Your cognitive biases are making your money decisions. Learn how to overcome them.
In part 2 of a 6-part series on Cognitive Biases and how they impact us and our money each and every day! It’s important to know what these are because they are impacting the way you make decisions and the way you think about your finances every single day. In this episode, we discuss how the Availability Heuristic bias is impacting the way we think of ourselves as money managers. Before you continue on, make sure you listen to Part 1 of this 6 part series.
Notes from the episode:
- Availability Heuristic – what it is and how it’s being used to affect my decision-making
- How this shows up on a regular basis for us
- How it’s impacting the way we think of ourselves as money managers
- How we can overcome this bias
Additional tips and strategies:
- ASK YOURSELF—> What do your older memories say about how you are as a money manager? What do your newer/more recent memories say about how you manage your money? How are you allowing these older memories to influence your current decisions? What decisions have you made recently without looking to statistics – or using your budget?
- Surround yourself with people doing GOOD THINGS FINANCIALLY will actually lead you to believe it’s more likely to happen to you. Surround yourself with people doing BAD THINGS WITH MONEY will influence your belief around the likelihood that you will too.
- Ask yourself if your fear or belief has any basis in statistics? This is also why we look at our budget to make a decision. If we have been in the repeated position on not being able to afford things, it is likely then that when we have to make a decision, we assume we will not be able to afford it – that’s the most likely outcome simply because we remember all the times we haven’t been able to afford it- they are emotionally more memorable than being able to buy something.
Resources/ links related to topic/ mentioned in podcast:
- Episode # 50 (Part 1 of this series)
Music by Annti Luode