The Behaviour Gap: Simple Ways to Stop Doing Dumb Things with Money by Carl Richards
If cold logic guided financial decisions, financial responsibly and profitable portfolios might be the norm. The emotional side of our personality can often push us to act unwisely or irresponsibly leading to greater debt and poor financial returns.
Carl Richards discusses the ways our behavior negatively affects our decisions even when we know we are acting irrationally. The 24-hour financial news channels, often staffed with animated financial pundits screaming orders to buy and sell, the flood of financial magazines with suggestions for the top stocks to purchase or dump, and the large investment book section of the average bookstore can overwhelm the everyday investor and provide guidance that seems reasonable but should be ignored. In fact, the author provides insight on how to use this information, even suggesting good reasons why we might ignore it.
Addressing our personal reactions, the author identifies triggers that can engage our emotional fight-or-flight response and suggests tactics for keeping the emotional response in check. Richards also advises how to react during emotional financial waves that sweep up the media, friends, and our co-workers. Much of his guidance runs counter to the financial industry that makes its money on financial advice (not acting on that advice – an important distinction) yet when you meditate on it, it makes perfect sense.
Richards acknowledges that some will be dissatisfied that the book does not provide a concrete blueprint for how to map ones finances and if that is what you are looking for, this book is for you. However; before getting a “blueprint” book you should read The Behavior Gap to help you wisely use any planning tools.
This book reflects my philosophy that outsmarting the market is a fool’s errand and there is no “magic stock” that hours of research will unveil to make the average investor rich. Instead of throwing up our hands and being a victim of the market, we can exercise wise judgment, act on what we can control, and behave logically (and often contrarian) to achieve sensible financial success and satisfactory financial returns.
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The worst of all purchasing situations for a buyer is when
- You must have the product or service and you must decide quickly
- You have emotional involvement in the purchase
- Your budget is unclear
- You have little information upon which to base an informed decision
In these purchasing situations we are likely to spend more than we can afford or fail to get a better deal. In the funeral business, the providers have the stronger bargaining position because they have most of the information and the customer is usually emotionally unbalanced and not thinking clearly.
I don’t want to imply that all funeral businesses are unscrupulous. Although some pride themselves on providing a dignified economical service for grieving families, other businesses can manipulate the family into purchasing services or products that or unnecessary or expensive. One does not have the luxury of time to do price comparisons, ask for recommendations, and other skills we use to make wise purchases of homes and cars when a loved one dies.
Tips for Easing Your Loved Ones Burdens
Document your final wishes
Few people want to accept that they or their loved ones will have to make this purchasing decision but we will die. In the absence of direction from the deceased, the family must make decisions on what would honor their loved one that may involve purchases that the deceased would have considered extravagant or unnecessary. Although Grandfather was the kindest man and “nothing but the finest oak coffin with the prettiest handles will do for him,” he might have been a practical man who just wanted a simple box coffin “the cheapest you can get.”
Some disagreements between loved ones take place as one child wants to honor the deceased but be practical and other siblings want to make purchases to prove to funeral attendees that they were not poor or cheap or to make up for not showing the love for the deceased when they were alive. We should not put our loved ones in a position to argue when they should be pulling together and supporting one another. We must accept our own mortality and for the sake of those we love provide direction on the disposition of our remains. Encourage your parents or grown children to also develop plans as you will certainly be involved in making the decisions for them in the absence of a plan.
Budget for services
If feasible, you may consider paying for the services in advance so the survivors are spared these confusing and anguishing decisions at a time when they are most unprepared to make them. In addition, this saves them from scrambling for money to pay for the services. Be sure to let your loved ones know what has been paid for and where the records can be located upon your departure. Consider giving copies to family members or close friends to keep in case something happens to your records.
You can provide for a future event at today’s prices but make sure that the company you purchase from is reputable and the guarantees are reasonable. With the instability in the economy you don’t know whether the company will be around when you are no longer around and you don’t want to lose your investment.
An alternative would be to put the funds in an interest bearing account to be used to cover the costs of the funeral. You may need to add additional funds periodically to account for the current value of the products and services that you want to use.
Since you are going to plan for, and possibly prepay, your final arrangements, shop around for the best deal. If you do not prepay you can outline in your arrangements what providers you prefer and specify products (or types of products) to use.