This is a summary of the book titled “Fixed: Why Personal Finance Is Broken and How to Make It Work for Everyone” written by Tarun Ramadorai and John Y. Campbell and published by Princeton UP, 2025. In today’s world, the financial systems that underpin our lives have grown so complex that they often shape our most important decisions—where we study, where we live, how we save, and how we plan for retirement—while exposing ordinary people to risks they never intended to take. John Y. Campbell and Tarun Ramadorai delve into the evolution of personal finance, revealing how saving and borrowing for education, housing, investing, and retirement have become fraught with pitfalls that disadvantage everyday households. Their analysis shows that the confusion isn’t simply a matter of numbers or contracts; it’s rooted in human psychology, the opaque design of financial products, and incentives that rarely align with the interests of consumers. As a result, many people, overwhelmed by complexity, turn to informal or risky alternatives, sometimes with damaging consequences. The authors argue that financial systems should be redesigned to be simpler and more attuned to the realities of how people actually live and make decisions.

The story of Renata Caines, a young woman from Boston, illustrates how poor intuition and emotional decision-making can transform small financial choices into long-term hardship. At seventeen, Renata took out a student loan to attend a local college, underestimating the true costs. Hoping for a better outcome, she transferred to a school in New York, but her financial aid fell through, and she left after just one semester. Over the next decade, she worked low-wage jobs and attended scattered classes at various schools, only to return to Boston in her late twenties without a degree and burdened by $65,000 in student debt. Renata’s experience is not unique; it raises the question of how a teenager could possibly grasp the lifelong consequences of early financial decisions.

The authors emphasize that those who struggle financially are not careless or unintelligent. Instead, they are navigating a world that places far heavier demands on individuals than in the past. Extended families and close-knit communities that once helped absorb financial shocks have weakened, while people live longer, have fewer children, and must personally fund decades of retirement. Higher education is more common and far more expensive, urban housing is harder to afford, and stable lifelong employment is rare. Globally, millions of households entering the middle class for the first time face unfamiliar choices about education, housing, insurance, and retirement, where a single misstep can undo years of progress.

Financial decisions are often made based on intuition. People judge numbers relative to familiar reference points, overvaluing flashy discounts on cheap items and undervaluing the same percentages on expensive ones. Many struggle to grasp exponential growth, so the compounding of investments or debts remains abstract until balances have ballooned. Emotional reactions and delayed attention mean that people often focus on what feels urgent or rewarding, rather than on long-term outcomes, allowing mistakes to accumulate quietly until they become severe.

Financial companies profit by designing complex products that exploit predictable human mistakes. Rather than protecting people from their cognitive limits, many companies create offerings that are complex, costly, and structured to amplify errors in judgment. Products may appear attractive on the surface but hide downsides that are difficult to evaluate, and some arrangements benefit financially savvy customers precisely because less knowledgeable ones make mistakes. This dynamic has fueled distrust of finance, pushing some toward informal and riskier alternatives.

Predatory financial systems exploit four common mistakes: overestimating benefits, underestimating costs, failing to comparison shop, and mishandling financial services after purchase. Advertisers lure people with dramatic but unlikely payoffs, like lottery-style investments, while undervaluing products that provide long-term security. Fees and charges are often hidden or spread over time, causing people to focus on uncertain upsides instead of predictable expenses. Many choose providers based on convenience rather than comparison, leading to systematically worse deals. After purchase, valuable features can go unused, and obligations are neglected, turning potentially protective products into expensive mistakes.

Financial vulnerability is especially acute for households without stable incomes or dependable savings. The Financial Diaries study found that low- and middle-income American families experience sharp swings in income and spending, driven by variable work hours, health problems, and emergencies. Across countries, a large share of households cannot support themselves for three months through liquid savings alone. Managing money requires sustained discipline in the face of temptation, social obligations, and stress. Many households use deliberate constraints, such as hard-to-access accounts or automatic savings tools, to protect themselves. Borrowing works best when arranged before a crisis, through pre-approved credit lines tied to existing bank relationships, helping people avoid high-cost emergency loans.

When debt accumulates, limiting the damage depends on shortening the time spent in debt, focusing repayment on the highest interest balances, avoiding missed payments that trigger penalties, and being cautious with balance transfers that may hide future rate increases. These strategies don’t eliminate vulnerability but can reduce how quickly shocks turn into long-lasting debt traps.

Education and housing offer long-term rewards, but their high expenses and debt make mistakes especially costly. College costs in the United States can range from $30,000 to $70,000 per year, and while financial aid helps, not all students earn high salaries or graduate on time. Some leave without a degree, burdened by debt and no corresponding income increase. Misunderstanding how interest accumulates or failing to enroll in income-based repayment plans can turn a reasonable investment into long-term strain. Housing decisions are similarly high stakes, as a home is often the largest asset a household will own. Buying and selling property is costly, and homeownership only pays off for those who stay put long enough to spread out these charges. Mortgages amplify exposure to income shocks, and borrowers often make mistakes by choosing loan types based on guesses about future rates. Additional dangers arise from teaser rates, failure to refinance, and loan structures that delay principal repayment.

Investing in diversified stock portfolios allows people to harness the rewards of financial risk while avoiding the pitfalls that keep many from building wealth. Equities tend to offer higher average returns than savings accounts, and even cautious individuals should accept some risk, as it pays off over time. Yet many avoid investing altogether, deterred by the hassle of opening accounts or the discomfort of choosing investments. Some avoid the emotional sting of losses, feeling short-term declines more acutely than equivalent gains. Ironically, some who avoid investing will still gamble for entertainment, chasing small chances of big wins despite gambling being a reliable money-loser. Wise risk-taking requires structuring risk intelligently, with diversification as the critical tool. Holding many investments that don’t all rise and fall together reduces overall risk while maintaining average returns. Modern mutual funds and exchange-traded funds make diversification cheap and accessible, allowing investors to capture market returns through passive investing.

Retirement success increasingly depends on how consistently individuals save, invest, and manage complex financial decisions over decades. People live longer and have fewer children, so fewer working adults support retirees through traditional systems. Public pension programs face strain, forcing governments to raise retirement ages or reduce benefits. Even when solvent, these systems often replace only a modest share of prior earnings, leaving households responsible for closing the gap. Retirement is challenging because its financial responsibility rests on the individual, with personal accounts replacing traditional pensions. Outcomes depend on how much people save, how they invest, and how they draw down assets later in life. Small differences in returns compound dramatically over decades, making fees, poor asset choices, and taxes especially costly. Taxes on investment returns, particularly during inflation, further erode real gains. A common guideline is to save 10% to 15% of pretax income over a working life, which can support a long retirement if contributions are disciplined. Employer matching contributions dramatically improve outcomes, but confusion, distrust, and overconfidence persist, especially regarding housing wealth and public benefits.

The authors advocate for a better financial system focused on a small set of standardized, trustworthy products that everyone can use safely. Instead of overwhelming users with complexity, a new system should reduce confusion, lower costs, and limit opportunities for harmful mistakes. Financial institutions should make it easier to compare products, and governments should make it harder for firms to hide excessive fees. Technology could help by lowering the cost of serving people with small balances and enabling products that largely manage themselves, but it must be regulated to build stability rather than encourage risky behavior. The hallmarks of a better system are simplicity, low cost, safety, and ease of use—products should have clear terms, minimal fees, government protections against severe harm, and require little ongoing management. In the end, John Y. Campbell and Tarun Ramadorai urge us to rethink the plumbing of personal finance, so it works efficiently for everyone.