Morgan Housel's essential financial wisdom for his daughter

Certain universal truths about finances often emerge only after many years of adult life. Morgan Housel, a partner at Collaborative Fund, a behavioral finance specialist, author, and journalist, shared them in a letter to his daughter.

In a message published by CNBC, Housel presented several insights about money that he believes we discover too late in our lives, providing advice that might prove useful for his daughter in the future.

Housel notes that it's easy to think about our financial situation, whether wealth or poverty, as a result of our decisions. However, we often overlook the significance of luck and circumstances that shape our lives.

The specialist points out that the environment in which we are raised, our nationality, and the conditions in which our loved ones live usually impact our achievements more than most of us are willing to acknowledge.

He adds that while hard work and its reward should be valued, it's important to understand that "not every success is due to hard work, just as not every failure is due to laziness".

"Keep this thought in mind when making judgments about others, as well as yourself," - emphasizes Housel.

"True happiness comes from the ability to do what you want, when you want, where you want, and with whom you want, as well as the ability to do it for as long as you want" - Housel asserts.

According to him, the excitement of owning 'great things' quickly fades, but the appeal of working with a flexible schedule "never wears off". Having savings that provide security in crisis moments and the freedom to retire whenever we want is also crucial.

Housel explains that achieving financial independence is the ultimate goal of life. However, he emphasizes that it's not about immediate full independence but about gradually saving funds that constitute "part of your future, independent of others."

He quotes Napoleon, who said that a genius can keep his head when others are losing his head. "The same goes for managing finances. You don’t have to perform miracles to find yourself in a good situation over time; consistently avoid serious mistakes" - Housel explains.

He says avoiding catastrophic mistakes, such as falling into a debt spiral, is more valuable than any other financial advice.

Housel notes that an intense career pays its price in the form of time not spent with family and friends. Long-term growth in the market comes with uncertainty and volatility. And spoiling children often results in them "living in a bubble".

In the expert's opinion, every decision has its price, often hidden. Sometimes, it's worth incurring these costs, but they should never be underestimated. "Once you understand this, you will start to treat time, relationships, and independence as commodities as valuable as money" - he explains.

"All the conclusions I've listed, including this last one, are most often realized too late" - writes Housel. He notes that we can confidently reject this advice.

The explanation? As the financial expert explains to his daughter: "Your life will be different from mine, just as mine differs from the lives of my parents. No one is identical. No one has all the answers. Never accept anyone's advice without adapting it to your values, goals, and situation," - he emphasizes.