Why don’t we always do what’s “best” with our money? Let’s be honest: most of us already know what we’re “supposed” to do with our money. But we don’t do it.
Spend less than we earn. Save consistently. Invest for the long term. Avoid unnecessary debt.
So why don’t we always do it?
Why do we promise to start budgeting next month, then swipe the card anyway? Why do we panic when markets dip, even when we know staying invested is usually the smarter move?
The answer lies in something economists and psychologists have been studying for years: we’re not rational decision-makers. We’re human.
And that’s where behavioural economics comes in.
Popularised by books like Nudge, by Richard Thaler and Cass Sunstein, this field explores how our decisions are influenced, not just by logic, but by emotion, habit, environment, and even how choices are presented to us.
Here are a few key biases that show up time and again in financial planning:
- Loss aversion
We feel the pain of a loss much more intensely than the pleasure of a gain. It’s why we may hold onto a losing investment far too long, or avoid investing altogether, because the fear of “what if it goes wrong?” outweighs the potential benefit of “what if it goes right?”
- Present bias
We’re wired to value today over tomorrow. That makes it hard to prioritise saving for retirement, even when we know we should. A pair of sneakers today feels more real than a comfortable future 30 years from now.
- Choice overload
When we’re faced with too many options, investment funds, insurance products, savings accounts, we tend to freeze. We delay, or we default to what feels easiest, even if it’s not the most suitable choice.
- Anchoring
We latch onto the first number we see. If someone tells you how much your neighbour just bought their house for, that number becomes a benchmark, whether or not it suits your needs or financial reality.
- Confirmation bias
We search for information that supports what we already believe. If you think the market is about to crash, you’ll find headlines to support that belief, and ignore the ones that don’t.
Understanding these patterns doesn’t make us weak, it makes us human. And when you work with a financial planner who gets that, something powerful happens: instead of being judged or “corrected,” you’re supported.
The best planning doesn’t just help you choose the right funds, it helps you create a system that makes those good choices easier, and those unhelpful habits harder.
That’s what nudging is all about: creating a structure that honours your goals, while gently steering you away from self-sabotage.
Because the truth is, smart financial decisions are often less about intelligence, and more about designing for behaviour.
Let’s build a plan that works with the way you think, not against it.