The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money [NOOK Book]

Overview

"It's not that we're dumb. We're wired to avoid pain and pursue pleasure and security. It feels right to sell when everyone around us is scared and buy when everyone feels great. It may feel right-but it's not rational."
-From The Behavior Gap


Why do we lose money? It's easy to blame the economy or the financial markets-but the real ...
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The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money

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Overview

"It's not that we're dumb. We're wired to avoid pain and pursue pleasure and security. It feels right to sell when everyone around us is scared and buy when everyone feels great. It may feel right-but it's not rational."
-From The Behavior Gap


Why do we lose money? It's easy to blame the economy or the financial markets-but the real trouble lies in the decisions we make.

As a financial planner, Carl Richards grew frustrated watching people he cared about make the same mistakes over and over. They were letting emotion get in the way of smart financial decisions. He named this phenomenon-the distance between what we should do and what we actually do-"the behavior gap." Using simple drawings to explain the gap, he found that once people understood it, they started doing much better.

Richards's way with words and images has attracted a loyal following to his blog posts for The New York Times, appearances on National Public Radio, and his columns and lectures. His book will teach you how to rethink all kinds of situations where your perfectly natural instincts (for safety or success) can cost you money and peace of mind.

He'll help you to:


avoid the tendency to buy high and sell low; avoid the pitfalls of generic financial advice; invest all of your assets-time and energy as well as savings-more wisely; quit spending money and time on things that don't matter; identify your real financial goals; start meaningful conversations about money; simplify your financial life; stop losing money!

It's never too late to make a fresh financial start. As Richards writes: "We've all made mistakes, but now it's time to give yourself permission to review those mistakes, identify your personal behavior gaps, and make a plan to avoid them in the future. The goal isn't to make the 'perfect' decision about money every time, but to do the best we can and move forward. Most of the time, that's enough."


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Editorial Reviews

Publishers Weekly
In this accessible book, financial planner and Morningstar Advisor columnist Richards sits down to talk about money and the crazy choices we make. Through personal stories and simple ideas enlivened with a touch of imagery (often literally sketched on the back of a napkin), Richards explains why we keep making bad choices and shows us that we’re often making decisions with our emotions rather than our intellect. However, Richards isn’t saying that investors try to eradicate their emotions; rather, they should aim for an investment strategy that balances managing fear and greed in a way that “truly reflects your own emotional strengths and weaknesses.” Once readers recognize what influences their decisions, they’ll be much better able to act rationally. Richards then covers a vast array of topics, from investor emotions to information overload. He offers suggestions for combatting decisions that might be overly influenced by emotions, such as in periods of market turmoil, by taking “the overnight test,” trying a media fast, or simply finding your focus. Whether relating a Zen story or talking about the Economist smirk, Richards succeeds in showing us how what we often think is right regarding investments rarely is. (Jan.)
Gretchen Rubin
"The Behavior Gap throws light on an important question: How can we think more clearly about money and its role in a happy life? Carl Richards shows how to shape our behavior to invest, save, and spend to foster greater happiness."
Barry Ritholtz
"Carl has a wicked way with a Sharpie."
Dan Heath
"Carl Richards is the anti-Jim Cramer. He doesn't pick stocks, and he doesn't shout. In wise, calm style, The Behavior Gap teaches us how to rein in the emotional saboteur within us-the voice that leads us to double-down when the market is peaking and to make a panicky exit when stocks are a bargain. Richards shows us that, when it comes to our financial security, slow and steady wins the race."
Jean Chatzky
"Ah, clarity! Carl Richards can see the mistakes that humans-being human- make again and again with money. Then with humor and an I've-been-there nudge he sets them on the right course."
Seth Godin
"Who says common sense is common? Smart, tactical, practical advice for anyone who has done dumb things with their money."
William Bernstein
"Carl Richards's deceptively simple sketches in The Behavior Gap will make you laugh, change your relationship with money, and leave you the wealthier for it. This one is bound to be a classic!"
Laura Vanderkam
"Carl has a knack for showing-gently and with charts!-that when it comes to money, most of us are idiots. Carl prods us to master money, rather than letting it master us."
Zac Bissonnette
"A brilliant guide to the ways we often trick ourselves into staying poor. Read this before you make your next financial decision."
Marty Kurtz
"If a picture is worth a thousand words, Carl's sketches could change a life! He captures the essence of life and money."
-Barry Ritholtz
"Carl has a wicked way with a Sharpie."
-Dan Heath
"Carl Richards is the anti-Jim Cramer. He doesn't pick stocks, and he doesn't shout. In wise, calm style, The Behavior Gap teaches us how to rein in the emotional saboteur within us-the voice that leads us to double-down when the market is peaking and to make a panicky exit when stocks are a bargain. Richards shows us that, when it comes to our financial security, slow and steady wins the race."
-Jean Chatzky
"Ah, clarity! Carl Richards can see the mistakes that humans-being human- make again and again with money. Then with humor and an I've-been-there nudge he sets them on the right course."
-Gretchen Rubin
"The Behavior Gap throws light on an important question: How can we think more clearly about money and its role in a happy life? Carl Richards shows how to shape our behavior to invest, save, and spend to foster greater happiness."
-Seth Godin
"Who says common sense is common? Smart, tactical, practical advice for anyone who has done dumb things with their money."
-William Bernstein
"Carl Richards's deceptively simple sketches in The Behavior Gap will make you laugh, change your relationship with money, and leave you the wealthier for it. This one is bound to be a classic!"
-Laura Vanderkam
"Carl has a knack for showing-gently and with charts!-that when it comes to money, most of us are idiots. Carl prods us to master money, rather than letting it master us."
-Zac Bissonnette
"A brilliant guide to the ways we often trick ourselves into staying poor. Read this before you make your next financial decision."
-Marty Kurtz
"If a picture is worth a thousand words, Carl's sketches could change a life! He captures the essence of life and money."
Kirkus Reviews
Financial advisor and New York Times blogger Richards discusses "how to cope with fear and stay grounded when making financial choices." In an era of austerity and lowered monetary expectations, the author provides smart, simple methods for taking charge of your personal finances. He begins with the premise that "financial decisions aren't about getting rich"--they are "about getting what you want--getting happy." The one element investors must learn to understand and control to maximize personal contentment/financial security is their own investing behavior. Richards coins the term "behavior gap" to describe "the gap between investor returns and investment returns," a phenomenon that occurs when individuals make decisions that work against their best financial interests--in fact, he writes, "all investment mistakes are really investor mistakes." Investing is based in choice, and people need to accept responsibility for their actions instead of blaming external factors like a fickle market or troubled economy. The path to success requires managing emotional responses to recessionary downturns, which play on investor fear, and prosperous upturns, which play on investor greed. This allows for a more balanced approach to managing financial portfolios. Richards' straight-shooting observations about cultivating fiscal self-discipline and awareness, embracing uncertainty and accepting personal fallibility seem like statements of the obvious. However, the obvious is often overlooked during turbulent economic times, which makes Richards' book is a must for small investors serious about gaining control of their financial lives. A solid, sensible guide for finding and maintaining financial stability in an unstable world.
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Product Details

