Why Smart People Make Big Money Mistakes and How to Correct Them by Gary Belsky, 0684859386, Lowest Book Price Finder

Customer Reviews:

Excellent Stuff from Gary & Tom

I have recently been introduced to the area of behavioral finance and I should admit that I have been thoroughly impressed so far by whatever I have read.

The authors talk about how we need to make our choices in everyday life based on positives. Though it might sound obvious, several times we make choices by process of elimination. We arrive at our preferred choice by eliminating weak choices by focusing on negatives. The authors then explain that how a change in the approach to focus more on the positives changes our approach and helps us to make informed choices based on things that matters most.

Overall an excellent read

Nonrational Economics Explained

People don't act like computers when making economic decisions. This book is full of examples that show why people make miseconomic decisions. The basic point is that we have rules of thumb learned in daily life that we apply to economic decisions, and the results are costly.

This book reminds me of Robert Cialdini's excellent book, Influence, that explains the psychological biases that harm us as consumers and how to protect ourselves against unethical sellers. If you read and apply them both, you will have much more prosperity in your life.

Here are some examples: We are all more careful about saving money in some areas than in others. For instance, I'll go to great lengths to save money on air travel, but frequently buy expensive wines in restaurants (not a great value).

Most of us are more concerned about avoiding losses than in making gains. This often translates into holding stocks with losses, rather than selling them, even if there is not much chance of a rebound. I know I'm guilty of this.

Another example is assuming that we have knowledge that we really don't have. Someone who is good in math may not take the time to mathematically evaluate the choices. For instance, a 15 year mortage on your home is only a little more costly per month than a 30 year mortgage. The different in the cost of the total interest you pay is enormous, yet almost everyone gets a 30 year mortgage. Almost everyone has the skill to compare the two choices, but few take the time to do so. This kind of stalled thinking can be irresistible, and your wallet will inevitably be lighter as a result.

When you discover that you have a weakness in one of these areas, you can then be more cautious in avoiding your biases in the future. This book is very helpful in this regard because each chapter explore one bias and begins with a question to test your instincts. In answering that question, you will probably find (if you are like me) that you make the wrong choice.

This book will return its cost in time and money hundreds of times over the rest of your life. Be sure to read and apply it!

Jaded Prudence with money

This is a very readable book on the new study of behavioral economics. Gilovich and Belski starts off where Peter L. Bernstein , in a chapter, ended in his book "Againts the Gods". Most of the book focuses on the work started by two Israeli Phycologists Tyverski and Khaneman. Although this book is about finance, it reads more like Caldiani's "Influence and Persuasion". There is a flavor of jadedness with thier exposition of the subject, and of course, they should. It gives a face to all the things I learned and is still learning in the years I've squandered my youth to the study of the Dismal science.

BAD THINKING HABITS "STALL" YOUR ECONOMIC PROGRESS

WHY SMART PEOPLE MAKE BIG MONEY MISTAKES is full of examples of decisions you might have to make. You get to choose an option, and then the authors tell you what you should have chosen. This is a great learning technique to bring home the lessons of this superb book. The authors point out several biases that most people have about money (such as it's okay to blow certain money, but not other money -- all money is really the same), themselves (people always overrate their abilities and get taken as a result), and circumstances (even people who got an A in statistics will usually misanalyze the risks they take). Since money is ultimately about math, a lot of your lifetime income and earning potential is lost in the process of following these biases. This book could make or save you a million dollars. You cannot afford not to read it. I was reminded of a parallel book on the same sorts of problems about bad thinking habits as they apply to work situations called "The 2,000 Percent Solution" which you should also read. If you use the lessons of both books, you will be enormously better off financially in your lifetime. It'll be like owning the casino, instead of losing money in it. Good luck!

I'll never make decisions quite the same way again

I am a "debt elimination specialist" - a financial consultant who teaches people how to pay off their debts and achieve financial independence quickly. Every day, I see smart people who have made big money mistakes, so the title caught my eye. I read the book thinking that it would be useful in helping me to understand my clients better. It did that AND MORE. I was surprised at the self-revelation that I received. At several points, I thought to myself, "These guys must have been reading my mail!" I'll never make any decision (financial or other) in quite the same way as I used to. I highly recommend the book.

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