“The Psychology of Money” is a compelling, quick read that shows how the ability to achieve wealth often depends more on healthy behavioral skills than on intelligence — and that behavior is often hard to teach. Author Morgan Housel illustrates his points through a series of short stories about people’s money-making decisions.

Housel says the book is a deeper dive into the topics he covered in his widely read 2018 report that bears the same name. Formerly a writer for The Wall Street Journal and The Motley Fool, Housel is currently a partner at venture capital firm Collaborative Fund.

Through the book’s 20 easily digestible chapters, Housel gives examples of people who succeeded — and those who failed — at accumulating wealth, holding onto that wealth, and making long-term, lucrative investments. He shows how financial decisions are made based on factors like personal history, worldview, fear and pride.

Keys to a money-saving mindset

In a chapter devoted to saving money, Housel delves into the benefits of frugality, the importance of building up a nest egg, and the notion that you don’t need to earn a lot of money to accumulate significant savings over time.

It’s all about frugality and humility

The ability to save a large chunk of one’s income is related to having a frugal lifestyle, Housel writes — which takes some humility. Case in point: The less you care about keeping up with your friends and neighbors, the less you’ll feel compelled to spend your money on things.

When it comes to increasing your savings, raising your humility is often a more powerful driver than raising your income, Housel writes.

Cash in the bank has unseen returns

While saving for a big purchase is important, Housel stresses that it’s also vital to set aside money just for saving’s sake — since money in the bank gives you options and flexibility. For instance, a sudden job loss will feel much less traumatic if you have savings to carry you through it.

The combination of flexibility and control over your time that you’ll gain by having a significant nest egg are an “unseen return on wealth,” Housel writes.

Low-earners can save money, too

Housel makes the point that building wealth often has little to do with your income and lots to do with your personal savings rate.

In the book’s introduction, Housel tells the story of Ronald Read, a gas station attendant and janitor who eventually went on to become an investor and philanthropist. Throughout his life, Read gradually accumulated a fortune by saving what he could and investing in blue chip stocks. When he died at 92, he made headlines for being worth more than $8 million dollars — much of which was accumulated through the power of compound interest.

Housel contrasts Read’s story with that of a highly educated, well-paid Merrill Lynch executive who retired in his 40s to become a philanthropist. Heavy spending on a lavish lifestyle that included two luxury homes eventually led him to file for bankruptcy.

Through the two men’s stories, Housel makes the point that financial success is often more a matter of how you behave than what you know.

Behaviors and beliefs for successful investing

Your success at investing, as Housel sees it, is affected by how well you hold onto the wealth you’ve earned. It also hinges on your ability to earn pretty good returns over time rather than aiming for one-off big hits.

Success comes from survival mode

Housel gives examples of investors who were good at getting wealthy but not as good at staying wealthy. Building wealth can involve optimism and risk taking, Housel writes, whereas retaining wealth requires humility and a fear of losing it all.

He goes on to explain that the survival mindset necessary to hold onto wealth comes down to a desire to be financially unbreakable, planning for the unexpected and maintaining sensible optimism.

The power of compound interest

Essentially, compound interest is the interest you earn on interest over time. In the book, Housel gives the example of renowned investor Warren Buffett — whose net worth is around $110 billion —  as someone whose investments have benefited enormously from the effects of compound interest. He attributes much of the 92-year-old Buffett’s success to the fact that he’s been investing since the young age of 10.

While high investment returns often result from one-time hits that can’t be repeated, earning more realistic, pretty good returns consistently over a long period of time is when you benefit from compound interest, Housel writes.

No one’s crazy when it comes to money

In the book’s first chapter, titled “No One’s Crazy,” Housel states that while people may do crazy things with their money, no one’s actually crazy. Rather, everyone’s unique money habits and beliefs come from their own personal experiences — including when and where they were born as well as what their parents were like. For instance, a person who grew up during high inflation or a bad recession may handle money differently from someone who grew up during healthy financial times.

As such, personal background affects how one goes about saving, investing and spending, Housel writes, which can help explain why one person’s choices may seem wrong — or even crazy — to another.

True wealth is often hidden

Housel stresses throughout the book the importance of frugality and humility when it comes to saving money, and he points out that wealth is something you don’t see: Someone with plenty of money in the bank may choose not to drive a luxury car, live in a mansion or wear expensive clothes. Conversely, a person paying for a lavish lifestyle may not have much, if anything, in savings.

While nice cars and big houses are things people notice and admire, Housel points out, someone’s savings, retirement accounts and investment portfolios aren’t things we see.

Bottom line

“The Psychology of Money” is a worthwhile read that may open your eyes to beliefs about saving money and investing that could be holding you back from having healthier money habits. It makes its points through bite-sized chapters, charts and personal stories, and it would be a strong addition to any shelf of personal finance books.

To explore more personal finance books, check out Bankrate’s 12 best investing books for beginners.