Episode 55: Cognitive Biases & How they affect our money and spending Part 3 of 6

Part 3 of a 6-part series on Cognitive Biases and how they impact us and our money each and every day!

Check out Part 1 and Part 2 of this 6 part series if you haven't yet!

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 Attentional bias is impacting the purchases we’re making but also the emphasis we place on those purchases as being life-savers.

In this episode we will cover:

• Attentional bias - 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 purchases we make and possibly leading to buyer’s remorse 
• How we can overcome this bias

Steps to overcome Attentional Bias:

• Solution 1: Talk to someone you trust about it. When you’re about to spend your hard-earned money on something, share it with the group or with me or with Jill so we can give you our opinions. We are not falling victim to attentional bias so even hearing what we have to say is important. It’s BEST if you can find someone who is “casually” interested in the item or industry you’re focusing on but not so interested they are biased.
• Solution 2: Continue to do more research but in particular, search for negative reviews or criticism of that item. A negative review of an item can shatter that funhouse mirror quite effectively. It can bring me right back down to earth about an item and make me see that perhaps it would not be a good idea to spend a lot of money on that item.
• Solution 3: Give yourself a longer waiting period before buying it. This is exactly why so many of you created “spending time frames” for your financial principles. Time is one of the most effective responses to attentional bias.
• Solution 4: Consider the opportunity cost - what effect does this have on your goals and what can you NOT buy because you may buy this?
• Solution 5: Try to focus on something else entirely and unrelated. If you want to buy a new dress, go hiking instead or go to the gym. If you want to buy some electronics, read a book. Do anything other than think of that thing you desire.

 

Resources:

• Related Post: Never Feel Buyer's Remorse Again
• Podcast Episode 50: Part 1 of this 6 part series
• Podcast Episode 53: Part 2 of this 6 part series