A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance.


Sunday, February 20, 2005

A Book Everyone Should Read

I'm hoping to make book reviews a habit. For one, it will help inspire me to read all the books I buy constantly. And, I might be able to help my readers find out about books they may not normally be interested in.

The reason why I recommend this book is that it will help you understand the various mind games we play with ourselves when it comes to how we look at money. Here's an example that really stood out to me:

You are shopping for a lamp. You go to a store and you find the lamp you want for $100. You know there is a store down the street that has the same lamp for $60, or $40 less. Question: Do you go to the other store to save $40? Okay, now you're shopping for a dining room suite. You find it at a store for $4,600. Again, you know that you can get the same suite at a store down the street for $4,560. Now, do you go to the other store to save $40 on the dining room suite?

You'll have to read the book to find out what the authors thought about this. Despite the fact that this is a behavioral finance (just the sound of that can nearly put a person to sleep) book, don't let that scare you. It is a very interesting read.