Why Smart People Make Big Money Mistakes and How to Correct Them

About the book

Ranging around 200 pages, this book is an application of behavioral science theories in relation to why people make mistakes when it comes to finance and investing.

Contents

Several theories are discussed in great detail in the book. These include: mental accounting, loss aversion, sunk cost fallacy, status quo bias, endowment effect, money illusion, bigness bias, anchoring, confirmation bias, overconfidence, and information cascades. The last chapter provides steps the reader can take to avoid those big mistakes and prevent losing money in the future.

Review

 

This is an easy-to-read and insightful book. Not only will you learn about mental behaviors that affect your finances; you will also learn how to spot if you have them, and what you can do to learn from them. 

Difficulty Level = 1/5

This is a good book for everyone interested in both finance and some psychology

Personal Rating = 5/5

 

This is a  highly recommended light reading


Personal finance tip for today:


There is no need to cut up your credit cards. To maximize your credit payment terms, make use of your card the day after the cut-off date. That way, the purchases will be included in the next cut-off instead, and you have a longer payment due date. Also make sure to always pay in full on or before due date. Interest from credit cards are very high.


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