(Secretly affecting your financial situation and your experience with money)

Money management depends on the choices you make when it comes to investments and spending. The choices you make are influenced by your emotional, financial, or practical experiences, which become your behavioural biases. Therefore, you must keep your behaviours in check, since they can directly affect your experience and affect your finances –

Aversion to Change –

It is a natural human behaviour to stick with what is working and not take a step towards a new thing that may be better. Your comfort with what you know and the assurance that it will continue to be the same way will dissuade you from looking at newer options, be it investments, holidays, products, etc. The current investment may give you a lesser return, you may get a better deal on your holiday or insurance, or there could be a new product at a lesser cost, but you are hesitant to try something new for fear of failure and not working in your favour. Is there a reason to change something that is working well? In recent years, what was good may no longer be true. With changing times, situations and life phases, you will need to adapt and change your financial viewpoint.

Emulating other’s lifestyles –

The other typical behaviour we humans have is comparing our success to others, matching lifestyles with your friends, family or neighbours and trying to recreate the same. This can lead to stress, depression, overspending and unhappiness. What may be necessary for someone may not be necessary for you and vice versa. The same behaviour, when applied to finances, can lead to investments that are not relevant to you. Your financial situation, means of income, expenses and goals will not be the same as your friend or neighbour. Your friend may have the means to withstand a bad investment, but you may not have that bandwidth if you make the same investment following the advice. So don’t compare but invest as per your means, needs and goals. Let your journey lead you.

Instant Gratification –

We all want instant satisfaction or quick outcomes, which is another behavioural tendency in all of us. Who doesn’t like instant gratification? A hot tea on a rainy day, instant likes to your social media post or buying a new phone on credit instead of saving up for it. You shouldn’t expect the same from your financial goals. Your investments must mature over time and grow with time to be successful. You cannot expect them to give you returns overnight. You have to plan for each goal and choose the investments that will provide you returns based on the timeline of your goals and how much volatility and risk you are ready to stomach. The best financial advisors understand your strengths and plan to keep your behaviour in check. Financial planners can help you transition from where you are to where you want to be, from retirement planning to personal financial planning to short-term and long-term goal planning.

Become familiar with your behaviours and study them closely to improve your financial standing. Put your behaviour to good use and make financial choices compatible with your financial means and objectives.

Managing behaviour is easier said than done. In money matters, however, you cannot let your emotions rule your actions. What is the best way to balance your wants and needs without getting into debt? By working with a financial planner, you can learn how to manage your money behaviour, develop good habits, determine your values, risk tolerance and time horizon, and much more. In addition to financial planning and retirement planning, they can assist you with wealth creation, estate planning, and many other milestones. Ensure you hire a team of the best financial advisor who has proven capabilities and experience that speaks volumes.