Behavioral Finance: Learning How to Get Out of Your Own Way and Buy Happiness

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Financial Advisor, Stefanie Pickard, discusses Behavioral
Finance, and how awareness of human tendencies relating to
financial decisions can help you work towards financial freedom
and risk-reward balance with investments.


Behavioral finance is the study of observed investor and market
behaviors. It focuses on the idea that people don’t always make
rational financial decisions, however this irrationality is
predictable and normal.


Behavioral biases and cognitive errors can be developed from a
multitude of different factors, such as past life experiences,
general temperament, gender, age, and relationship status.


Examples of types of behavioral biases include: loss aversion,
overconfidence, status quo, cognitive dissonance, mental
accounting, and sunk-cost effect. These biases are explained in
further detail in the podcast. 


Understanding these biases and using them to your advantage is
important not only for financial freedom, but to “buy happiness”.
You can use these biases to plan life experiences that will bring
joy and memories, to donate and give to others in a meaningful
way, and to utilize your money in a useful and impactful manner.