How to Think About Money

by Jonathan Clements

A cult smash in the U.S., "How to Think About Money" is the ultimate smart thinking book for those who want a more prosperous and less stressful financial life.

There are those who think the goal of investing is to beat the market and amass as much wealth as possible, that street smarts and hard work ensure investment success, and that the road to happiness is paved with more of everything. And then there are those who get it.

Want a richer, calmer financial life? Jonathan Clements, longtime personal finance columnist for The Wall Street Journal, is here to help. His goal: To provide readers with a coherent way to think about their finances, so they worry less about money, make smarter financial choices and squeeze more happiness out of the cash they have.

How to Think About Money is built around five key ideas:

- Money can buy happiness, but we need to spend with great care.
- Most of us will enjoy an extraordinarily long life - and that has profound financial implications.
- We are hardwired for financial failure, so sensible money management takes great mental strength.
- We need to bring order to our financial life - by focusing on our paycheck, or lack thereof.
- If we want to add to our wealth, we should strive to minimise the subtractions.

With rave reviews from readers and praise from some of the greatest investors of all time ("Easy to understand, essential to follow" - Jack Bogle), this is the ultimate smart thinking book for everyone interested in making their money work for them rather than the other way around.

Genres: Finance, Nonfiction, Personal Finance, Business, Money, Economics, Self Help

200 pages, Paperback

First published July 16, 2016

About the author

Jonathan Clements is the author of "How to Think About Money" and editor of HumbleDollar.com. He was born in England, graduated from Cambridge University and now lives just outside New York City. He wrote for Euromoney and Forbes before joining The Wall Street Journal, where he worked for almost 20 years. He also spent six years at Citigroup as Director of Financial Education for the bank's U.S. wealth-management business. Jonathan has written seven books -- a novel and six guides to personal finance. For additional information, go to HumbleDollar.com. You can follow Jonathan on Twitter @ClementsMoney or on Facebook at Jonathan Clements Money Guide.

Reviews

[Lil · Rating 5 out of 5]

Concise and well reasoned. This is a good starting point to think about finances that can be referred to over and over to remind yourself of the big picture.

[Tim Jones · Rating 5 out of 5]

This book is really enlightening. It makes you think of money from a different perspective. There on thought on what really makes us happy in life and the truths, and myths about the role money plays in that quest for lifetime happiness. Also really enlightening investing advice for the safest and best way to invest over a lifetime. Definitely worth the read every so often to remind us the role money plays in our mental well-being.

[CatReader · Rating 4 out of 5]

Jonathan Clements is a financial educator and editor of the website The Humble Dollar. His 2016 book How to Think About Money is actually less about money than one would think -- it's much more a meditation on the relationship between happiness and life satisfaction with money. There are nuggets of financial advice sprinkled throughout, but this book's approach is similar to Morgan Housel's The Psychology of Money and fundamentally different than, for instance, how-to primers like Ramit Sethi's I Will Teach You to Be Rich: No Guilt. No Excuses. No BS. Just a 6-Week Program That Works, and investment manifestos like Larimore, Lindauer and LaBeouf's The Bogleheads' Guide to Investing. A thoughtful read, though if you've already read the aforementioned titles, a safe skip.

My statistics:
Book 173 for 2025
Book 2099 cumulatively

[Virginia · Rating 5 out of 5]

This is a must read for anyone who wishes to have clear headed advice about how to be in control of your financial future. I am about to buy this book for all my loved ones since it is so accessible and straight forward. The premise of the book may sound simple, yet we all need reminders to put our long term financial health above short term desires.

Clements advises us to prepare for a lengthy retirement by saving as much as possible and by striving for a career that yields financial gain. While it sounds like an old saw, in his hands it somehow seems like a novel and achievable goal.

There are a few chapters that are dense in analysis of stocks and bonds but these can be skimmed for the less interested. There is a summary of his philosophy at the end of the book which should become the financial manifesto for every generation of reader.

I give very few books 5 stars. This one deserves it.

