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Why personal finance “experts” continue giving worthless advice

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Today, I’ll share a behavioral-change technique that’s helped me create a New York Times best-selling book, a blog that’s been read by millions of people, and a course on earning money that has helped my students earn hundreds of thousands of dollars on the side.

In 1954, researchers Hastorf and Cantril published a seminal study in The Journal of Abnormal Psychology called, “They Saw a Game: A Case Study.” What they discovered would change the way we look at rational behavior forever.

Yet decades later, much of that research has not trickled down to ordinary people — most notably “experts” in various fields, including personal finance. We continue to ignore the lessons in Hastorf and Cantril’s study. Why? Because it challenges our worldviews about perception, psychology, and behavioral change.

For example, nobody ever wakes up, stretches, clears their eyes, and says, “TODAY I REALLY WANT TO GET FINANCIALLY LITERATE!!”

It just doesn’t happen. Nobody wants to be financially literate…they want to be rich. Nobody wants to learn about stocks and bonds…they just want their money to be doing the right things, automatically. (Just like nobody wants to go to the gym…they just want to lose weight.)

Yet virtually every college course on personal finance is pedantically called “Financial Literacy 101” or “Managing Expenses” — yes, the things we “should” do, but the last thing anyone actually wants to do. Witness how most personal-finance books treat people as robotic automatons whose only goal is to consume structured information on stocks, bonds, insurance, annuities, and other pointless encyclopedic topics.

Today, I want to show you something I’ve learned over the last 10 years of writing this blog and systematically developing my skills in behavioral change. This will change the way you view personal finance — and changing others’ behavior — forever.

What do people want to do with their money?

Last week, I asked what was wrong with this page in the Wall Street Journal.


The 100+ responses were terrific:

It seems overly complex and could cause analysis paralysis. Reader thinks ‘it’s all too much effort’

The reporters and columnists are telling me ‘how-to’ do all this stuff, when I don’t know ‘why-to’ do it.

I feel overwhelmed just looking at that page! A ton of acronyms and frankly, gibberish to most people. But I feel like the most important part they overlook is that money is really about emotions. There are no emotions on that page.

…the essential problem is that it isn’t going to reach anyone…few of your fellow undergrads would show up to your personal finance classes because they didn’t think they needed the help or didn’t want to admit that they did.

What’s going on here?

To understand, let’s go back to the 1950s…to a psychology experiment on, of all things, football.

The Hastorf & Cantril study: How Ivy League football explains personal finance failures

In the famous study, the two researchers analyzed a 1951 football game between the Dartmouth Indians and Princeton Tigers. The game was unusually rough, with the Princeton quarterback being injured so badly that he had to leave the game.
One week later, researchers questioned students who had attended the game to understand their perception of what had happened. Who played dirtier? Who was responsible for the fouls and injuries?

When asked, “Do you believe the game was clean and fairly played or that it was unnecessarily rough and dirty?” a staggering 93% of Princeton students responded “Rough and dirty,” while only 42% of Dartmouth students agreed.

When asked, “Which team do you feel started the rough play?” 86% of Princeton students surveyed responded that Dartmouth had. Only 36% of Dartmouth students blamed their own team.

In a clever twist, the researchers then asked students to watch a film of the game and report how many infractions were made. Both groups watched the same game on video, but Princeton students reported twice as many infractions as Dartmouth students did.

These students watched the objectively same game, yet had astonishingly different perceptions of what “actually” happened.

Please read that last sentence carefully. You’ll notice that I wrote they perceived the game.

That is indeed what happened. Even though they physically “watched” the very same game, each set of students — Dartmouth and Princeton students — were unconsciously affected by their group membership and beliefs. Despite what we think, we do not objectively see what happens around us. You and I could be watching a clown walk across the street, and we would perceive two VERY different things. Our perceptions are colored by a variety of factors, including our beliefs, history, group membership, culture, and more.

