Overcoming behavioral biases

Behavioral science helps us understand what obstacles interfere with our ability to make sound decisions that align with our best interests and long-term goals. There are a number of learned behavioral biases that can affect this decision making process, especially when we face uncertainty or adversity.

Some common biases that can derail our decisions include:

There are many situations where our instincts prove to be valuable in avoiding danger, triggering our “fight or flight” response. However, when dealing with the economy and the markets, this response, coupled with our behavioral biases, can cause us to make decisions that can be counterproductive to our long-term financial success.

Our recent economic environment has created fertile ground for emotions to run amok. To make matters worse, the media and some in the financial services industry prey on these biases to get your attention in order to serve their own needs.

Strategies for success

Here are a few ways to change your course and make the journey more manageable:

Becoming aware of these biases and taking steps to overcome them will put you on the path to making better daily decisions that support your financial goals and protect your financial future.