[Andy · Rating 5 out of 5]

Jonathan Clements' brilliantly concise book 'How to Think About Money' should be required reading material for all young adults currently in their 20's. What I find most beneficial about Jonathan's book is that he doesn't bog down the pages with fancy spreadsheets/graphs, and instead focuses on the essentials of smart money management. Jonathan is also not afraid to point out the obvious but often times hard to acknowledge financial implications of marriage and starting a family. As I mentioned earlier in my review, I highly recommend this book to all ages but especially those in their 20's and 30's. This is a book that should be read at least once a year and the values and strategies applied immediately.

[Deanna · Rating 3 out of 5]

Decent. Lots that I already knew, lots that I don’t care to know. Not very engaging.

[TwoTonYoda · Rating 4 out of 5]

There is good content here, but per the usual it is written by an author who can not write. Self help and financial books are great, but they are always painful to read. I would save your money and listen to something like Wealthion or The Money Guy Show. Spend less, save more, don't be emotional with your money. End of story.

[Javier]

Jonathan Clements provides a wealth of sensible and practical advice on not only how to think about our money but also about how to give it meaning. I’m left with a sense of reassurance, knowing that as long as my efforts are directed towards living a life of purpose, financial peace will follow. Great book!

[Vlejd · Rating 5 out of 5]

I appreciate the set of sober ideas about money. Do your taxes right, max your 40(1)k, spend less than you can and most important, do not think you are smart (you probably are not).

[Daniel Zucchi · Rating 2 out of 5]

On the subject of bad investment decisions, £7.99 for a short book of old, repeated and long dated financial advice that you could have gotten from Yahoo! Finance in 2007.
Basic tenet (aka 'save your time' summary): get a high paying job, save most of your salary, buy market-tracker funds and hope for the best. Book finished.
Hardly a groundbreaking way to think about money.

[Matt Hooper · Rating 4 out of 5]

I am one of those people who occasionally wakes up in the middle of the night fretting about how far behind I am in saving for retirement.

I'm 33 years old. I have a 401(k) with a match courtesy of my employer, but I couldn't tell you a thing about it beyond this: Fidelity handles it, and it's virtually all tied up in index funds (because everybody, even financial neophytes, knows that index funds are safer and more reliable than managed funds). Oh and should either I or my wife pass on unexpectedly, the other is entitled to a handsome pile of cash that should somewhat deflect the double wallops of sudden grief and perpetual loneliness.

This is the extent of my planning for retirement. Beyond that, there's a glass jar on the kitchen counter into which my wife and I deposit paper currency each month for our big end-of-the-year blowout vacation.

That said, I am THE target market for "How To Think About Money," Jonathan Clements' concise primer on personal finance, investing and, in his opinion at least, what constitutes a healthy behavior toward money.

If you judge a person by the company they keep, then Clements would earn high marks for his financial peers alone. John Bogle -- the poster child for aforementioned index funds -- wrote a back cover blurb. Eric Tyson, who has written not one, but two "Dummies" books on personal finance -- you know, "____ for Dummies" and such -- also wrote a blurb. William Bernstein, the eminent neurologist, money manager and author (someone you expect could use some help managing vast piles of money) literally begged to write the forward to Clements' book -- which is the opposite of how that literary transaction usually works out. So I am confident in assuming that what's written here is, indeed, worth reading for those in search of financial advice.

So, what is the secret sauce for socking away enough cash to get you to the grave? First, establish your priorities. For Clements, the goal of investing isn't to get rich -- it's to get you from your retirement party to your funeral service with enough cash in between to live your life comfortably. He and I share a common belief that experiences are worth more than tangible items -- even though tangible items tend to cost more cash.

Second, don't pull the Social Security lever until age 70. This assumes that you are physically able to wait that long -- and for the Millennials, this assumes Social Security will not be a museum piece in 20 to 40 years. The longer you delay jumping into the social safety net, the bigger your payout will be. (Essentially because the government is rooting for your death -- but that's another issue.)

Third, if you're young, get into the stock market and don't sweat its mood swings. When the bubble finally bursts on this bull market and a period of hibernation sets in, a 20-something has plenty of time to hold their cards until the pendulum swings back around from red to black. After all, remember the Great Recession of 2008? Well today, a decade later, the stock market is over 26,000. (Whatever the hell that means.)

