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Smart Money Decisions: Why You Do What You Do With Money (and how to change for the better) 1st Edition

4.2 out of 5 stars 10 customer reviews
ISBN-13: 978-0471296119
ISBN-10: 0471296112
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Editorial Reviews

Amazon.com Review

Before you read the first chapter of Smart Money Decisions, kick yourself. Hard. Then do it again, just for good measure. Because no matter how hard you're able to pummel yourself, it won't match the impact you'll feel when you realize how much you overpaid for your house and your car, how badly you bungled your last job change, how you were suckered into buying an extended warranty because of a fearful scenario that a veteran salesperson planted in your head.

Max H. Bazerman is a professor of negotiation at Northwestern University. Unlike many of today's investment gurus, he's applied statistical models to numerous situations in which the price of a purchase was in flux. And he has concluded, beyond any doubt, that certain tactics will almost certainly save you money, while others put the power in someone else's corner, dooming you to pay a higher price than you might have otherwise. Now, you may already know that there's a mere 10 percent chance you'll use an extended warranty, and thus pass it up; about 60 percent of purchasers are able to resist. But you may not know that you should never let a real estate agent know the highest price you are willing to pay for a property. In fact, you're best off if the agent knows only how low the seller is willing to go. With a knowledge only of the floor and no idea what the ceiling is, guess where the price winds up? Right: hovering just over the carpet. There's more to this book than negotiation, though. One chapter persuades you to keep the value of your time in mind when making a purchase. For example, if you research and shop for 20 hours in order to save $120 on a purchase, you've set the value of your time at $6 an hour. (Would you like fries with that big-screen TV?)

Like the best investment books, Smart Money Decisions should have a permanent place on your shelves. You may need it only a few times a year, but you're virtually guaranteed to have more money at the end of the year. --Lou Schuler

From Booklist

Contemporary guides to financial planning and money management are now apparently obliged to consider the psychological aspects of personal fiscal behavior. The frequent result, however, often consists of New Age mantras or confusing psychobabble. Bazerman, on the other hand, grounds his guide in the behavioral aspects of decision making. He is a professor at Northwestern's Kellogg School of Management and author of Judgment in Managerial Decision-Making (1998) and Negotiating Rationally (1992). He begins here with a fascinating illustration of how otherwise sensible individuals can make foolish decisions. Students in Bazerman's class are offered the opportunity to bid on a $20 bill; but given his unusual ground rules, they end up paying anywhere from $20 to $70 for it. He explains this behavior and goes on to identify the "top ten money mistakes." He shows them at work in decisions to buy a home, a car, insurance, and mutual funds, and in deciding whether to accept a job offer and how to manage one's time. Bazerman's unique perspectives make this an exceptional book. David Rouse

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Product Details

  • Hardcover: 256 pages
  • Publisher: Wiley; 1 edition (August 23, 1999)
  • Language: English
  • ISBN-10: 0471296112
  • ISBN-13: 978-0471296119
  • Product Dimensions: 6.2 x 0.9 x 9.4 inches
  • Shipping Weight: 1.2 pounds
  • Average Customer Review: 4.2 out of 5 stars  See all reviews (10 customer reviews)
  • Amazon Best Sellers Rank: #3,989,837 in Books (See Top 100 in Books)

