Anonymous 1m 217
The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Making decisions is hard — especially when it comes to money. The emotional ties that often come with money can lead to cognitive biases, or errors in thinking that affect our judgement and decision-making ability. We often hold on to our existing beliefs, leaving little room for any new information, even if it may be beneficial.
Cognitive biases can wreak havoc on our financial health, keeping us from saving regularly or spending rationally. If left unchecked, they can drain savings or tank credit. When committing a cognitive bias, we often think that our own knowledge is the best, and ignore the wisdom of others. For example, in one study, one-third of investors continued to over-confidently spend money on a project even after receiving advice that their investment decision was no longer wise.
Since there is so much room for mental error, it’s no wonder that 7 in 10 Americans postpone making major financial decisions, with over half having not made one in the past 3 years. The good news is that with a little self-awareness, you don’t have to let biases slow you down.