Sean Pyles

I'm Sean Piles.

And I'm Elizabeth Ayola.

On this episode, we're going to answer a listener question about how climate change is affecting how people decide whether home ownership is worth the risk and the expense.

But first, we're talking about the behavioral financial biases that are costing you money and what you can do about it.

So as a quick recap for folks who may not know, behavioral finance is a field of study that explores how emotional factors and personal biases affect our financial decision making.

And it turns out that we are not the highly rational robots making financial money decisions in a vacuum.

We're not?

Nope.

We are highly irrational animals, Elizabeth.

We're basically right out of the jungle throwing money at whatever looks shiny and nice to us.

But financial biases are a subset of behavioral finance, and they describe how certain preconceived notions or tendencies can lead to some less than ideal outcomes for our finances.

There are so many different financial biases out there.

We're not going to mention them all, but I'm going to mention a few that come to mind.

First one that comes to mind for me is loss aversion.

And that's the idea that losing money is much more painful than earning money.

But somehow I don't think that's an idea.

It feels like a fact.

And we'll do a lot to avoid this pain.

Now, herd mentality is another one that comes to mind, and that is jumping on a bandwagon and taking an action just because everyone else is doing it.

And Sean, that makes me think of NFT craze during the pandemic.