@organized.finance: A lot of the decisions we make are influenced by our emotions and impacted by cognitive biases. Here are 5 ways to reduce the influence of emotions on your financial decisions: 🧠 Familiarize yourself with cognitive biases: There are several cognitive biases that may influence financial decisions, such as loss aversion, confirmation bias, and hindsight bias. By understanding these cognitive biases, you’re more likely to identify and curb them if they come up in your financial decision-making. ⚙️ Automate your financial processes: By minimizing the number of decisions you have to make, you reduce the likelihood of last-minute, impulsive decisions. For example, if you have your investments on auto-pilot, there’s less room for you to buy or sell stock based on emotions/herd mentality. 👀 Manufacture your environment: If you know what your “weaknesses” are, you may be able to change your environment to eliminate them. For example, if you know that seeing stock market news stresses you out and may cause you to panic sell your investments, you might benefit from blocking those news sources. ⏳Take your time: By implementing a self-imposed waiting period before you take action, you reduce the likelihood of emotion-based snap decisions. If you struggle with over-spending, for example, you might benefit from implementing a 48-hour waiting period before you make any purchases over $100 (or the amount that seems right for you). 🔎 Perform thorough research: This goes without saying, but I’ll say it anyways. The more financial education you have, the more you’ll understand the financial pros & cons of the decisions you make. Those pros & cons will help you make a more logical (and less emotional) decision. ... Note: While it’s important to understand and limit the impact of cognitive biases on our decisions, it’s also important to recognize that decisions often aren’t (and shouldn’t be) made based purely on financial outcomes. Many other factors—personal values, relationships, happiness, and others—should factor into your decision-making. #goals #personalfinance #finance #womenwhoinvest #investing #invest #investingforbeginners #millenialmoney #travel

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Saturday 15 July 2023 17:08:45 GMT