Fourth, live within your means. Seriously. You don't need a big house, a flashy car, or a designer anything. The more breathing room you create now by saving a bit here and there, the easier it will be to maintain your standard of living once retirement season is upon you.

Fifth, pick the low-hanging fruit. If your company offers a 401(k) with a match -- take advantage of it. If you have a mortgage, round up your monthly payment to the nearest $100. If you get a tax refund, a bonus, or win a college basketball bracket pool, then turn around and put that windfall into savings. Don't spend found money.

Sixth, you can't outsmart the market. The market, like the house, always wins. You probably knew that already. Here's the thing, though -- that person managing your mutual fund or stock portfolio (for a hefty fee, no less) can't beat the market either. Index funds. Index funds are the Honda Accord of investing. It's the smart, reliable choice. Low fees, consistent performance and no middleman.

Seventh and finally, when you're young you can get away with having a majority of your investments tied up in stock and a smaller percentage in bonds. But when you start getting into your 40s and 50s, flip the switch and start swapping stocks for bonds. That's the safer bet; you don't want a market crash wiping out your nest egg right before you're ready to crack it open. I'll remind you that Donald John Trump is currently the leader of the free world and that, as a consequence, we are perpetually on the precipice of a global finance catastrophe. Actually, I suppose that every sort of catastrophe is on the table currently ... but surely everything's fine, it's all fine.

Anyway, regardless of your financial acumen, you would benefit from reading this short, well-written, well-edited book. And (no spoilers) know it does contain very specific investment recommendations for those of you who wish to simply cut to the chase and throw your money at something likely to generate a pleasing return. For that alone, it's worth the price of purchase.

[Justus · Rating 2 out of 5]

I'm definitely not in the target audience for this -- I'm more financially sophisticated than most, it's a subject I actively enjoy learning about, and I've read dozens of more complex books on the subject. But I went into this hoping it would be a good primer for my wife & kids on, as the title says, "how to think about money".

Overall I was never particularly engaged by this. While some of that is because none of the material was new to me (not the book's problem, since it is targeted at people for whom the information is new), the larger issue is I just struggled to feel a good coherent thematic through-line here.

He will throw out retirement advice ("One implication: We should think twice before moving to another part of the country, especially upon retirement.") just a few pages after telling us how to think about our commutes or having children. He starts with some fairly concrete things (don't buy a house with a long commute, having children doesn't seem to help or hurt happiness) then becomes fairly philosophical with talk about self-actualisation and intrinsic motivation. Then gets very number crunchy talking about what GDP growth means for the expansion or contraction of P/E multiples and what the means for expected returns going forward.

It felt a bit scattershot and didn't quite cohere.

It's not all bad. He offers one truly interesting thought:

When I talk to college students, I don’t tell them to follow their dreams. Instead, I tell them to focus on making and saving money. I even suggest that they might deliberately opt for a less interesting but higher-paying job, so they can sock away serious sums of money.

[...]

Underpinning this is an implicit—but rarely examined—assumption: that pursuing our passions is somehow more important in our 20s than in our 50s. I think this is nonsense. In fact, I think just the opposite is true.

His argument is that, thanks to a combination of factors like compounding and how humans seem to more or less adjust to any set of circumstances (he points out that Americans are twice as rich as they were 30-40 years ago but aren't twice as happy), is that people should spend the early part of their careers focused on setting up a path to financial independence by living well below your means and saving tons of money. Then they can use that to buy the freedom to pursue what they actually love. It's a good thought experiment (why shouldn't you do the Peace Corps in your 40s instead of your 20s) but is a bit hand-wavy. Not necessarily a deal breaker in a primer but a bit at odds with his later hyper-detailed calculations of future expected returns, which could have (and probably should) been left equally hand-wavy.

Overall this is pretty similar in thrust to another book I read years ago called The Geometry of Wealth: How to shape a life of money and meaning. Again, I'm not quite the target audience for either book but I recall liking that one better than this one. It is higher level and theoretical but I think that's a better place to start "thinking about money" than trying to run people through the math of GDP's relationship to P/E multiples.