  • ISBN-13: 9781101559550
  • Publisher: Penguin Group (USA)
  • Publication date: 1/3/2012
  • Sold by: Penguin Group
  • Format: eBook
  • Pages: 240
  • Sales rank: 642,875
  • File size: 3 MB

Meet the Author

Carl Richards is a certified financial planner and founder of Prasada Capital Management, a portfolio design firm. He contributes to the Bucks blog at The New York Times and is a columnist for Morningstar Advisor. Richards appears regularly on National Public Radio's Marketplace Money, and is a frequent keynote speaker at financial planning conferences and visual learning events. You can find more of his work at behaviorgap.com. He lives in Park City, Utah, with his family.

Visit www.behaviorgap.com
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Customer Reviews

Average Rating 4
( 5 )
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Sort by: Showing all of 5 Customer Reviews
  • Posted January 8, 2012

    Readable & Applicable

    I don't have a background in finance, so I was concerned this book would be boring and difficult to understand. However, it was very accessible and the sketches really pulled everything together. Thanks to Carl for creating a book that I can use to direct my thinking & behavior with financial decisions.

    1 out of 1 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Posted January 6, 2012

    A New, Simpler and Better Way to Think About Personal Finance

    Not only does Carl challenge conventional financial thinking, but he does so with humor, deep insight and a genius simplicity that only a master thinker can convey. I was challenged to truly shift paradigms while reading and I found that by so doing, a clearer picture of my relationship with personal finances emerged. Bravo to Carl. His book will definitely change the way I behave around money.

    1 out of 1 people found this review helpful.

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  • Anonymous

    Posted January 6, 2013

    No substance. Sum it up with "use common sense". Fort

    No substance. Sum it up with "use common sense". Fortunately I chose to look through an acquaintance's copy before deciding to buy. What slop. Cutesy and nonsensical Venn diagrams and "graphs" that are a great demonstration of what-to-do-to-earn-a-failing-grade for an eighth grade paper. I guess that this is how this certified financial planner (yikes!) is digging out from his own financial screw up. Just like Edmund Andrews of "Busted" fame.

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted January 15, 2012

    No text was provided for this review.

  • Anonymous

    Posted December 26, 2012

    No text was provided for this review.

Sort by: Showing all of 5 Customer Reviews

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