Why Smart People Make Big Money Mistakes summary and quotes

Why Smart People Make Big Money Mistakes quotes

In financial terms, the difference between earning $10 or $20 for a job well done has a bigger effect on how happy you are than the difference between earning $110 or $120.

We spend more money on car repairs because we’ve already spent so much on the car.

The more choices people face in life, the more likely they are to simply do nothing.

Because people’s natural bias is to confirm what they already “know” or think they know, they reflexively try to prove a rule by looking for facts that would support it rather than looking for information that might contradict.

People overconfidently confuse familiarity with knowledge. For every example of a person who made money on an investment because she used a company’s product or understood its strategy, we can give you five instances where such knowledge was insufficient to justify the investment. A classic example is Apple.

Why Smart People Make Big Money Mistakes summary

In their fascinating investigation of the ways we handle money, Gary Belsky and Thomas Gilovich reveal the psychological forces--the patterns of thinking and decision making--behind seemingly irrational behavior. They explain why so many otherwise savvy people make foolish financial choices: why investors are too quick to sell winning stocks and too slow to sell losing shares, why home sellers leave money on the table and home buyers don't get the biggest bang for their buck, why borrowers pay too much credit card interest and savers can't sock away as much as they'd like, and why so many of us can't control our spending.