[Mike A · Rating 3 out of 5]

An educational personal finance book, relying on the adage 'live frugally - invest cautiously'.

The structure and arguments therein are sound and reasonable. The data is however presented mostly anecdotally, as the author appears not to grasp basic statistical fallacies such as confirmation bias, publication bias, availability bias, confounding and so on...which essentially means the author is cherry-picking and not probing some of his data too much. For example, he notes that surveyed adults with children and without children are equally happy and thus concludes that children don't play a role in happiness - yet, it's more likely that the surveyed groups differ in a distinct, independent variable: whether they want to rear children or not. A dog owner and a cat owner may each be equally happy with their pet, but not necessarily with the other pet. So a person that wants children but decides not to have them because of financial worries may derive unhappiness from that. In this manner, the strength of the author's arguments is weakened. Also, some of the logistics of proposed strategies are not sufficiently explained for the uninitiated (especially the crucial passive index investing). Nevertheless, there are still some useful perspectives in the book (e.g. relationships>experiences>things, money = time [or freedom to use it as you wish], and others).

As a personal finance book, it's a bit underwhelming and not overly persuasive. There are better resources out there: a simpler, more concise, more powerful, and more instructive document is If You Can: How Millennials Can Get Rich Slowly, available for free: https://www.etf.com/docs/IfYouCan.pdf . For a more developed version of most of the arguments expressed by this approach, check out The Only Investment Guide You'll Ever Need. I don't think there is much to gain from this present book if one reads the aforementioned works, which are much more useful personal finance educational tools and which also at least make a passing mention of systemic problems, such as the collapse of defined-benefit pension plans. This book ignores them, but one needs to be aware of the forces that are in recent decades making the task of leading a financially healthy life more and more challenging for the general public.

[Volkan · Rating 4 out of 5]

This book is mainly written for an American audience (the suggested index funds for example are not available to Europeans) but it contains mostly common wisdom and logic on how to deal with money that is applicable to anyone anywhere in the world. There is nothing groundbreaking or new here, it's just a summary of what you probably already know if you have read some investment books: save as much as you can, invest in index funds and maintain a diversified portfolio.

Another point of attention would be that (Western) Europeans find themselves in a rather different situation concerning housing prices (and thereby the mortgage debt that we find ourselves in). The author mentions the average price of US homes costed 200,000 USD while in the Netherlands this is 464,000 USD. One would argue that our school fees are not as outrageous as in the States, but we also have lower GPD per capita (PPP) and salaries tend to be much lower in general.

Next, the author underlines the importance of experiences and being frugal at the same time, but experiences (with friends and family or for yourself through vacations) require significant more investments than buying the newest iPhone.

Clement's advice is certainly not bad but whether it's applicable to you also completely depends on your social class in my opinion. If you have time to think about investing for your retirement during your 20s and 30s, you already belong to at least the middle class or above.

[Walter Ullon · Rating 5 out of 5]

Short, clear, and chock-full of excellent financial advice.

One should know from the outset that this book will not tell you how to pick stocks, or otherwise invest your money in ways that would allow you to cash out early and retire at 30 so you can sip Mai Tais in Maui for however long you care to stand that sort of thing. No, this book will teach you to see money as a tool that, with practice and the right technique, can allow you to purchase peace of mind, autonomy, leisure time to spend with loved ones or travel, and ultimately, happiness.

More than any other book of its kind, this one got me thinking about retirement and the mindset that ensures a comfortable, successful, and stress-free transition into the golden years.

If you have been reading personal finance books, or classics such as "A Random Walk Down Wall Street", then many of his recommendations will ring familiar (i.e. avoid actively managed funds, buy the index instead, diversify your portfolio and balance it according to your goals, etc...) But there are some select pieces here and there that are almost never touched upon in more mainstream works such as: annuities, insurance, behavioral pitfalls, etc. So it is still a worthwhile read.

