Building wealth isn't just about numbers.
It's also about the mindset.
Cognitive biases may convince us to spend more, save less, and feel more confident in our decisions than perhaps we should. And the scary thing is, for the most part, we're powerless against them.
Here's a look at some of the most common ones working against us.
This is a familiar concept to anyone who has ever chosen to spring for a weekend at the lake today, rather than saving that money for a more comfortable retirement later.
Time discounting fights against delayed gratification, making us more likely to value immediate rewards over ones to be had in the future.
Seersucker illusion sounds more jovial than it is, which is being overly reliant on expert advice.
This is particularly poignant when it comes to money, where many of us are happy to outsource our decisions not only to general advice in the media, but to financial advisers and even investment algorithms.
Expert advice certainly has its place, but it's always wise to remember: No one will look out for your money more than you.
Also called the relativity trap, anchoring explains why you'll pay $25 for an hour of parking after seeing $30 at a lot down the street.
You hate to break a $50, but have no problem dissolving four tens, a five, and a handful of change.
It's not just you. Studies have shown that people are less likely to spend higher-denomination bills. Once you break that $50, however, you may be in trouble.
Common lore says that when an ostrich is scared, the bird buries its head in the sand to stay ignorant of the approaching threat. (It's actually a myth that might be based on the way they dig.) When it comes to investing, humans do the same thing -- figuratively, of course.
When news isn't good, we're more likely to steer clear of everything from financial news to our bank balances. When we're all doing it as a group, our actions can even affect the behavior of financial markets.
Apparently, many of us have a problem with that, and base financial decisions on expertise we don't actually have.
This bias causes us to underestimate how much time a given task will take, based on our plan for the future ... like, say, saving for retirement.
The tricky part is, there are a lot of things we can't actually plan, so our results rarely turn out as expected.
Fear of losses
Everyone hates to lose money, but some of us are more scared than others.
Investing in particular is subject to gains and losses, and those of us with outsized fear of losing money may be more apt to make rash, expensive decisions without waiting for the market to even itself out.
We tend to think our purchases are worth it after we've already made them, because if it turns out we don't like them, we've wasted that money.
It's more comfortable to convince ourselves we're thrilled with our spending choices.
One marketing expert has even dubbed it "the buyer's Stockholm syndrome."
Procrastination isn't just for college dissertations and haircuts.
The impulse to put things off can affect your money, too, whether you're waiting so long to open a credit card that you miss the introductory offer, or you're putting off saving money for college until your kids start high school.
The longer you wait, the more expensive many things will get.
Bias blind spots
Arguably the most damaging bias, having blind spots means you're less likely to recognize any of these psychological influences in yourself.
What was that you were saying about your sixth sense for investing?
This is our tendency to overestimate our mastery of self-control ... until we're actually faced with an aisle full of expensive gourmet cookies, a beach trip with our childhood best friends, or a limited-time offer on an amazing convertible.
We love the things we own -- even if they aren't technically in our possession.
If you've been tracking the price of a sofa online for weeks, picturing it in your living room, mentally adding throw pillows, you may be more likely to overvalue its worth and ultimately pay more than you can afford.
Status quo bias
This bias describes our tendency to stick with what we know, whether or not it's the best course of action.
Whether you're buying the same name-brand groceries that you always have or you're leaving your retirement fund allocation the same over the course of 15 years, refusing to make a change can be expensive.
Sunk cost fallacy
This is the bias behind, "I can't cancel -- I've already paid!"
That money is gone whether you use the service you paid for or not, so it shouldn't influence your decision. The same principle applies to everything from the failing business you've financed to the standing-room-only concert tickets you bought before you broke your foot.
By focusing on the past and refusing to let go of money that's already gone, you could trap yourself into spending even more.