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

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Understanding the Behavior Gap: Why We Make Poor Financial Decisions

In this episode, we explore the concept of the 'behavior gap' as outlined in Carl Richards' book, 'The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.' We discuss why there's a disconnect between what we know about investing and the decisions we actually make. Topics include fear and greed, overconfidence, and the flaws in traditional financial planning. Learn how focusing on your own behavior, rather than market predictions or media advice, can bridge this gap and lead to greater financial success and personal happiness.

00:00 Introduction: The Behavior Gap
00:36 Understanding the Behavior Gap
01:21 Investor Behavior and Common Mistakes
03:21 Emotional Drivers: Fear and Greed
03:57 Overconfidence and the Greater Fool Theory
06:03 The Problem with Conventional Advice
09:17 The Value of Planning Over Plans
12:00 Focusing on Personal Economy
12:41 Connecting Money to Life Goals
15:14 Simple Choices for Financial Success
17:55 Conclusion: Controlling Your Own Choices