The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money

The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money

by Carl Richards


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"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."

Product Details

ISBN-13: 9781591844648
Publisher: Penguin Publishing Group
Publication date: 01/03/2012
Pages: 192
Sales rank: 366,429
Product dimensions: 8.30(w) x 5.80(h) x 0.90(d)
Age Range: 18 Years

About 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 He lives in Park City, Utah, with his family.


What People are Saying About This

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."

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!"

Zac Bissonnette

"A brilliant guide to the ways we often trick ourselves into staying poor. Read this before you make your next financial decision."

Seth Godin

"Who says common sense is common? Smart, tactical, practical advice for anyone who has done dumb things with their money."

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."

Barry Ritholtz

"Carl has a wicked way with a Sharpie."

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."

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."

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The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money 3.9 out of 5 based on 0 ratings. 7 reviews.
Ericaice More than 1 year ago
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.
J-Ting More than 1 year ago
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.
teckelvik on LibraryThing More than 1 year ago
My biggest problem with this book is that I think it is really an article padded to book length, rather than a book. I felt like a lot of it was just rehashing things. On the other hand, I've been reading a lot about personal finance, and it could just be that there are only so many ways to describe reality.What I really liked about this book is that the author clearly states that money is more about emotions than anything else. He talks about how fear and greed tug us back and forth in our money lives, and that we need to step back and use our intellect to make decisions, while acknowleging how hard that is. He also keeps saying that no one knows your life like you do, and no one can make the decisions except you. His push is for everyone to decide what they really care about, what matters most to them, and start making money decisions with that in mind. He also points out that a long time horizon is almost impossible to plan for, so we should focus on the next three years.This is an excellent personal finance book, one that is worth revisiting and reflecting on every couple of years, to help stay on track.
annbury on LibraryThing More than 1 year ago
This short book focuses on how to make investment decisions, not on what investment decisions to make. It isn't complicated, and it isn't groundbreaking, but it will be very valuable to investors who incorporate its principals into their investment approach. That's because it moves the focus from financial instruments to personal financial goals, stressing that investment isn't about being right or wrong, it is about being able to do things that you want to do in the future. The book's maxims include 1) There's no one right investment 2) Nobody can predict the market, so why bother trying 3) Don't pay attention to "experts", and -- most important -- 4) try to keep your emotions out of your investment behavior. I would recommend this book enthusiastically, particularly to someone who is either scared of dealing with money, or just getting into it. APM
Anonymous More than 1 year ago
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.
Anonymous More than 1 year ago
Anonymous More than 1 year ago