Welcome to today’s episode, where we dive into the first step of our money mindset mastery framework: awareness. In this episode, we explore the impact of confirmation bias on our financial decisions, memories, and self-perception as business owners. By becoming aware of our unconscious thoughts and biases, we can gain a better understanding of our current money mindset.
Confirmation bias, our tendency to seek, interpret, and remember information that confirms our existing beliefs, plays a significant role in our financial choices. It influences everything from our buying decisions and budgeting to how we run our businesses and spend money. Often operating beneath our conscious awareness, confirmation bias reinforces negative stories we tell ourselves and fosters unhelpful comparisons with others.
Emotional Spending and Confirmation Bias
One common manifestation of confirmation bias is emotional spending, which can affect many business owners. Driven by our biases, we may make impulsive purchases, believing they will solve our business problems. However, taking a step back and allowing 48 hours before making a significant purchase can help counteract this bias. By doing so, we create space to critically evaluate the positive and negative aspects of the decision, rather than solely focusing on the positives. This intentional pause helps break the cycle of biased research and encourages more balanced and informed financial choices.
Unfortunately, even when we take time for research, confirmation bias can still influence our perceptions. We may overlook negative aspects and only see the positives, reinforcing the belief that such purchases are beneficial. This process triggers dopamine spikes that reinforce our emotional spending habits, making them challenging to break.
Steps to Break the Cycle
To break free from this cycle, we must approach our financial mindset with curiosity rather than unwavering conviction. Embracing a mindset of curiosity allows us to be open to new perspectives and experiences, as well as acknowledge the possibility of being wrong. By adopting this approach, we can reframe negative thoughts and challenge them with a more curious and open mindset.
Another crucial step is to think about your thinking! Evaluating our instinctive reactions and searching for ways to prove ourselves wrong can help us break free from the constraints of confirmation bias. It’s essential to consider multiple perspectives and be open to changing our minds. We must remind ourselves that change is not a bad thing; it signifies growth and development.
Join us in this episode as we explore the power of awareness in overcoming confirmation bias and transforming our money mindset. By understanding how biases shape our financial decisions, we can make more informed choices and create a healthier relationship with money.
[09:37] Emotional spending and confirmation bias
[14:05] Steps to break the cycle
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