Even the Unbiased have Biases


CentsAbility’s tagline is “unbiased financial education”, but we wouldn’t be human if we didn’t carry some biases.  In the name of transparency, here’s what we believe:

1. Good enough beats perfection

Will you be healthier if you exercised for three hours each day and never ate chocolate cake again?  You bet.  Is every person that aims for that goal doomed for failure?  Almost certainly.  Yes, you need life insurance – but an informed guesstimate is fine.  Yes, you should do some loose form of budgeting – but tracking every penny for the rest of your life doesn’t have to be it.  Yes you should save for retirement – but it’s impossible to know exactly how much.  And yes you should invest – but doing hours of stock analysis is not necessary.

Perfection is unrealistic and usually impossible in every day life.  And yet the fear of making an imperfect choice so often leads to making no choice at all.  So when faced with “good enough” action vs paralysis, we vote for any step that moves you in the right direction.

2. Process goals beat outcome goals

Here’s an outcome goal: I will win my next tennis match.  Here’s a process goal:  I will practice tennis every second day for one hour.  See which one you have much more control over?  Breaking outcome goals into step-by-step process goals empowers and motivates.  How do you eat a whale?  One bite at a time!

3. Simplicity beats complexity

We believe:

  • Low-cost mutual or index funds beats picking individual stocks
  • For temporary needs, term insurance beats whole life insurance
  • Finding an advisor you trust beats spreading your money out among many

Simple strategies often perform as well as, or better than, complex ones. And as a bonus you’ll actually understand what’s happening with your money.

4. Wanting what you already have goes a long way to being financially successful

We humans are on a hedonic treadmill.  That’s the tendency for humans to return to their normal state of happiness even after major positive or negative events happen.  Sobering thought if you believe you’ll be happy once you get X, Y or Z.

You don’t have to love everything about your life.  And you can take steps to change things – remember process goals above? But remain grateful as you strive for the next thing, as in ”Man I wish we could own a bigger house…and my life is blessed”.

5. Human nature has its weaknesses, so set good defaults

Did you know that willpower is a finite resource?  Setting smart defaults means pre-selecting smart options for your money.  And that means you don’t have to be making willpower-draining decisions over and over, exposing you to bad choices. So automate whenever possible: Auto-save.  Auto-escalate those savings.  Join your group savings plan at work.  Can’t handle lines of credit or credit cards? Go for an installment loan instead.

When automation isn’t possible, set a personal default position.  Tax refund, bonus or inheritance?  Follow the 40/40/20 rule: 40% toward debt, 40% toward savings and spend the rest. Love to shop but spend too much?  Go shopping with cash only.  Get invited to too many home parties?  Have a personal policy of neither hosting nor attending them (…guilty as charged, and no offence).

6. Update your Net Worth every month

Okay, so this isn’t really a bias, or a belief.  But we think it’s one of the most important things you can do for your money.  And we don’t mean kind-of-guessing at what your Net Worth is each month.  It means logging in, getting hard numbers, doing some basic math and then looking for trends.  Reviewing your Net Worth each month creates a powerful feedback loop that allows you to adjust and get on the track you want.

7. Have an updated will and enough life insurance

Absolutely non-negotiable. Your loved ones deserve this.

8. Passive investing is a great choice, but it’s not for everyone

We love the low-cost passive options of index and exchange-traded funds (ETFs).  We believe that over the long run, passive investing will outperform active investing.  And that do-it-yourself passive investing is a viable option for the right investor.

However, most financial advisors sell active, not passive, investment products.  And many investors are better off using an advisor if it helps them invest their money appropriately and confidently. Especially if the advisor can help manage emotions through market cycles.

9. Building wealth takes patience and work

We’re sorry, there is just no road to easy wealth.  If you are looking for a hot stock or a way to get rich quick, CentsAbility isn’t for you. Instead, we believe in having a plan, saving regularly, making sacrifices, and committing to an investment strategy that suits you.

And step-by-step, we’re here to help you do that, biases and all.

Rich regards,


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1 reply
  1. Naheed Gilani
    Naheed Gilani says:

    Really like some of these strategies, and the pragmatic approach to index investing (ie. it’s not for everyone!). This isn’t the typical list of items that I find on other personal finance sites.

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