[Paul · Rating 5 out of 5]

I checked this out from my local library, which is my M.O. for most books. I'm trying to avoid becoming a literary hoarder, so I want to make sure I like a book enough to buy it before I pull the trigger. This book will have a permanent place on my shelf. In fact, I may just buy it in bulk because of how often I will be lending it out and recommending it to friends.

Jonathan Clements draws from years of experience as a journalist and academic in the world of personal finance and brings to the reader the most treasured of gems from a non-fiction book... real, actionable, practical wisdom.

Do you want to build wealth in a way that will maximize your happiness and relieve you from the nauseating roller-coaster ride of the media's constant frenzy around the markets? Read this book. Do you want to avoid financial advice that is full of conflict of interest or the narrow point of view of a zealot? Read this book.

Financial books in particular can have the side effect of leaving the reader more confused and less centered than before. I recommend Clement's book because it does the opposite. It centers and clarifies, and for that reason alone it is worth your time.

[Truong · Rating 3 out of 5]

Đọc rất chán, ngay từ chương đầu. Ông Jonathan cho rằng tiền bạc và hạnh phúc có liên hệ phức tạp với nhau, tuy nhiên xuyên suốt phần 1 của cuốn sách ông cho rằng việc có thêm tài sản không làm bạn hạnh phúc thêm vì sự thích ứng khoái lạc. Vậy giả sử 1 người nghèo khổ có hài lòng với sự nghèo khổ không? Tôi nghĩ là không. Buồn chán trong sự đầy đủ còn hơn là đau khổ trong sự nghèo túng. Ý tưởng ở đây là con người không nên tập trung quá mức vào tiền bạc mà thay vào đó là mindset hạnh phúc với những gì mình có. Suy cho cùng thì tài sản là thứ mong manh, còn hạnh phúc là do tâm trí con người quyết định. Đọc cuốn này làm mình nghĩ đến câu này của Naval: “Việc kiếm tiền hay tích luỹ tài sản không phải là xấu, tuy nhiên ham muốn tiền bạc thì lại trái ngược. Ham muốn nuốt chửng bạn, không bao giờ là đủ.” Nếu muốn có suy nghĩ đúng đắn về tiền bạc, mình khuyên bạn nên đọc The almanack of Naval Ravikant. Sách đã có tiếng Việt và hoàn toàn miễn phí.

[Malin Friess · Rating 4 out of 5]

Clements argues for the following:

- We are often happier with less choice than more (Costco)
-Working hard towards a goal brings greater joy (achieving the goal is often a letdown)
-Raising children may not bring as much joy as people claim
-Satisfaction in life is U-shaped. Happiness falls in our 20's and 30's, hits bottom in our 40's, and bounces up from here (That is at least encouraging news for me!)
-We place too high a value on possesions, experiences (dinner out, vacation, a race--bring much more pleasure)

His financial advice is also solid-
Low cost index funds (keep fees down)
Delay social security until 70-- most of us will have a long retirement
Keep working part time (or find a new career)
Live like a resident when you are young

4 stars. Solid advice in this short 168 page book.

[Ray · Rating 4 out of 5]

This is a good book that covers similar topics as other investing/personal finance books but also approaches it from a different angle. Initially, the book talks about how to spend money to maximize happiness, such as spending less on material goods and focus more on experiences. In the other chapters, he talks about investing and offers similar advice as other books, such as investing in low-cost index funds over actively-managed funds. However, he does this in a unique way compared to other books I've read, such as valuing human capital as a type of bond. My only criticism of the book, which is admittedly pretty minor, is that it does use some terminology and calculations that take a bit of time to digest, such as when discussing dividends and P/E ratio. Because of this, I'd say this book is not an intro, but more of an intermediate-level book for investors. Overall, a good read

[Hung · Rating 5 out of 5]

This book is an excellent book to learn about personal finance, investing and financial planning. The points conveyed by the author are clear, concise and to the point. Some ideas and insights are provocative - they made me question my own beliefs and judgments about my personal finance practices. The author advocates buy-and-hold investing strategy with index funds. He also points out the urgent need to take a hard look at retirement. Finally, he insists that the goal of personal investing is to have enough money to lead the life we want. I totally agree with him. I highly recommend this book to finance lovers!

