Why We Stick With What We Know (Even When It’s Not Best for Our Money) – An Investment Psychology Perspective

Have you ever wondered why you keep doing the same things with your money, like always ordering the same coffee or never switching those familiar services? This phenomenon, deeply rooted in investment psychology, is not just about habits; it’s about the comfort of familiarity, even when there might be better financial choices available. In this article, we’ll explore why we tend to stick with what we know, how this behavior influences our finances, and actionable steps you can take to gently guide yourself toward smarter money decisions.

Table of Contents

• Introduction
• What is This “Sticking Point” Habit?
• Why Do We Get Stuck in Our Money Ways?
• Simple Steps to Gently Check and Change
• Conclusion
• Your Next Step

Introduction

Many of us continue with our financial habits simply because they are familiar. This behavior isn’t just a quirky habit—it has deep roots in investment psychology. Sticking with known methods can provide comfort, consistency, and ease. But it can also cause us to miss opportunities to optimize and enhance our financial well-being.

Imagine always reaching for the same coffee order even when there are new, exciting options on the menu that might offer better taste or even better value. Financial decisions work similarly. Whether it’s not exploring a new savings account with competitive rates or sticking with a bank out of habit, our decisions can end up costing us in the long run. In this article, we discuss the psychology behind these habits and offer practical advice on how to break out of them, all while maintaining a calm and focused approach to improving your financial health.

Section 1: What is This “Sticking Point” Habit?

At its core, the “sticking point” habit is about our natural tendency to favor the familiar. When it comes to finances, this means repeatedly engaging with the same methods or institutions simply because they represent a known quantity. The very idea here is linked directly to what we term investment psychology—how our mental and emotional processes influence financial decisions.

Some clear examples of this habit include:

• Choosing not to switch banks even if another offers better interest rates.
• Holding onto an outdated savings plan that no longer suits your changing life circumstances.
• Continuing with subscriptions or financial products that no longer serve a real purpose.

This kind of inertia is not necessarily the result of laziness; rather, it’s our brain’s way of seeking comfort in the routines we’ve established over time. Evolutionarily, sticking to routines helped our ancestors survive in uncertain environments. Over time, however, these survival behaviors can sometimes work against us in the modern financial landscape.

Tip: Remember, change doesn’t always have to be drastic—small, calculated steps can open up opportunities for better financial outcomes.

Understanding that this approach is a natural part of human behavior is essential. It helps us see why our brains favor the status quo even when it might not be the best option for our money in the long term. Recognizing this is the first step in shifting towards more intentional and purposeful financial decisions.

Section 2: Why Do We Get Stuck in Our Money Ways?

Making decisions, particularly when they involve money, can often feel overwhelming. The modern world bombards us with an endless array of options for investing, saving, and spending. It’s no surprise, then, that many of us adopt strategies to minimize mental clutter—even if that means opting for decisions that are merely “good enough.”

Here are some key reasons we get stuck in our money ways:

1. The Comfort of Familiarity: Our brains are wired to associate familiarity with safety. Sticking with familiar financial institutions or habits reduces the cognitive load of decision-making. Even when better alternatives exist, the anxiety of change can often win over the desire to improve.
2. Fear of Making the Wrong Choice: Uncertainty in any decision-making process, particularly when money is involved, can feel paralyzing. The fear of loss, regret, or even simply facing new and unknown territories means that sometimes the easiest decision is no decision at all.
3. Hassle Factor: Changing routines or financial products might require effort—even if it’s just a little research or a phone call. This hassle, combined with the risk of disruption, encourages many of us to stick with what we already know.

Think of it like holding onto that old streaming service subscription that you rarely use. Even if there are better packages available that could save you money, the process to cancel or switch seems like too much of a hassle. Research often shows that many people feel that the benefits of familiarity outweigh the potential gains from change.

We can also view this behavior through the lens of behavioral economics. The concept of status quo bias helps explain why people stick to existing conditions rather than making changes. When our emotions are involved, the brain often prefers the security of the familiar path, even if it means missing out on potentially better alternatives.

This is where investment psychology tells us that managing our emotional responses is as important as managing our finances. Realizing that these habits are a normal part of being human can empower us to gently challenge them, rather than succumbing to anxiety or stress when faced with decisions.

Important: Acknowledge that resisting change is just a part of our natural behavior. By understanding this, we can begin to make more informed and relaxed choices about our money.

Section 3: Simple Steps to Gently Check and Change

The good news is: you don’t have to overhaul your entire financial strategy overnight. Small, thoughtful actions can make a huge difference. Here are some actionable steps that align with the principles of investment psychology, helping you gradually shift from the comfort of the familiar to a more dynamic, rewarding financial strategy.

