be real, have you seen the price of diapers and milk powder these days? It's like they're made of pure gold, sprinkled with unicorn glitter.

Not mentioning the clothes, the extracurricular classes, music lessons, supplements, fun tickets. Wow. They literally cost a bomb!.

Additionally, becoming aware of my parents' aging and the significance of relationships has had a profound impact on me. If I don’t treat them generously now, I may not have the chance to do so in the future.

Today, I find myself more liberated when it comes to treating those close to me. I've come to appreciate the joy of giving and understand that experiences hold more value than just financial transactions.

Whether it's surprising my parents with a weekend getaway, treating close friends or splurging on a special treat for my kids; seeing the smiles on their faces is worth every penny. Well, maybe not every penny, but you get the idea.

And let's face it, memories are like the best kind of investment. They appreciate in value over time, and you can't put a price tag on the happiness they bring.

So, as I navigate this wonderful journey of parenthood and life in general, I've come to embrace a new outlook. I've learned to loosen the grip on my wallet and tighten the embrace on the ones I love.

I've discovered that the joy of giving, and the value of experiences outweigh the temporary thrill of a few extra zeros in my bank statement.


The lessons I've learned from "The Psychology of Money" have helped me embrace a more optimistic outlook, make informed financial decisions, and prioritize what truly matters in life. It's a continuous journey of growth and adaptation, and I am grateful for the insights the book has provided.

As such, I highly recommend you to read the book and exact whatever you can from the author. Let’s improve our financial literacy and our personal life together.

With love.