The Psychology of Money: Lessons from Meme-Based Cryptocurrencies

On January 17, 2025, President-elect Donald Trump and First Lady Melania Trump took the world by surprise by introducing their own meme-based cryptocurrencies, $TRUMP and $MELANIA. These new coins skyrocketed in value, reaching an astounding $72 billion in just two days.

The news spread like wildfire, and soon enough, family and friends started asking me, “Did you buy the coin?” Their excitement was contagious, but I paused to reflect on something I recently learned from Morgan Housel’s The Psychology of Money.

Know the Game You Are Playing

First, I explained that it’s crucial to know the game you are playing. Understanding your own time horizon is key in finance. Are you a long-term or short-term investor? Or someone investing for retirement? Perhaps a day trader or a swing trader? Identifying this is essential to making informed decisions.

Why This Matters

I elaborated further, emphasizing why this is important. Getting swayed by people playing a different game can throw you off track. Just because someone is making quick profits doesn’t mean their strategy aligns with your goals. Define your game plan and stick to it—it’s the only way to stay grounded in a world full of noise.

The Emotional Aspect of Money

I reminded them that money is highly emotional. Many people know what they should do with money, but rarely follow through. The emotional aspect often clouds judgment and leads to impulsive decisions.

Here are the Key Lessons I learnt from The Psychology of Money

Morgan Housel’s book offers invaluable insights into how we think about and handle money. Here are the key lessons, categorized for better understanding:

Behavioral Insights

• The ability to endure bad times and keep playing the game is what separates successful investors from the rest.
• Doing well with money has little to do with how smart you are and more to do with how you behave with it.
• A genius who loses control of his emotions can be a financial disaster.
• Patience is the key ingredient to becoming wealthy.
• Finance is guided by people’s behaviors, not laws. We are products of our environments.
• Everyone thinks about money differently. What looks crazy to you might make sense to someone else.
• If the cost of a venture is ruin, no matter how appealing it is, it is not worth it.
• Money is emotional: Most people know what to do with it, but they don’t always do it.

Investment Strategies

1. Compounding is powerful. Warren Buffett’s wealth-building journey illustrates this perfectly—starting early and staying consistent allowed his investments to grow exponentially over time.
2. Market volatility should be viewed as a fee, not a fine. The trick is convincing yourself that enduring short-term turbulence is worth the long-term gains.
3. “The most important part of every plan is planning on your plan not going according to plan.”
4. Measure the health of your investment by looking at your full portfolio rather than focusing on individual investments.
5. Avoid risks that could wipe out your investments, no matter how appealing the upside might seem. Morgan Housel shares the example of many overleveraged investors during financial downturns who lost everything because they didn’t account for the downside.

CLICK HERE TO PURCHASE A COPY OF THE BOOK: THE PSYCHOLOGY OF MONEY

Financial Preparedness

1. Saving money is the gap between your ego and your income. It creates a margin of safety for life’s surprises.
2. Prepare for the unexpected: recessions, pandemics, or wars. Housel recommends having 3–12 months’ worth of salary in the bank to endure hardships.
3. Wealth is created by suppressing what you could buy today to build a better tomorrow.
4. The biggest failure with money is relying solely on a paycheck with no savings to buffer against future uncertainties.
5. Use money to gain control over your time. True happiness often lies in the ability to do what you want, when you want, for as long as you want.

Conclusion: Play Your Game

The $TRUMP and $MELANIA cryptocurrency craze reminded me that financial success isn’t about chasing trends—it’s about sticking to your plan. Define your game, invest with purpose, and prepare for the unexpected.

Final Advice

So, my final advice to those who asked was simple: invest in whatever will make you sleep well at night. This way, even if the value doesn’t pan out in the coming days or months, you can rest easy knowing you made a decision that aligns with your own goals and risk tolerance.

In the end, your financial health depends on your ability to balance discipline, patience, and self-awareness. If this resonates with you, click here to buy the full book, or share this article with a friend.

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