With the Montyville money extra, I'm Chris Hill.

Spending a lot of time thinking about money would be fine if it led to better decisions,

but generally it doesn't.

So why do we make bad decisions with money?

Dan Ariely is a professor of psychology and behavioral economics at Duke University.

He's also the author of several best-selling books, including Dollars and Sents, how we

miss think money and how to spend smarter.

According to Ariely, a lot of our bad decision making is fueled by the environment of our

spending.

So there are mainly two types of ways in which we're bad.

The first one is that money is all about opportunity costs.

Every time you spend $5 on a cup of coffee, you should be thinking to yourself, what else

wouldn't I be able to buy if I spend $5 on a cup of coffee?

But the reality is it's really hard to think about.

Just think to yourself, when was the last time you thought about opportunity cost?

You know, money is a wonderful thing and being about opportunity cost is part of the

wonderful thing that money is, but it also means it's really, really hard to think about

money.

So that's the first problem.

Money is all about opportunity cost, but it's hard to think about opportunity cost.

The second thing is that many of our decisions are about now versus later.

And when it comes to now versus later, we often make bad decisions.

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