Customer Reviews

Top Customer Reviews

Format: Hardcover
I have read lots of books about behavioral decision-making and behavioral finance. When I bought the book I initally expected it being similar like many other books covering this subject. But while I was reading I just could not stop, though I found many examples I knew already. But the style of Bazerman's writing attracted me (though English is not my mother language) so much, that I studied the book from the first to the last page. The examples of bounded rationality of many human decisions and its 'sub-optimal' if not sometimes costly results are very well explained. The solutions to improve the decision-making processes are presented very clearly at the end of each chapter.
For those who work in the area of behavioral decsion-making or behavioral finance the book is an excellent comprehension and an 'add-on' to the basics that are partially covered in other publications. For beginners the contents is easy to understand: The examples deal with important decision problems everyone of us is confronted with at least once in her/his lifetime. If people try to follow Bazerman's advices, they probably will not only imrpove reasoning, but might save some money at the next purchase of a new car or at other occasions. Most important for me was the description about the value of time.
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Format: Hardcover
This book has the effect of sitting down to a heart to heart talk with an admired family friend who knows you well enough to appreciate your strengths, forgive your shortcomings and believe in your capacity to change.
After the first chapter, even an unregenerate spendthrift like me will be thinking about patterns we didn't recognize as obstacles, especially in the realm of money management. And that is the key, says Prof. Bazerman. The very idea of money mistakes may be daunting, but what this book does very clearly -- painlessly and with good humor -- is prescribe ways to prepare for, circumvent and correct them.
Every chapter takes examples with which it is easy to identify, from buying a car or a house to negotiating a new job, and explores alternative strategies to show how they actually do affect the outcome. And recapping key pointers at the end of each chapter reminds us (for instance) that not just cold cash but time is money, and a critical element we might not recognize in many of our decisions.
What I like best about Smart Money Decisions is it gets right down to business without condescending or pandering to late-blooming readers like me, who will really benefit by being honest with ourselves about what we need to do to change our fiscal ways. Read it and reap!
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Format: Hardcover
It starts with interesting but simplistic common sense advice about buying houses and cars, then falls flat. The author never seems to be settled on whether he wants to help consumers or large companies. And much of the advice is weak.
In the fourth chapter, for instance, after making a hopelessly simplistic but somewhat credible case against buying title insurance when buying a house, he forgets to include the vital fact that the seller pays for title insurance in almost all cases. Later in the book he gets lost in his own story about budweiser without making any point at all.
Like so many books about finance, this book has two flaws. It does not have enough content to warrant a full book, even a skinny one like this. When it does start to wade into deeper water, one senses the heavy hand of an editorial assistant, too weak in the comprehension of numbers, trimming and constricting the story to the point that the reader can't find the significance of its message.
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Format: Hardcover
This book is great - really worth buying.
Bazerman is well known as a management and negotiations guru. What's special about this book is he doesn't write like an academic. Instead he gives specific, easy-to-use tools you can literally copy down and use step-by-step. If you've ever felt like an idiot in real life dealing with situations like managing money for your retirement or encountering a high-pressure real estate hawking your dream house, this is the book for you.
Bazerman's book is easy to read, and it's specific. His "Advice" tips at the end of every chapter tell you exactly what to do in personal situations that range from buying a car to making decisions about insurance to job negotiations. This book - unlike a lot of academics' work - not only analyzes the dynamics of situations, it tells you exactly what to do to come out on top. And it's human and readable to boot. I really related to what he was saying, and I laughed when he wrote about his own experiences and his wife's reaction to them (she sounds like a hoot).
I wish I'd had Bazerman's Advice "tips-list" about real estate next to me the first time I bought and sold a house. It would have saved me a bundle!
This is one self-help book I've bought I'm actually USING.
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Format: Hardcover
This books allows us to ponder financial stuffs that never came across our minds before, and leaves us guessing about better future options. This highlights the best part and the not-so-best part of the book; by leaving rather open ended solutions at the end of certain chapter, we are left on our creativity to formulate the best solution for ourselves. This, indeed, is a very logical way to lead readers. Rather than spoonfeeding them with hard information, we are allowed to evolve from the materials given. However, the not-so-best part is when you really can't think of any better way out of your own situation, then, by all means, sulk; the answer isn't going to be found in the book! Plus, if you think real hard about the material that you've just read, you'll realize that you could've thought of it if you think real hard... which you didn't! And by explaining the psychology behind each financial decision, we are able to identify our financial behaviour and this certainly helps a lot!
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