Psychology of Financial Planning

By working with David, you can increase your chances of closing the investment behavior gap, reducing psychological biases, and changing money scripts that may be holding you back from achieving your financial goals.

Plan For Your Goals Service Areas

  • Developing and envisioning financial and life goals
  • Financial coaching for implementation of a plan
  • Identifying money scripts
  • Offering peace of mind by tracking financial life
  • Support overcoming financial biases
  • Support overcoming the investment behavior gap

How Will Plan For Your Goals Help Me to Overcome My Investment Behavior Gap, Psychological Biases, and Money Scripts?

David can help you to overcome your investment behavior gap, psychological biases, and money scripts by providing you with the following benefits:

  • Education: help you acquire the knowledge and skills needed to make informed and rational decisions about your finances. Help you understand the concepts and principles of behavioral finance and how they apply to your situation.
  • Advice: help you develop a financial plan that aligns with your values, needs, and goals. Help you choose appropriate investments that match your risk tolerance, time horizon, and objectives. Provide you with objective and unbiased guidance and feedback on your financial decisions.
  • Coaching: help you identify and challenge your own biases and money scripts that may be affecting your financial behavior. Help you develop strategies and tools to overcome them and improve your outcomes. Provide you with support and accountability to help you stick to your plan and avoid emotional or impulsive actions.

What is the Investment Behavior Gap?

The investment behavior gap is the difference between the returns that investors could theoretically earn by following a rational and disciplined strategy and the returns that they actually earn by making emotional and impulsive decisions. The investment behavior gap can be caused by various psychological biases and errors that affect how investors perceive and react to market information and events. Some of these biases are listed in the next section.

To reduce the investment behavior gap, investors need to be aware of their own biases and emotions and how they affect their decisions. They also need to follow a consistent and evidence-driven investment strategy that aligns with their risk tolerance, time horizon, and objectives. They should avoid making frequent changes to their portfolio based on market fluctuations or media hype, and instead focus on their long-term goals and diversification.

How do Psychological Biases Affect How I Manage My Finances?

Psychological biases are mental shortcuts or errors that can affect your judgment and decision-making. They can also influence how you perceive and interpret information, especially when it comes to money and investing. Some examples of psychological biases that can affect how you manage your finances are:

  • Loss aversion: This is the tendency to prefer avoiding losses over acquiring gains. It can make you hold on to losing investments for too long, hoping they will recover, or sell winning investments too soon, fearing they will drop.
  • Consensus bias: This is the tendency to follow the crowd or the majority opinion. It can make you invest in popular stocks or funds without doing your own research or ignore alternative viewpoints that may be more accurate.
  • Familiarity bias: This is the tendency to prefer what is familiar or comfortable over what is unknown or risky. It can make you invest in companies or sectors that you know well but miss out on opportunities in other areas that may offer higher returns or diversification.
  • Confirmation bias: This is the tendency to seek out or interpret information that confirms your existing beliefs or opinions. It can make you ignore or dismiss evidence that contradicts your views or overestimate the reliability of sources that support your views.
  • Overconfidence bias: This is the tendency to overestimate your own abilities, knowledge, or skills. It can make you take excessive risks, trade too frequently, or disregard expert advice.
  • Recency bias: This is the tendency to give more weight to recent events or experiences than to earlier ones. It can make you extrapolate short-term trends into long-term outcomes, or chase performance based on recent returns.

These are just some of the many psychological biases that can affect how you manage your finances. Being aware of these biases and how they influence your decisions can help you avoid making costly errors and improve your financial outcomes.

What Are Money Scripts? 

Money scripts are subconscious beliefs about money that people develop as early as childhood. They can be shaped by your experiences or even passed down to you from your parents’ own beliefs. Even though you may not be consciously aware of them, they have a powerful influence over the financial decisions you make as an adult.

Money scripts can be classified into four main types: money avoidance, money worship, money status, and money vigilance. Each type has its own characteristics and implications for your financial well-being. Here is a brief description of each type:

  • Money avoidance: Money avoiders believe that money is bad or evil, and that they do not deserve it. They may feel guilty for having money or wanting more of it. They may also sabotage their financial success or give away their money to avoid having it.
  • Money worship: Money worshippers believe that money is the solution to all their problems, and that having more of it will make them happy. They may chase money at the expense of other aspects of their lives, such as health, relationships, or personal growth. They may also hoard money or spend it compulsively.
  • Money status: Money status seekers believe that money is a measure of their worth and success, and that they need to display it to gain respect and admiration. They may equate net worth with self-worth and compare themselves to others based on their income or possessions. They may also live beyond their means or take excessive risks to maintain their status.
  • Money vigilance: Money vigilants believe that money is a scarce and valuable resource that needs to be protected and saved. They may be frugal, cautious, and secretive about their money. They may also have anxiety about losing their money or not having enough of it.

Simple Path to Improve Your Financial Condition

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Step 1:

Select a Consultation Service

My services are designed to be flexible and meet your needs. Whether you're looking for a basic evaluation, help with a key area of your finances, or comprehensive financial planning, you'll find it here.

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Step 2:

Understand Your Real Financial Condition

Working together we will determine your financial needs. We’ll assess what is effective or problematic, and what is hindering your progress. With a clear understanding of your financial condition, you can make smarter choices.

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Step 3:

Plan a Better Future

Getting the knowledge and guidance you need from a financial professional is an investment in your security and hope for the future. And it’s not just for you, but for the people who depend on you.

David Roberts - Financial Planner and Advisor of Plan For Your Goals

David Roberts, Owner: Plan For Your Goals

You Deserve a Better Future

Affordable financial advice with flexible options that fit into your tight schedule can be difficult to find. That's why so many people struggle to make smart money decisions. At Plan For Your Goals my clients get the financial planning, coaching, and resources they need to make better decisions and plan a better future.