That might seem obvious. But now think about politics, the most fertile ground for misunderstood perceptions. Most people believe they are rational and know what’s “really” going on. Obama is a socialist! You’re a crackpot Tea Partier! But have you ever considered that the other side has a legitimate reason to believe what they believe? Again, if you put two people in front of the same situation, they will perceive it very differently. One is not right or wrong or smart or dumb — to him, his perceptions are true and indeed, very real. But they are nonetheless surprisingly discrepant from someone else’s views of the identical situation. (Read more about political marketing.)

No matter how simple or clear-cut or objective we think a situation is — whether a simple football game or a complex political belief — the person next to us is likely seeing it totally differently.

What does this mean for personal finance?

It means that experts in personal finance have gotten fat and intellectually lazy by writing bullshit like, “The 7 types of bonds.” In general, facts do not change behavior. Nobody cares about “objective” advice that’s not tailored to them.

But it’s easy to write a post on “the 7 types of investments you should hold” and call it a day, isn’t it?

Imagine a regular person clicking around and ending up on The Wall Street Journal, or Smart Money, or even this blog. Most “experts” think, “Well, he’s here. He needs to understand how stocks and bonds work and how they fit into his portfolio!”

Meanwhile, the person does not give a damn about stocks or bonds. In fact, he doesn’t even know where stocks and bonds fit into his universe of options. He simply knows, “I just got screwed by my bank on late fees and I really need to figure this out.” How effective do you think it is to throw a kitchen sink of terms and definitions at this person?

99% of people care about their money and couldn’t care less about “learning” about personal finance in general.

Unfortunately, personal-finance “experts” are obsessed with their own encyclopedic knowledge and seemingly take any opportunity to intellectually masturbate about the depth of their knowledge. ‘Why yes, I CAN present a glossary of terms like CAGR, NPV, Black-Scholes, and derivatives. Will this change anyone’s behavior? Who knows! But I sure sound smart!’

If your goal is to write a glossary, just take your pen and paper and throw them in a fire. You can save yourself the trouble. But if your goal is REAL BEHAVIORAL CHANGE, you need to model an approach that resonates with your readers.

When it comes to money, what do people REALLY want?

I’ve spent the last 10 years trying to understand this. I’ll share some of the things I’ve learned here:

People want…

  • To not worry about money
  • To be in control
  • To occasionally live extravagantly
  • To dominate their friends (virtually everybody neglects the social aspect of money)
  • To get relevant, tailored information for their personal situation (this doesn’t necessarily have to be via a person…think also of Amazon-like personalization/recommendations)

People do NOT want…

  • To have to “learn” about personal finance as a whole — they just care about their own situation
  • To learn what stocks, bonds, interest rates, or ANY OTHER TERMS are
  • To be told they CAN’T do something (this is probably the #1 biggest mistake personal-finance “experts” have made in the last 50 years: turning money into a conversation of “no”s, which elicits reactance)
  • To wait 50 years to see results
  • To have to manually “throw money away” into a savings account
  • To ignore their emotions about money

Each of those seems deceptively simple, but they are deeply complex when you dig into the psychological underpinnings. (And there are a few other insights that I’ll keep to myself, since I’ve spent years discovering and refining them.) Here are more specific examples.

GOOD: “Here’s a 4-step process to start investing”

BAD: Let me explain what stocks and bonds are and how they work (NOBODY CARES)

GOOD: “Here are 2 ways to pay off your debt, and this is the way I recommend the best”

BAD: Let me explain how debt works (NOBODY CARES)

GOOD: “Here are scripts to use to negotiate against your bank. Read them off and watch the customer-service rep melt like butter”

BAD: You should really negotiate stuff (LAZY)

GOOD: Here is what YOU need to be doing, Mr. 26-year-old dude who I deeply understand and therefore know that you spend a significant portion of your income on drinking

BAD: Here is a comprehensive list of things that everyone should be doing: Insurance, retirement, estate planning, tax optimization, family planning… (BROAD AND WORTHLESS)

GOOD: Spend extravagantly on the things you love, but cut costs mercilessly on the things you don’t

BAD: Keep a budget (HAS THIS EVER WORKED?)

