Lesson 1 of 3 · 7 min
Five biases that spend your money
Loss aversion, FOMO, recency, anchoring and herding — what each one feels like from the inside, the tell that gives it away, and why knowing barely helps.
Your brain runs on shortcuts that were brilliant for dodging predators and are terrible for handling money. They are not flaws in you personally — everyone runs the same firmware, including fund managers and the people who design apps to exploit it.
Knowing the five big ones by name is most of the defence, because a bias you can name mid-feeling loses much of its grip.
| Bias | What it feels like | Where it shows up |
|---|---|---|
| Loss aversion | Losing ₹500 stings far more than winning ₹500 pleases | Holding a losing position 'until it comes back'; refusing to book a small loss until it has become a big one |
| FOMO | Everyone around you seems to be getting rich without you | Buying whatever the group chat is excited about, at whatever the price happens to be that day |
| Recency | Whatever just happened feels like what happens next | Assuming a market that rose for three years rises next year too — or that one crash means crashes from now on |
| Anchoring | The first number you see becomes 'normal' | A ₹2,999 price slashed to ₹1,499 feels like a saving you never actually made; 'minimum due' on a card statement reads like the amount owed |
| Herding | Doing what the crowd does feels safe | Crowds pile in nearest the top and leave nearest the bottom — average in, average out |
Quick check
A stock you bought at ₹500 trades at ₹350. Selling feels impossible, even though you would never buy it today. Which bias is talking?
Work it out yourself
Anchoring has a price. 'Minimum due' is the anchor printed on every card statement — put a balance in and see what treating it as the real bill costs.
Credit Card Minimum Due CalculatorMyth
“Once you know about biases, you become immune to them.”
False
Research on this is humbling: awareness barely dents the effect in the moment, because the biases fire before deliberate thought arrives. What works is changing the setting instead of the self — automatic transfers that pre-empt the decision, a cooling-off day before big buys, deleting the app whose alerts set your anchors. Design beats resolve, because design does not have bad days.
Match them up
Five biases, five tells
Pick a bias, then pick what it feels like from the inside.
Pick a term on the left.
Check yourself
1 / 3
Kabir asks
A share you bought at ₹500 trades at ₹350 and selling feels impossible. Which question cuts through it?
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