You probably already know how to save, spend, and invest wisely.
You’ve read the books. You’ve listened to the podcasts. You even made the spreadsheet.
But still, sometimes you hesitate. You get stuck. You overthink. You chase returns. You freeze when the markets fall.
It’s not that you lack knowledge. It’s that your mind is getting in the way.
As a financial planner, when I talk to people about building a better financial future—more intentional cash flow, better risk management, investing aligned with their goals—the first thing they want to talk about is asset allocation, Roth IRAs, or what the market’s going to do next.
But what they should be talking about… is the psychology of money.
Traditional Finance Assumes You’re a Robot
Classical financial theory is built on tidy assumptions:
- Investors are rational.
- Markets are efficient.
- Everyone acts in their own best interest with perfect information.
But real life is messy.
You’re not a robot. You’re a person with emotions, stories, lived experiences, and biases.
A first-generation immigrant who watched their parents pour everything into the next generation may approach money with caution and self-sacrifice. A tech executive who suddenly netted $2 million in RSUs may feel pressure to chase the next big win.
Behavioural finance recognises this truth: we all make mistakes, not because we’re stupid, but because we’re human.
Easy Money Is Fragile Money
Let me pause here for a moment to share a pattern I see too often.
When someone makes a lot of money fast—through crypto, concentrated tech stocks, or a lucky windfall—it tends to disappear just as quickly.
Why?
Because money that comes easily tends to feel disposable. The effort isn’t there. The habits aren’t built. And the planning—the part that helps you keep and grow your wealth—is often missing.
The investments are impulsive. The portfolio is unbalanced. The strategy is non-existent.
Compare that to someone who’s built wealth over 20 or 30 years. They’re thoughtful. Measured. Aware of risk. They might still feel fear or greed, but they’ve developed the discipline to not let those feelings drive the bus.
Easy money is fragile money.
Nassim Taleb put it best: “Invest in preparedness, not in prediction.”
You can’t predict the next bear market or recession. But you can prepare for it.
The average investor will experience three 20% market declines per decade. That’s the cost of admission. And the biggest gains? They tend to show up just when you’re least expecting them, right after the headlines scream that it’s all over. That’s why the most successful investors have one thing in common: they stay in the game.
The Investor Who Couldn’t Let Go
One of my clients had been investing for over two decades. He was proud—rightfully so—of the smart bets he made early in his career. He picked a few winning stocks during the dot-com boom and had held onto them through market cycles. His account had grown impressively over time.
But when we took a fine-toothed comb through his holdings—over 300 in total—we uncovered something he hadn’t noticed: 10 positions with significant losses. They were buried, almost forgotten, in a swamp of old trades and overlapping funds.
So I asked him, gently: “Why are you still holding on to these?”
He paused. Then smiled. He remembered the early days—those companies were once darlings. He’d read glowing headlines, joined investor calls, maybe even told his friends he’d found the next big thing.
But the reality had changed.
He didn’t want to sell because selling would mean admitting they failed. Or that he had. Maybe he was waiting to “get back to even.” Maybe he just hadn’t looked closely in years.
What he hadn’t considered was that those losses could’ve been used to offset gains during the high-income years when he exercised stock options for cash flow. But he didn’t use them. He didn’t even see them.
This is what anchoring, mental accounting, and hindsight bias look like in real life.
And it’s not a matter of intelligence—it’s a matter of awareness.
Which of These Sounds Like You?
Take a moment. Be honest. Which of these investing patterns feels familiar?
- I hold on to underperforming investments, hoping they’ll bounce back.
- I hesitate to rebalance my portfolio even when it drifts.
- I feel “smarter” after my predictions turn out right, and ignore the ones that didn’t.
- I treat my bonus or RSUs like “fun money” and spend them more freely than my salary.
- I read articles that confirm my opinions and ignore ones that challenge them.
- I feel fear when markets drop, even though my plan says to stay invested.
If you saw yourself in any of these, that’s not failure—it’s feedback.
You’re not broken. You’re human. And the best thing you can do for your finances isn’t to “fix” yourself—it’s to create a system that accounts for your humanity.
The 9 Money Biases (And How to Overcome Them)
| Bias | How It Shows Up | How to Overcome It |
|---|---|---|
| Conservatism | Ignoring new info that contradicts your beliefs | Reassess: “Would I buy this today?” |
| Confirmation | Only consuming info that supports your view | Seek out counter-evidence |
| Illusion of Control | Overconfidence in market timing or stock picks | Use a written investment policy |
| Representativeness | Making decisions based on stereotypes | Focus on probabilities, not headlines |
| Hindsight | Believing “I knew it all along” | Keep a decision journal |
| Framing | Reacting differently to identical facts based on presentation | Zoom out and reframe context |
| Anchoring | Sticking to a price point or original belief | Ask: “What’s the right decision now?” |
| Mental Accounting | Treating money differently based on category | Think holistically across your portfolio |
| Availability | Overweighting recent news or vivid stories | Rely on long-term data and process |
You’re Not Here to Predict the Market—You’re Here to Be Prepared
The market doesn’t care what you expect. And neither does your retirement account.
But your plan can. Your strategy can. Your behaviour can.
The goal isn’t to be perfectly rational. It’s to build a plan that works even when you’re not, because let’s face it, none of us are robots.
If you want to make better investment decisions, don’t just change your portfolio. Change your process. Your habits. Your self-awareness.
Book a Clarity Session
In a one-on-one Clarity Session, we’ll explore:
- The unspoken beliefs and biases shaping your financial decisions
- Whether your current investment strategy matches your life and goals
- How to build a plan that keeps you prepared—regardless of the headlines
Let’s take the emotion out of it. Let’s build something thoughtful.
Schedule your Clarity Session today
Frequently Asked Questions
What are the most common money biases?
Some of the most common money biases include confirmation bias, anchoring, hindsight bias, mental accounting, and the illusion of control. These can lead to poor investment decisions and emotional reactions during market volatility.
How can I avoid emotional investing?
You can avoid emotional investing by creating a clear investment policy statement, using dollar-cost averaging, maintaining a diversified portfolio, and working with a fiduciary advisor who holds you accountable to your long-term strategy.
What is behavioural finance?
Behavioural finance is the study of how psychological influences and cognitive biases affect financial decisions. It helps explain why investors often act irrationally—even when they “know better.”
Why do smart people still make money mistakes?
Because knowledge alone isn’t enough. Even high-income professionals are influenced by past experiences, fear, greed, and emotional attachments. The smartest thing you can do is build a system that manages those biases.