How to challenge your financial bias and make a positive change

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Many people harbour financial biases, but these could be affecting your long-term goals. Here is how to challenge financial bias and make a positive change.

Bias is a natural phenomenon that has helped to keep every species on Earth alive.

After all, bias is formed after negative or positive experiences and shape our understanding of the world. If you had a car that regularly broke down and cost a fortune to run, you are unlikely to buy another car of that make or model again; this is just one of countless examples of how bias helps people to make informed choices.

However, bias can also be an unhelpful hinderance that stops you from achieving important goals. When it comes to your money, you most likely hold financial biases that you may be unaware of. In many cases, these biases could be doing more harm to your wealth than good.

Some common forms of financial bias include:

  • Cash bias. Many individuals favour cash over investments, and while cash is an important aspect of how you keep your money, an aversion to investing could impede your wealth’s ability to grow over time.
  • Home bias. Some studies show that investors gravitate towards holdings within their own country, as opposed to creating a diverse portfolio of global assets.
  • Debt bias. While debt is something that should always be taken on with caution, being entirely biased against debt could harm your financial progression.
  • Present bias. It’s easy to become bogged down in what is happening right now, but actually, financial decisions are often better suited to a long-term view.

With these aspects in mind, here is how to confront your financial bias and make positive changes to your financial behaviours.

Find the “why” behind your bias

Before you begin to challenge your biases and take a more openminded approach, it could be helpful to identify the “why” behind the bias.

For example, if you are loyal to cash and rarely invest, this might come from a deep-seated risk aversion. There is nothing wrong with being risk averse, of course, but it may help to understand where your bias towards the safety of cash comes from.

It could be that you have previously made risky investing mistakes that warned you away from investing altogether, or perhaps you have a loved one who lost money on a high-risk investment.

In any case, when you find the “why” behind your bias, you may be able to:

  • More easily recognise it as bias
  • Notice the ways that your bias influences your financial behaviours
  • Look at how shedding this bias could improve your financial situation.

Although it is impossible to completely break free from bias, finding the root cause of yours could help you to remove unhelpful financial prejudices that may impede your goals.

Challenge your financial bias with data

One way we often help our clients to challenge their financial bias is by using hard data.

In the information age, there are billions of facts and figures about any topic on the planet that anyone can access in seconds. This can make it more difficult to discern which information you should trust.

As such, having professionally, independently sourced data at your fingertips could help you cut through the noise and make positive changes to your financial behaviours.

For example, your financial planner could use cashflow modelling software to project potential outcomes of placing your wealth in cash, versus what might happen if you invested it. This model may be based on around 100 years of global financial data – and while we can’t make guarantees, this kind of data-driven information could help you make educated choices about your wealth.

Another example could be home bias. With the help of an expert, you could challenge your home bias as an investor by looking at market performance in the UK and comparing this to non-UK returns during any given time period.

By doing so, you can face your bias with cold, hard facts. This is just the beginning of the journey; you are then free to create more ambitious goals, diversify according to the data you find, and put together a financial plan that could help you grow your wealth more effectively and help to meet your long-term goals.

Work with an independent financial planner to make goal-oriented decisions

Take a long look at your own financial behaviours, and it may be very difficult to see the bias within them, or how this bias might be impeding your ability to grow your wealth in line with your goals.

As such, working with an independent financial planner could be the ideal step to take. Unlike restricted advisers, Kellands financial planners are entirely independent, meaning that we are free to recommend any route that may suit your plans, rather than shoehorning you into a solution based on products alone.

Moreover, your financial planner will listen carefully to your financial fears and concerns, helping to identify any unhelpful bias that could be holding you back. Your goals are used to shape a financial plan that has one sole aim: to grow your wealth and aid a prosperous future for you and your family.

To find out how you could challenge your bias and make a positive change to your wealth, email us at, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All contents are based on our understanding of HMRC legislation, which is subject to change. The Financial Conduct Authority does not regulate cashflow planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.


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