How to Think About Money Book Summary

Book Review, Wealth Creation 4 Comments


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Financial success is about having enough money to lead the life you want.

how to think about moneyHow to Think About Money, by Jonathan Clements, tackles the “personal” side of personal finance. His goal is to help readers alter their thoughts on handling money for the betterment of their financial situations. I was drawn to this book because I’m interested in personal finance, for many reasons, but also, I’m interested in the psychology of things. One of the things I’m focusing on in 2017 is experimenting with new things, and any book or experience which will bring new concepts and thoughts into my life is something I welcome with open arms.

Clements spent 31 years thinking and writing about money: 25 years as a financial journalist, and another 6 years as Director of Financial Education at Citigroup. Clements’ goal is to look at our relationship with money and talk about how we can improve our financial situation.


Summary of How to Think About Money

In How to Think About Money, there are five steps to which Clements’ believes should be central to how we handle money:

  1. First, we should spend our money in a way which will bring us happiness. Things that don’t bring us direct happiness might not be worth buying, believe it or not!!
  2. Second, most of us will live a long time, the life expectancy for people in their 20’s-40’s is more than 85 years old. For this reason, it is extremely necessary to save more early in life.
    • A point Clements makes in the book is our investment horizon is not weeks and months, but years and decades.
  3. Third, due to our brains being hard-wired to spend and consume, we fail as savers and investors. Once we change our mindset to a saver mindset, we will be aligned much better for financial success.
  4. Fourth, we tend think of our finances in many distinct buckets: loans over here, deposits over there, insurance policies around the bend. We should think about these buckets as multiple parts of a whole.
  5. Fifth, we should focus on protecting our assets vs. taking on too much risk. Clements does not suggest taking no risk, but we should be careful with what we have accumulated.

Action Steps

I have a few action steps to take away from How to Think About Money. One of them is to keep leveraging my paycheck to improve my financial situation. What I mean by leveraging my paycheck is using the money I earn in my day job to create multiple income streams for the future. Currently, I have two income streams: my day job paycheck and my house (I have two roommates). I would love to turn this blog into another income stream, with my short term goal to be roughly $500 a month in income.

In addition to leveraging my paycheck to develop more income streams, I want to continue to challenge my thoughts on my financial situation. I will do so by writing posts on this blog and gather feedback from The Mastermind Within community to further my understanding and improve where necessary.

Remarkable Quotes and Passages from How to Think About Money

Here are some impactful quotes, takeaways, and notes in addition to what I have above:

  • “Money can buy happiness, but not nearly as much as we imagine.”
  • “We place too high a value on possessions and not enough on experiences.”
  • In a poll, the worst ranked activity of a person’s day was the morning commute and the third worst ranked activity was the evening commute.
  • More money may not make us happy – but not having money could make us extremely unhappy.
  • When managing money, we should worry less about dying young, and more about living an astonishingly long life. We should first focus on achieving some measure of financial freedom, then focus on what we are passionate about.
  • A question, given a choice, wouldn’t you rather spend your time doing what you are passionate about, rather than devoting your days to work that others deem important?

Given a choice, wouldn’t you rather spend your time doing what you are passionate about, rather than devoting your days to work that others deem important?

  • The fundamental value of the underlying corporation does not decline as quickly as the share price of that underlying corporation. Changes in the real economy simply don’t happen that fast.
  • You should not invest in the company you work for’s stock. This is to prevent a double whammy from occurring: economy tanks, you are potentially out of a job and your investment portfolio could suffer.
  • Having children will make it difficult to become financially free.
  • Financial success is about having enough money to lead the life you want.
  • Change your thinking: do not ask “Is this the right time to buy stocks?” rather ask the following questions: “How will investing in stocks affect my portfolio? Will I overextend myself from a risk standpoint? How much will this transaction cost in tax and expenses?”
  • Focus less on the odds of success or failure, and more on the consequences.
  • Ask yourself this question: if I was to start from scratch, would I buy the portfolio I own today?

Ask yourself this question: if I was to start from scratch, would I buy the portfolio I own today?

My Recommendation

If you are looking for a quick read on improving the “personal” side of your personal finances, I’d certainly recommend reading How to Think About Money. A while back I read Money – Master the Game, by Tony Robbins (book review). I’d recommend How to Think About Money before Money because it is 450 pages shorter, is not focused on advertising friends’ businesses, and is straightforward and to the point. While there are a few drawbacks, namely, no pictures or tables, Clements covers a lot of material and have actionable steps to take to be financially successful.

How to think about money, by jonathan clements

Buy this Book!

Have you read How to Think About Money? How long is your commute? Did you put off having kids until your finances were set?


About the Author

Hi! I'm Erik, the creator of The Mastermind Within blog.

I'm passionate about helping you improve as a person, get better with your finances, and create your dream life over time.

Through setting goals, critical thinking and intentional living and action, I believe you can master your life, win with money, and get on the path to freedom.

Get your free goals guide below, or browse through the 6 portal pages after the guide form.

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Comments 4

  1. I haven’t read the book yet but will definitely be adding it to my list. Right now my commute is about 15 minutes which really isn’t bad. I hit more stop lights than cars at this point. So I’m not going to complain 🙂

    My wife and I definitely got our finances in order before we had kids. I also wanted to travel before we had kids but was determined to have our finances in order. So it was two fold reason 🙂

    1. Post

      15 minutes is a fantastic commute. Mine is about 12-15 minutes as well. I have co-workers who are commuting 1 hour+ and I just sit there and scratch my head.

      That is a good thing regarding your family. I hope to do the same (right now Mrs. Erik isn’t in the picture…)

  2. Hi Erik,
    Thanks for the book review – Clements is a good writer with lots of great advice. It looks similar to Your Money or Your Life but I’m adding it to my reading wish list.
    Best wishes,

    1. Post

      Hey Div Life, Thank you for stopping by. A lot of personal finance concepts blend in with each other, to your point. This one touched on a few more personal things. I’ll have to check that one out! Have a good one 🙂

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