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

As a financial advisor, I published my free ebook, The 10 Simple Truths About Money, because I strongly believe that it’s true that, “Learning financial concepts and managing money can be intimidating, but it doesn’t have to be. There are simple truths about money that can change your life.” I wanted to help alleviate some of the stress people feel around money.

After reading Carl Richards simple but powerful book, The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money, I realized that a better title for my ebook would have been, The 10 Simple (But Not Easy) Truths About Money. As Richards says, “We often resist simple solutions because it requires us to change our behavior.” Thus, the behavior gap.

Richards displays a true understanding of human nature with his words, but also with his disarmingly simple sketches that portray powerful truths about people’s behavior around money. You will recognize yourself in many of them. With amazing insight into how our brains work, he uses real-life stories and humor to show how we are our own worst enemies when it comes to money management. He also offers up great advice on how to make better money decisions.

Some of my favorite “behavior gap” insights include:

• Investments don’t make mistakes. Investors do.
• Figure out which emotion is the bigger issue for you—fear or greed—and invest accordingly. You can’t have it both ways.
• Planning for your financial future is a balancing act rather than a single-minded pursuit of the highest return.
• There is no such thing as the best investment.
• Planning for your financial future is personal. A good plan will be unique to your situation.
• No one knows what the future holds.
• Our real task is getting to know ourselves and our goals, making choices aligned with those goals, and adapting to the surprises that are bound to come along.
• Financial decisions are almost always life decisions. Before you decide on your financial goals, you need to choose your life goals.
• Focus on your personal economy and stop worrying about the global one.
• Our deepest instincts will tell us that money doesn’t mean anything, it’s simply a tool to each our goals.

Two thoughts kept running through my head as I read Carl’s book: “I wish I had written this” and “All of my clients need to read this.” Even if you don’t have time to read the book, flip through and take in all the sketches. They tell the story of our behavior gap just as well and may just motivate you to stop doing dumb things with your money!