Sean Pyles

So anytime you might get a little pang of financial FOMO about what your friends or a bunch of people online might be doing, that can be a signal that you're being tempted by herd mentality and assigned to step away.

Let's give an example of overconfidence bias.

Let's say that you have this one friend in your life who's always telling you about all the things they're doing with their money, but they don't actually have great returns to show for it.

Like they're investing in crypto you never heard of or getting into infinite banking where you use your life insurance to lend yourself money.

You have probably met someone who has overconfidence bias in that case.

Yeah, this is when people have a lot of misplaced confidence in their own abilities to manage their finances, and they end up making mistakes that cost them money, or maybe they're missing other opportunities to make a more secure, reliable form of money.

And this affects a lot more than obnoxious finance bros too.

I think we can all be susceptible to overconfidence bias in ways that we might not expect.

So one risk that comes to mind for me around this is not being properly insured.

You could just be really confident that you will never face an accident or that you'll be able to cover your pet's health care if an emergency happens.

So why bother getting insurance at all?

And then guess what?

Life happens.

Accidents are going to happen.

And because you didn't really think that you'd be facing these risks, now you're on the hook for whatever bill is coming your way.

So to overcome overconfidence bias, humble yourself.

And I mean that in the nicest way.

Realize that you're not going to beat the market.

Insurance will help you weather the inevitable challenges in life and consider getting the perspectives of other people who are more experienced than you before making risky financial decisions.

Amen.