Feeling Behind? Understanding the Biases That Hold You Back
By: Carol Cho, CLU®, ChFC®, BFA™
The journey was an emotional rollercoaster as I prepared for my powerlifting meet last December. A series of health and life setbacks caused me to start, stop, and start over three times. Each time I began to find my rhythm again, something came along to knock me off course for a few weeks. And there I was—far from lifting the weights I used to handle, feeling like December was just around the corner, and feeling like I was nowhere near ready.
This struggle is all too familiar. Not just in training but also in financial planning. I hear it all the time from clients: "I feel so behind." But let me tell you something I’ve learned through my years of helping people plan for their financial futures: It’s normal to feel that way.
So why do we feel so behind? Often, it’s because our brains are wired to specific mental shortcuts—called biases—that distort how we perceive progress. Three of the most prominent biases that trip people up are anchoring bias, comparison bias, and recency bias. Let’s break these down.
1. Anchoring Bias: Stuck on Old Benchmarks
I often compare my current performance to the weights I could lift before all the setbacks in powerlifting. I’m "anchoring" myself to an outdated benchmark—my past peak performance—and beating myself up for not being there yet. This happens in finance, too.
Anchoring bias occurs when we fixate on a specific number or piece of information—like the price of a stock or the value of our portfolio—without considering the bigger picture. For example, imagine you bought shares of a company at $100, and even though the stock has since dropped to $80, you refuse to sell because you’re anchored to that original purchase price. You’re waiting for it to go back up to $100 to feel like you’ve "broken even," when in reality, market conditions have changed. Holding onto that anchor can cause you to miss better opportunities or, worse, keep you stuck in an underperforming investment.
Pro Tip: Don’t let an old price define your financial decisions. The market constantly evolves, and clinging to past numbers can distort your judgment. Focus on where your investments are heading, not where they’ve been.
2. Comparison Bias: The Grass Isn't Always Greener
We live in a world of comparison. Social media, family gatherings, and even casual conversations with friends can make us feel like others are hitting their financial milestones faster or easier than we are. In powerlifting, it’s easy to fall into the trap of watching other lifters on Instagram and thinking, "Why am I not there yet?"
This is comparison bias, where we evaluate our success based on the perceived success of others. In finance, it’s easy to look at someone else’s new home, car, or vacation and wonder, "Why am I not there yet?" But the reality is, we don’t see the full picture—just like we don’t know how many setbacks that Instagram lifter might have had. Everyone’s financial journey is unique. Comparing your situation to others can lead to unnecessary stress and poor decisions, such as overextending yourself to "catch up."
Pro Tip: Financial planning is personal, and comparing yourself to others won’t help you reach your goals faster. Focus on your journey. It’s about where you’re going, not where everyone else is.
3. Recency Bias: Overvaluing Recent Events
Here’s a truth bomb: setbacks are part of life—whether in the gym or your finances. But sometimes, when you experience a setback, it feels massive, like it’s the only thing that matters now. I’ve felt this way every time I’ve had to pause my powerlifting training. It’s as if those few lost weeks are a giant blow to my progress.
This is a textbook example of recency bias. We tend to give more weight to recent events, which distorts our long-term view. This bias was clearly illustrated during the housing boom in the mid-2000s. People made real estate purchase decisions based on recent trends, such as housing prices steadily increasing yearly. The assumption was that this trend would continue indefinitely. Most didn’t think beyond what they were seeing and experiencing at the time: a rising real estate market. So, when the bubble burst in 2008, it came as a shock to many. Homeowners and investors felt blindsided, some even believing the market would never recover. But in reality, the housing crash—while painful—was just a short-term event in the grand scheme of long-term property values.
Pro Tip: Don’t let recent events cloud your judgment. Whether it's a market dip or a boom, financial success is built over the long term. Stick to your plan and remember that short-term fluctuations are often temporary setbacks.
Moving Forward: Focus on the Journey, Not the Obstacles
The key to overcoming these biases—whether in lifting or finance—is to shift your focus. It’s not about where you are or how far behind you feel. It’s about where you’re headed. With a solid plan and consistent effort, you can make progress, even when life throws you off course.
When you focus on the long game, adapt as needed, and stop comparing your path to others, you’ll see that you're not as far behind as you think. You’ll learn to trust the process and understand that your journey is unique, and that’s perfectly okay. Always remember: It’s not about where you start but where you’re going.