Understanding Behavioral Finance: 10 Key Money‐Behaviors That Are Holding You Back
Understanding Behavioral Finance: 10 Key Money‐Behaviors That Are Holding You Back (and How to Break Free)
Money decisions are not always logical. Many of them are emotional. You might know what you should do — save more, spend less, avoid debt — yet still struggle to follow through. That tension is what behavioral finance seeks to understand.
At Lionhood Financial Coaching, we help you recognize the emotional and psychological factors that influence your financial behavior. Once you understand why you make certain money choices, you can finally start changing them — and that’s where transformation begins.
What Is Behavioral Finance?
Behavioral finance is the study of how emotions, biases, and habits affect the way people handle money. Traditional finance assumes we all make rational decisions, but real life tells a different story. 1
Think about it:
- You promise to stick to a budget, then splurge when you’re stressed.
- You hold onto a bad investment because you don’t want to admit a mistake.
- You delay saving because the future feels far away.
These are not financial problems — they’re behavioral patterns. A coach helps you identify these patterns and replace them with habits that support your goals.
10 Powerful Behavioral Biases Impacting Your Money (and What You Can Do About Them)
Below are 10 biases that often sabotage our financial lives — and actionable steps Lionhood Financial Coaching helps you implement to fight them.
1. Loss Aversion
You’d rather avoid losing $100 than have the chance to gain $150. That fear holds you back. 2
Action: Before every major money decision, ask: What is the best-case, what is the worst-case, and am I avoiding gain because I fear loss? Write it down.
2. Overconfidence & Illusion of Control
You believe you know more than you do, or that you can “beat the system.” That leads to risky moves. 3
Action: Set predetermined decision rules. Ask a trusted coach or peer to challenge your assumptions.
3. Anchoring
You get fixated on one number (e.g., purchase price of a stock, last month’s revenue) and make decisions based on that instead of current reality. 4
Action: Remove that anchor. Re-evaluate with fresh info. Ask: If I didn’t know that number, would I still decide this?
4. Confirmation Bias
You seek only information that supports what you already believe and ignore contrary facts. 5
Action: List your belief. Then list 3 ways you might be wrong. Invite someone to challenge your view.
5. Herd Mentality
You do what everyone else is doing (invest in trending markets, spend like peers) without your own strategy. 6
Action: Develop your own “why”. Write down your financial vision. Then check each move: Does this serve my vision or the crowd?
6. Recency & Availability Bias
You focus on what happened recently or what’s top of mind, and assume it will continue. 7
Action: Use a “past-5-years, next-5-years” rule. Look at long-term trends, not just the last data point.
7. Familiarity Bias
You prefer what you know — your company’s stock, your hometown investments — which may not serve your diversification or strategy. 8
Action: Ask: Am I investing in this because I know it or because it fits my goal and risk? If not, adjust.
8. Framing & Emotional Decisions
How a choice is presented (gain vs loss, savings vs spending) influences you more than you realize. 9
Action: Re-frame key decisions. For example: “By saving this, I’m providing security for my future self” vs “I have to restrict myself”.
9. Endowment Effect
You value what you already own more than you should — perhaps holding onto underperforming assets. 10
Action: Regularly review what you own. Ask: Would I buy this again today at this price? If not, consider letting go.
10. Present Bias / Hyperbolic Discounting
You prefer small immediate rewards to larger future rewards. That’s why savings and investments often get delayed. 11
Action: Automate the future now. Set up automatic transfers that skip your present self’s decision fatigue.
How Lionhood Financial Coaching Helps You Overcome These Biases
Recognizing these biases is half the battle. At Lionhood Financial Coaching, we transform recognition into action.
- We assess your current money habits and identify which biases affect you most.
- We build a personalized action plan anchored in faith, ownership and purpose.
- We meet regularly to track progress, recalibrate when you get off track, and reinforce healthy financial habits.
- For business owners, our virtual bookkeeping services keep your financial data clean so your decisions are informed, not emotional.
👉 Try QuickBooks through our referral link
If you live in Tulsa or anywhere across the nation, we work virtually and bring clarity, accountability and transformation to your financial life.
Faith, Stewardship & Financial Mastery
Consider this: Stewardship is not just about managing money. It’s about aligning your resources with your values, your purpose and your calling. It’s the belief that every dollar has a mission.
“The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” — Proverbs 21:5
When your financial behavior is aligned with biblical wisdom and intentional strategy, you start to build not just money, but legacy. Generational wealth begins when you make choices that go beyond you.
Take Action Today
Behavioral finance isn’t just an academic term. It’s your reality. The good news is: You don’t have to be a victim to your biases. You can become the master of them.
👉 Schedule your coaching session today
Let’s build clarity. Let’s build consistency. Let’s build wealth — together.
Free Workbook Download (Bonus Value)
To help you take the next step, we’ve included a free downloadable workbook: “Bias Buster Checklist: 10 Money Moves to Reclaim Control”. Use this to track your behaviors, spot patterns and reclaim your financial freedom.