[Victor Leung · Rating 5 out of 5]

The book provides readers with invaluable insights into the world of personal finance. The author's vast experience as a financial journalist shines through in the clarity and practicality of his advice. The book covers different aspect of financial planning. From the basics of budgeting and saving to more complex topics such as investing and retirement planning, it provides a comprehensive overview of all aspects of personal finance. The author's writing style is engaging and accessible, making even the most daunting topics seem manageable. The book is filled with practical tips and advice. I recommend this book to anyone looking to take their financial planning to the next level.

[Dani · Rating 5 out of 5]

This book takes a lot of what readers of personal finance have come across but turns it on it’s head by focusing on what problem we need to solve - how to have enough money over a lifetime to live stress free. Instead of focusing on the components ( behavior, salary, investment, insurance, etc.), the author takes a big picture approach on how to obtain that goal. This book gives the framework for how to look at your finances, and begins to break down simple investment portfolios, however you will need other resources to examine life insurance needs, etc.

[Jimmy Darwis · Rating 5 out of 5]

As I read this book, I became more and more fascinated by the research correlating money and happiness. At first glance some may wonder about yet another "money book" , however, the philosophical side to how we save, spend and enjoy our money is so well compiled and documented in this book that you cannot fail to learn very important lessons in how to manage your financial life.

[Nicolas Vidal · Rating 4 out of 5]

It gives you a good insight to start thinking about money in a more efficient way. It gives you tips for saving and a couple investment options but limited to the USA market. So maybe you will want to do a little research in your country about the different investment options you have.

Other than that, it is a good book for settling the roots of a good investment plan.

[Danik Therrien · Rating 2 out of 5]

I really don't get it why it rated so High.

This is like 147 pages of invest in the stock, spend less than you earn, think about your 401k...

I gave it two stars because I like some bits about the psychology of things and withing the 647396472 statistics cited in this book, some of them were useful to a degree.

I'm sorry I really don't see that's the excitement.

[Robin Dong · Rating 4 out of 5]

1. Save as much money as possible
2. Delay satisfaction (we will finally be adapting or boring to our new happinees)
3. Enjoy experiences instead of goods
4. We tend to have a very long life
5. Remember the stock market crashes (2000, 2008 etc.)
6. We should be excited to buy falling stocks like buying discount goods in supermarkets.
7. Buy total market ETF and bonds (diversification)

[Jill Carpio Santos]

A refreshingly honest book on how humans often make mistakes when dealing with money, as a result of irrational decisions that we often don’t notice we are making.

Took off two stars since the advice for investing is very US-centric, so I did not find that applicable to me.

Some of my favorite advice:
1. We often get greater happiness on experiences rather than possessions (which decrease in value).

2. Do not be envious of people who look wealthy externally— it is not an indication of how much they have, but how much they SPENT. Most of the wealthiest people are those who live below their means.

3. Save early and live frugally, so that we can enjoy the moments when we slowly step up our lifestyle— versus spending on luxuries now and having to move to economy class later on.

4. The goal isn’t to get rich, it’s to have enough money to lead the life we want.

[Brandon · Rating 5 out of 5]

A nice simple overview of, can you guess, how to think about money. Some good basic points about budgeting, spending, evaluating the value/joy we get from what we spend on, and the importance of saving for one of our largest inevitable expenditures, a.k.a. retirement. Also goes into some of the common pitfalls we trap ourselves in when we think about spending, money, and investing.

[James · Rating 4 out of 5]

Solid advice about personal finance. Personal finance seems so straightforward in a lot of ways there's a lot of overlap between these books. That said, this is well organized and explains things in a straightforward and understandable way. Would definitely recommend to anyone looking to get into personal financial planning.

[Pooja · Rating 4 out of 5]

Excellent read. Loved the bit about finding meaningful work that you would like to do well past your retirement years. Makes a lot of sense. I am going to work on a lot of these practical suggestions. Though it is US of A focused, it is great book for anyone who aspires financial freedom.