(The last one really makes me mad. So many “experts” write nonsense like “Keep a budget” or “Stop spending on lattes!” that lets them wipe their hands clean — “I’ve done my job!” — WITHOUT ACTUALLY CHANGING ANYONE’S BEHAVIOR. For example, this article says: “We need to start a new tradition for Valentine’s Day, one that includes a focus on personal finances rather than consumerism to demonstrate our love.” Right. I really want to talk to my girlfriend/boyfriend/husband/wife about money on Valentine’s Day. YOU might think that’s important, but nobody else does…and as a result, it won’t even get cognitively processed, much less cause behavioral change.)

Personal-finance “experts” need to get off their asses and start talking to the people they’re writing for to understand what they’re really looking for. For example, I could write the most technically brilliant article about asset allocation, but if people are afraid of investing or don’t believe they have enough to get started, none of my brilliance matters. IT’S NOT ABOUT YOU. IT’S ABOUT YOUR AUDIENCE.

Case study: The WSJ How-To Guide

Let’s go back to the WSJ image I posted above.

Can you now see what’s wrong with it?

When I asked a few days ago, lots of commenters harped on the lack of automation, earning more, or even the order of the presentation. Frankly, that’s stylistic. But there’s something far more damning — but you have to look deep beneath the hood to understand.

Several commenters said, “They don’t write about the why.” This is true, but incomplete. For example, how many of you have had parents emphasizing how IMPORTANT IT IS TO START INVESTING RIGHT NOW??!? Yet you ignore them. Because of both the source, and the way they communicate the information. Explaining “why” is critical — but not enough. There’s something else.

Here it is: Each of the topics is me-focused. The editor thinks understanding bonds are important…but ordinary people do not. And so they will not read this page.

In other words, the editors did a terrific job of simply listing off topics, much in the same way an encyclopedia editor organizes and lists off material. But the encyclopedia editor doesn’t expect anyone to ever read his material.

The average person comes to this page with dozens of inherent biases:

  • “I know I should be doing something with my money, but I don’t know what…” (and throwing complicated terms at me will just cause me to shut down)
  • “I keep hearing about paying off credit card debt, but they don’t understand. My situation is different — I have [details that are actually very similar to everyone else but SEEM different to them]”
  • “I need to figure out all my stuff before sitting down and really starting to invest”
  • “I’ll do this later”
  • “I’ll let my husband/wife do this”

And so on.

Now, you also have Wall Street Journal readers, who are likely far more sophisticated than the average person. One of my commenters, Wren, said it best:

“Typical WSJ readers aren’t going to look at a how-to guide because they already think of themselves as above-average investors (even though they’re probably losing money trying to pick stocks or buying shares in the latest hotshot mutual fund). Even if they made it to the page, the first article on “What is a bond” would convince them that there was nothing to learn there. If instead the WSJ paid more attention to its audience and titled the page “Little Known Tips for Skilled Investors” the page views would be through the roof and readers might actually learn something.”

By the way, I’ve made this mistake myself. When my book was published, I spent hours working with my publisher carefully crafting the copy on the front and back cover. When it was published, I noticed that this back-cover copy had slipped through the cracks. See the problem?


Nobody wants to be financially literate. They want to be rich.

Personal finance needs better marketing

Marketing is not a bad word. In fact, it’s one of the reasons that I Will Teach You To Be Rich readers use this site to implement real behavioral change, instead of just reading about money over and over again.

After reading your book, I’ve now signed up for my company pension plan (target lifestyle funds too!) and am on my way to automate my savings.

I got the bank charges reversed 3 times

Negotiating credit card interest rates: I went from 27% to 6% with one 20-minute phone call

I’m the only person within my group of friends (I’m 23) who already has $1000 saved for a wedding

The biggest you have taught me, is that personal finance is 95% psychological. The tactics are pretty simple, it’s more about getting over the mental barriers we place on ourselves.

…haggled him down about from $4500 to $2500…

Pay off $12K in student loan debt in 18 months rather than 10 years.

This stuff works.

