A very simple bad decision is to get into debt. And that is very expensive. Dan Ariely More Quotes by Dan Ariely More Quotes From Dan Ariely Money is all about opportunity cost. Every time you spend on something, that's something you can't spend on something else. Dan Ariely opportunity-cost cost opportunity It is very difficult to make really big, important, life-changing decisions because we are all susceptible to a formidable array of decision biases. There are more of them than we realize, and they come to visit us more often than we like to admit. Dan Ariely life-changing important decision The people who need to overcome temptation to the highest degree have the hardest time doing it. Dan Ariely temptation overcoming people If you have loans, the first thing you want to do is say, "Okay, look I have a credit card, if I really need to borrow, I have this emergency money that I can get, but for now there is no reason for me to keep cash at zero percent interest rate and at the same time, pay all of this money out. So, I think people need to figure out quickly how to pay loans and how much cash they should really keep. Dan Ariely zero people thinking What you should do is wait until the end of each month, and then say, "OK, how much money do I have? How much do I need? Let me send the rest to retirement." Dan Ariely each-month waiting retirement Imagine you have six loans, small to huge. People want to close loans and because of that, they try to pay off the small loans, but that's not the right strategy. The right strategy, of course, is to pay the loan with the highest interest rate. People make this mistake and it costs them lots and lots of money, it's a very expensive mistake because interest rates accumulate and become very, very expensive very quickly. Dan Ariely mistake trying people I don't think we should go around life and being miserable all the time and feel the pain of paying. It's a question of what categories we want to spend more on and what categories we want feel that we are spending too much on and we want to cut down. Dan Ariely cutting pain thinking Money is a great way to get happiness. Right? Lots of wonderful things you can do with money. The question is, are we really optimizing on that? So, if you think about getting lattes and getting cable. Which one of those is actually giving you a greater happiness, and if you have to cut on one of those, which one would you cut? So, I think thinking in terms of concrete terms would help us a great deal. Dan Ariely cutting giving thinking If you want to spend more money in restaurants, use credit cards more than cash. If you want to spend less, use cash more than credit cards. But in general, we can think about how to use the pain of paying and how much of it do we want. And I think we have like a range. Credit cards have very little pain of paying, debit cards have a little bit more because you feel like today, at least it is coming out of your checking account, and cash has much more. Dan Ariely pain cards thinking While we somehow understand revenge on an intuitive level between individuals, I do suspect that companies, assuming that people are rational, completely miss and underestimate the motivation people have for revenge. Dan Ariely motivation revenge people Money are very difficult to think about. So, we think about money as the opportunity cost of money. So, we at some point went to a Toyota dealership and we asked people, what will you not be able to do in the future if you bought this Toyota? Dan Ariely opportunity people thinking Money is a wonderful invention. It lets us save, it lets us specialize, right? I couldn't be a professor if there wasn't any money. Every day I would have to raise chicken and bread and broccoli and go ahead and spend all my time trading. So, money is a wonderful mechanism. Dan Ariely invention bread wonderful When it comes to the mental world, when we design things like health care and retirement and stock markets, we somehow forget the idea that we are limited. I think that if we understood our cognitive limitations in the same way that we understand our physical limitations … we could design a better world. Dan Ariely motivation inspiration retirement If you think of people as making decisions actively, every time we think about the cup of coffee, we say, "How much will I enjoy the cup of coffee, what else could I not do in the future because I buy this cup of coffee? Dan Ariely coffee people thinking In the U.S., I think there is an ideology of not telling kids what to do. Nobody to tell you who to marry, not tell you what job to pick. You're your own person. You have the freedom to choose, including the freedom to fail in magnificent ways. And I think that's the big difference. In other countries there is basically a social norm about saving that is passed from generation to generation. In the U.S. there isn't. Dan Ariely jobs country kids Once we start thinking of ourselves as polluted, there is not much incentive to behave well, and the trip down the slippery slope is likely. Dan Ariely slippery-slope persons believe Marketing is all about providing information that will heighten someone's anticipated and real pleasure. Dan Ariely information marketing real Dishonesty is all about the small acts we can take and then think, 'No, this not real cheating.' So if you think that the main mechanism is rationalization, then what you come up with, and that's what we find, is that we're basically trying to balance feeling good about ourselves. Dan Ariely real cheating thinking Money actually becomes even more difficult than other things because it's very hard to imagine what the benefits are to saving. So, imagine that you see a new bicycle, a new pair of shoes, or something today. You know exactly what you are giving up if you are not buying it, what are you gaining in the future if you are not getting it. So, you are giving up the bicycle today, what is it in the future? What will happen if you send another $1,000 to your retirement fund? What difference will it make? It is very, very hard to figure out. Dan Ariely shoes giving-up retirement If you ever go bar hopping, who do you want to take with you? You want a slightly uglier version of yourself. Similar ... but slightly uglier. Dan Ariely bars motivation inspiration
