We all hope that life’s difficult experiences will bring us wisdom. Financial planner, sketch artist, and now author, Carl Richards shares his own personal financial experiences to help others make more thoughtful and informed financial decisions in their own lives with his simple sketches of complex financial concepts and his newly released book, Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money. Following his clients and their portfolios, Richards discovered a phenomenon he termed “Behavior Gap”. Something about the way in which individuals make financial decisions causes them to have “dramatically lower” returns on their investments, than the average mutual fund. He set out to determine what it is we are doing that is creating financial problems for us. Significantly, he recognized that we seem to have a big issue determining our needs versus our wants. Somewhere along the way, we are getting trapped into the mindset that what we desire to have, is, therefore, what we need to have. This leads to many of us living beyond our means, and caused financial disaster for many people with the fall of the housing market.
To simplify his complex financial concepts, Richards has drawn sketches, often containing Venn diagrams, that are easy to understand, intuitive, and quite thought-provoking. In one titled “Things You Can Control”, he recommends to not focus on things we cannot control, and even to take a break from media to focus on the important things in our lives that both matter and that we can control. In our time of current economic crisis Richards’ sketches offers us respite from our fears and anxiety with wisdom and simplicity.