1. Set a Check-In Date

Rather than waiting until a crisis emerges, set a recurring check-in date to review your financial habits. This isn’t about stress or deep analysis; it’s a gentle reminder to evaluate what’s working and what might need tweaking.

• Choose a regular interval: For instance, every three months or at the beginning of each season can work well. Setting a routine helps mitigate the overwhelm of unexpected changes.
• Quickly glance at key accounts: Focus on your savings, checking accounts, bill payments, and any investments to see whether they align with your current needs and goals.

“A simple, periodic review can prevent small issues from becoming big problems. It’s about taking control and staying informed.”

2. Ask One Simple Question

When you sit down for your check-in, ask one clear question: “Is this still working well for me?” Instead of overwhelming yourself with choices, focus on whether the current setup still aligns with your personal and financial goals.

• If the answer is yes, you can continue as is, knowing that you’re in a stable place.
• If the answer is no, identify what aspects might be outdated or inefficient. It could be as simple as a bank account with hidden fees or a subscription you no longer find valuable.

This single question is powerful. It acknowledges the current comfort zone while gently nudging you to consider better alternatives. By contemplating just one question, you reduce the fear of making the wrong decision—it’s all about gradual improvement.

3. Start Small

Change doesn’t have to be immediate or dramatic. Often, small steps build the most lasting habits. Think of it as dipping your toes into a new water—gradually warming up to the idea of change rather than taking a plunge all at once.

• Automate a Bill Payment: Small automation can streamline your financial management and reduce the risk of late fees.
• Test Out a New Savings Account: Research and perhaps even open a side account to see if it better suits your evolving needs. By experimenting with one alternative, you open yourself up to potential benefits without making a complete switch immediately.
• Review One Financial Product: Instead of reevaluating all your financial products at once, pick one—maybe an old credit card or subscription—and see if there’s a better alternative.

Starting small helps in overcoming inertia. Every little change is a victory, and as you accumulate these small wins, your confidence in making financial decisions grows. This is a prime example of applying investment psychology: by breaking down what seems like a big decision into a series of manageable steps, you ease the mental burden and pave the way toward more advantageous financial choices.

This approach is not only practical but also profoundly transformative over time. Gradually, these minor adjustments can lead to better interest rates, fewer fees, and an overall healthier financial profile. The power of small changes has been backed by numerous behavioral studies—they demonstrate that incremental improvements often lead to significant long-term benefits.

Conclusion

While it’s completely natural to stick with the familiar, especially when it comes to our finances, it’s important to pause and ask ourselves if our current habits are truly serving our best interests. Investment psychology teaches us that comfort zones, while cozy, may also limit our potential for financial growth and security.

By understanding why we get stuck in our money ways, you can begin to gently nudge yourself towards more informed decisions. A regular check-in routine, asking the right question, and starting small are all steps that empower you to take charge of your financial future—one thoughtful decision at a time. It’s not about sudden, sweeping changes but rather about building confidence in incremental steps.

Remember, every financial journey is personal. What works for one may not be ideal for another, but the pursuit of better financial health is universal. As cultural and personal contexts vary, adapting these strategies to fit your unique circumstances is key. The essence is to gradually overcome the psychological barriers that keep you rooted in outdated habits, thereby liberating your financial potential.

Essential Insight: Small financial changes, when compounded over time, can lead to significant improvements. Embrace change as part of your growth journey rather than a threat to your comfort zone.

Your Next Step

Now that you’ve explored the reasons behind why we stick with what we know and learned some practical steps to check and change your financial habits, it’s time to take action. Consider scheduling a 15-minute review session next week. Look over one aspect of your finances—be it an old savings account, that seldom-used subscription, or even a recurring bill payment method—and ask yourself if it’s still the best choice for you. The goal isn’t perfection—it’s progress.

If you found these insights helpful, share this article with a friend or family member who might benefit from a gentle nudge towards smarter money decisions. Comments and questions are always welcome. At Calmvestor, we’re in this together. Our mission is to support and guide you on your journey to financial confidence with practical, easy-to-implement advice, regardless of where you are in your financial journey.

By being proactive today, you’re setting the stage for a more relaxed and empowered financial future. Remember, every little step counts, and over time, these steps add up to meaningful change.

Embrace the journey, challenge the status quo, and let your financial decisions reflect not only what is comfortable but also what is truly beneficial in the long run.

We’d love to hear from you! What small change are you going to make this week? Share your thoughts and experiences in the comments below, and let’s continue to support each other in reaching greater financial well-being.

Thank you for taking the time to explore this article. Here’s to a future where your money works as hard for you as you do for it!