Why do you think these people were able to change their behavior? Why do you think I can sell a $1,000+ course to help people earn money… to a group of people who ordinarily never buy anything online? Why do you think of ALL the “earn more money” courses online, this one helped my students get off their asses, find a profitable idea, and earn money (sometimes to the tune of thousands of dollars/month)? I will tell you why: Because I spent years understanding people’s REAL needs to get people to STOP READING and START EARNING MORE — not just write high-level BS about “10 different ways you can earn money” and “You should get business cards and a Twitter page.” And now my students are earning money, when 3 months ago, they would have never imagined they could.

Marketing matters. It works in persuading people to change their behavior, unlike simply “putting the information out there” or claiming that “you have to really want it to change,” which embraces a highly ineffective persuasive mechanism where you simply list out the info and hope people “get it.” Good luck with that. People don’t respond to pure information because they have frame information based on prior experiences, culture, group membership, etc.

Yet even though the corporate world knows that marketing works, ordinary people think marketing is a bad word. “Ugh, that’s just advertising,” they’ll say (then, amusingly, claim that advertising does not affect them).

No. Marketing is not just advertising, or writing copy for brochures. Marketing is the end-to-end customer experience, from deciding what to build all the way through the design and delivery process — including deeply understanding your audience’s biases, beliefs, and barriers. As an example, here’s a terrific TED video — “Rory Sutherland: Life lessons from an ad man” — illustrating how marketing adds value every day.


Personal finance needs better marketing. What personal finance needs is less people who think that “information” alone will change behaviors, and more people with marketing and psychology backgrounds who know that it’s critical to connect with people in order to change their behaviors. More information alone won’t do. Education is not the solution to personal-finance problems.

Banks need to stop sending out useless campaigns on the importance of saving and investing. We “know” that. Why aren’t we doing it? Do banks really know? Why aren’t they sending me lifecycle communications when I get married, buy a car, buy a house, have kids, and other personal situations?

Why do credit unions continue to talk about how they’re different than banks? Nobody cares. Talk to me about ME, my problems, and how you can solve them for me.

Why do personal-finance magazines continue to talk about investing in stocks? Well, that’s easy — they have 2 customers: Advertisers first, then readers. But even they could do an infinitely better job and still make tons of ad money.

I’m not trying to highlight myself as the best at this. I have a lot to learn and I’ve only scratched the surface of behavioral change, which I will continue to study for the rest of my life.

But one of the main reasons that “I Will Teach You To Be Rich” has been so widely read and shared is that I try to use classic marketing and psychology principles here, rather than pedantic lecturing of the same old boring topics (lattes, budgets, start early, blah blah kill me). For example, you want to spend $21,000/year going out? Do it! Let me show you how to automate your personal finances to do it.

Remember: Nobody wants to read an encyclopedia. Next time you’re trying to change behaviors, don’t fall into the trap of writing a me-focused article that highlights what you think is important. Nobody cares, especially your audience. They have their own filters and biases filtering any information they receive. To execute real behavioral change, you must understand and address these concerns first.

Want more real-world personal finance advice? Join my private list

I’m as sick as you are of generic, outdated, boilerplate financial advice. That’s why, in addition to this blog, I created a free Private List for readers who want even more (including content I never share publicly.) Each week, I’ll send you detailed, actionable information about:

  • The psychology of money, including biases and barriers that hold us back
  • Specific action steps to optimize your spending, savings and investments
  • Simple ways to earn more money using skills you already have
  • Much, much more

You can sign up for free below:

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  1. a) They are not really experts

    b) They have something to gain by offering the advice, and the fact that it may hurt clients is immaterial. Ethics have disappeared.

    c) The talking heads on CNBC are just trying to boast about themselves, not help anyone

    You sell the public short when you say ‘nobody cares.’ You built an audience of people who don’t care. That’s why they love your advice and shortcuts. It’s good advice, but it’s for people who don’t care.

    The rest of the world does care, but there are too few experts who can help.

  2. I graduated in May and took a job to save up for a two-month trip to Munich, Germany (Oktoberfest, anyone?). I’ll be returning to a boatload of student debt. I’ve already opened accounts with Schwab and ING, set up automatic transfers, and enrolled in automatic payment plans with the loan companies. After my galavanting is over, I’ll be using your techniques to further fine-tune my finances, pay off my debt quickly, and get filthy rich!

