Financial decisions are often viewed as rational processes based on numbers, forecasts, and logic. In practice, however, our choices are regularly influenced by less visible factors such as stress, habits, and automatic responses to uncertainty.
This is where self-awareness becomes useful. It's a core skill within mental fitness: the ability to recognise our thoughts, emotions, and behaviours as they're happening, and to understand how they might be shaping our actions.
Self-awareness helps create a pause between impulse and action - creating a clearer sense of what's driving our behaviour allows for more deliberate choices.
The brain under pressure
Neuroscience research highlights the role of the brain's prefrontal cortex which is responsible for executive functioning, this includes self-regulation and planning. When we're mentally overloaded or under sustained stress, the parts of the brain responsible for forward-thinking and decision-making tend to be less active.
A small but valuable habit
Positive psychology approaches self-awareness as a practical tool for building agency and self-management. It doesn't require deep introspection just small, consistent habits of observation. For example, noticing when decisions feel rushed, or identifying situations where the same challenges tend to repeat themselves. These small check-ins can help reduce friction and lead to more deliberate action.
The role of the environment
Self-awareness is also connected to context. Ecological models of wellbeing highlight how our surroundings whether its digital, social, or physical can shape how we think and behave. A fast-paced schedule, constant notifications, or even background noise can all affect decision quality. Becoming more aware of these subtle influences helps us manage them more effectively.
A learnable practical skill
Importantly, self-awareness is a learnable skill. It can be developed over time through reflection, feedback, and small behavioural experiments. This might involve adjusting when certain tasks are done, building in brief pauses before making key decisions, or reducing exposure to known distractions.
In practice, greater self-awareness supports more intentional decision-making. It doesn't eliminate pressure or uncertainty, but it helps create a gap between stimulus and response. That gap can be the difference between a reactive decision and a considered one.