I’ve been thinking a lot lately about the various areas of life where I consistently make decisions that might not be optimal, but I’ve never really stopped to think about why or how I make these decisions. When it comes to money, these are referred to as financial blind spots.

Last week, I nearly merged into another car that had been driving in my blind spot. Honestly, I already despise driving, so incidents like this make me nervous to get out on the road at all. In fact, during the 5 years of my adult life (while living in Shanghai) that I didn’t own a car, I never once missed driving. 

However, driving is pretty much a necessity in today’s world, and so is managing your money. So, while we can’t completely avoid blind spots, we can become more aware of them so that we can avoid steering in the wrong direction (pun intended!). 

What Are Financial Blind Spots?

We all have gaps and biases when it comes to making personal money decisions and those go unnoticed, they become blind spots. This recent article by Tim Maurer (which is what got me thinking about all of this!) has some great examples.

It’s difficult to notice these things because we get stuck in our:

• Habits
• Routines
• Emotional comfort levels

These blind spots can be formed from doing things the same way (even when our situation has changed!), gradual changes in spending habits that creep up on us, or simply not knowing there’s a better way.

It’s helpful for our brains to go on autopilot and keep doing the same things we’re used to, especially if it’s worked well enough for us in the past. It’s normal to gradually increase spending and keep up with those around us. And, no one has unlimited time to learn every detail of personal finance (like the entire tax code or detailed legal implications of estate planning). 

Most of the time, if we knew we had these financial blind spots, we’d be able to address them, but most of the time we go years–or even decades–without even recognizing them. 

Common Financial Blind Spots to Watch For

Typically, blind spots are caused by either a lack of awareness or a lack of knowledge. When it comes to money, it can be both. Let’s look at some examples.

Spending Patterns

There are numerous studies that analyze how people spend money, which I find absolutely fascinating. One of my favorite money books, Dollars and Sense, is a great read for those who want to identify some of their blind spots when it comes to spending.

Many of us underestimate how much we spend simply because we don’t track our cash flow. We might make different decisions once we truly understand where our money is going, and whether it aligns with our values.

Small expenses that have become habits (like daily coffee runs and lunch out) add up quickly and you won’t realize it unless you step back and look at the bigger picture (which in this case is the total you’re spending).

Recurring expenses are the ones that I find to be underestimated (and ignored) most frequently, especially because they are automatically billed and paid each month or year. While I don’t recommend paying everything manually (I personally have autopay set for everything I possibly can), it’s important to at least acknowledge these expenses and make sure you still find value in them.

There are some other spending behaviors that can be blind spots. Some people will drive around for cheaper gas to save a few dollars, but then not spend 15 minutes getting updated insurance quotes, which could result in hundreds of dollars of savings.

When it comes to spending, there’s not a “right” or “wrong” way to spend money. The key is being aware of how much you spend, why you’re spending the way you are, and whether you’re using your money toward the things that matter most to you. If you’re doing that, it no longer becomes a blind spot.

Emotional & Behavioral Biases

Being human means that we don’t always make the rational choice, especially when it comes to money. Emotions often get in the way of the ideal, so it’s key to be aware of them and how they’re impacting your financial life.

The biggest blind spot I see when it comes to emotions and money is avoidance. Money is such a taboo topic in our society that often people end up carrying around a lot of shame, guilt and fear. This only compounds money problems (especially when it comes to debt!). 

A blind spot (often related to avoidance) is a sense of overwhelm, which can keep you from doing anything at all. When we feel like it’s all too much, we don’t take the next step that we know will help us move forward.

We also tend to compare our money habits to friends and family, either feeling worse about our own situation, justifying our own situation, or trying to keep up with others. Comparison is rarely helpful, especially because we don’t see the underlying details of someone else’s finances.

On the other side of trying to keep up with others, some people save too much money (yes, I believe there is such a thing!) and refuse to spend on things that would truly improve their lives. Oversavers would rather spend hours fixing or doing something themself when the value of their time greatly exceeds the cost savings. Sometimes, people actually enjoy doing yard work (no, that’s definitely not me!), but frequently it’s due to guilt, fear and anxiety.

Knowledge & Experience Gaps

When it comes to financial knowledge, blind spots appear when we don’t even know what we don’t know.

Some of our money behaviors come from what we learned growing up. There’s a statistic that income among brothers is more highly correlated than height (crazy, right?!). Whether we consciously realize it or not, a lot of our thoughts and behaviors when it comes to money are a direct result of what was modeled for us in childhood.

Sometimes, we focus a lot on the area we know a lot about and optimize it, such as cash flow and budgeting, but largely ignore the areas we don’t know a lot about, such as investing.

Our financial system is complex: we’re supposed to figure out how to invest our retirement funds, whether we should contribute to a Roth or a Traditional account, file our taxes with a tax code full of rules and exceptions, make a plan to pay off student loans, etc.… The system isn’t designed to help the average person, and it’s difficult to figure out how to navigate it all. 

At the same time, it’s important to understand how things like fees, interest rates and taxes impact your finances, both now and in the long term. Knowledge is power.

How to Identify and Fix Your Financial Blind Spots

The good thing is, awareness goes a long way. But, it requires being willing to do things you haven’t done before, think about things in a different way, and learn new things.

Sometimes, you need an outside perspective to identify some of these blind spots. This is where a trusted friend, financial coach or financial planner can help.

Other times, financial education can help you understand some of the things you’re missing, such as how to invest, minimize your taxes, or set up processes to track cash flow.

One of the key ways to identify blind spots, though, is through noticing areas of managing your personal finances where you feel confident and others that make you anxious and uncomfortable (those are the areas to look into further!).

Tim Maurer explains the importance of emotions in identifying blind spots in the following quote:

“Blind spots may live in patterns we feel but haven’t named yet.”

If you’re looking for a way to identify some of your own financial blind spots, here are a few additional tips:

• Track your spending in detail, at least for a few months
• Look at trends in spending from previous years
• Analyze the emotions behind your spending transactions – what were you feeling when you spent this money?
• Look at the big picture – what would someone outside looking in think were your values if they looked at how you spend, save and give money?
• Compare how you currently manage your money with how your parents managed money growing up

Overall, looking at financial blind spots results in you asking the question:

Why do I do ________ this specific way? Is it improving my life (both financially and otherwise), or not?

When you find areas that need more attention in your life, take some small steps to move forward in the right direction without getting overwhelmed. When needed, hire someone to help you address issues that you’re not able to solve on your own. You can even use AI (with the right prompts) to review your situation and provide you with insight you might not have considered.

Final Thoughts

Financial blind spots are simply part of being human (we all have them!). 

But the more willing we are to pause, reflect and ask ourselves difficult questions, and learn more about financial topics, the more likely we are to uncover opportunities to move forward and grow. 

With this new awareness, we can focus on making more intentional choices that improve our financial lives, which improve our entire lives (because money is so much more than numbers!).