  3. This is one of the best posts I’ve ever read on here. I became ‘financially literate’ mostly through Dave Ramsey (even though he’s got his problems), and yes, I actually DO budget (pain in the ass, but it works). The biggest thing I learned from you that he ignores is your focus on spending on the stuff that’s important.
    Using your money to work for you to create the life you want, instead of constantly sacrificing everything so you can live well at some later undetermined time (amazingly many of his listeners in their forum who are at that end stage still say they’re not really happy).
    It took me years and lots of fighting with my (now) wife to get my money under control, and looking back I WISH someone had written more like you do, selling me by explaining how I can be in control instead of being responsible.

  4. Speaking of ineffective tactics for behavioral change… I cringe whenever I hear people give advice that requires personal sacrifice for group benefit. This is not a Utopian society people. What is your incentive? Guilt? Does that ever work?

    Environmentalists are the worst offenders. Give up your car. Buy organic foods. Buy green cleaners. Don’t buy plastic. The arguments they give always relate to helping the environment and not to the personal benefits of each individual action / product. The message could easily be along the lines of how being an environmentalist makes you richer, healthier, and happier.

    Also, the SHOCK over Wall Street and the big banks and people’s “solutions”. HELLO! These companies are out to make money. They’ve always been out to make money… they’ve just gotten more focused over time. Do people actually expect companies to do the right thing at the expense of corporate profits?

    • Agreed. It shows a profound lack of understanding about people’s motivations.

      There are a few nonprofits who DO deeply understand how to motivate behavioral change (usually donations). Most, however, do not, and spend their entire lifetime struggling to stay afloat because of this.

  5. It makes me somewhat sad to admit that you are right. The intellectual in me wants the lists and the facts “just thrown out there,” because it’s hard to build a wholistic understanding of personal finances (or anything) when the information you’re given (or seeking out) is step-by-step plans.

    That being said, if one wants to write a reference, you are right in that they need to design it as something that will likely be read only occasionally, and in chunks.

    The me-centrism kind of stinks too, as it smells of a problem that seems to be endemic of our generation (I’m 25). Everything is me, me, me…

    • This is not a generational issue. This is a HUMAN issue. Top behavioral-change experts have known this for centuries. Even 50 years ago, you can read experts in health/fitness and advertising who deeply understood what motivates people.

  6. It’s amazing how fired up this got me. I’m going to remember this the next time I write an article for someone…or just communicate with anyone period.

    You understand your audience, Ramit. Kudos

  7. That was pretty much awesome.

    I am a business psychologist mahor, finishing this year. I didnt know of this study but have been harping on the importance of coaching and emotional understanding since I started my studies.

    The Ash experiments are highly interesting in that regard as well. What everyone could use is instead of being told what to do, something that attracts them and then someone ( A coach) who makes sure they follow up on the steps. With this combination far more people succeed than with telling people “Well this leadership and management style Y is better than this style X”. Those are actually real leadership styles, named theory X and theory Y based on their presumptions of human psyche. Might be interesting stuff for you to explore Ramit!

  8. I definitely don’t want to learn about “finance” or “personal finance”….I just wanted to learn how to manage my money and not end up broke for retirement. Did so with this IWTY, Get Rich Slowly, and The Simple Dollar.

    I tried to convince myself I gave a shit about investing, bonds, etc.–but really, I don’t. And I don’t want to spend any more time pretending I care about things that don’t interest me or doing what I think I’m supposed to to get ahead of the pack.

    Wish I’d had the insight of this 18 year old valedictorian years ago. Also wish I’d known who Cal Newport was.…aduation-Speech

  9. The WSJ and other big publications aren’t trying to change readers’ lives – they’re trying to get clicks and page views to sell advertising. They don’t give a damn about the readers. They write overly simplified “Top 10…” articles because people will click on them and advertisers will pay to put annoying ads on the pages.

    The biggest offender of worthless-information-to-sell-advertising is They have entire sections of why running and cardio is great, then other sections on why running and cardio are bad for you. You can find so much contradictory information it should be clear that they don’t give a damn about the readers. They’re just means of delivering advertisements.