Beneficial State Foundation Perspectives

Our thoughts on changing the banking system for good and building the new economy

The hidden factors that impact your financial decisions

Tucker Brofft was a 2018 Beneficial Banking Fellow based in Oakland, CA.

It has been a privilege to research financial empowerment resources and provide recommendations to Beneficial State Bank on how to enhance its financial literacy programming in my role as a Financial Empowerment and Education Fellow.

Your financial wellness is tested every day, from deciding how much money to spend on lunch, to navigating the complicated process of getting a car loan. But like any decision, there are numerous conscious and subconscious factors that influence us. Below are some of the most common factors that affect financial decisions.

State of mind:

Studies have found that attitude and self-perception can influence your financial decisions. For instance, people who exhibit more self-confidence in their ability to control their life’s outcomes are more likely to feel motivated to stay on track toward their financial goals. Knowing how much personal characteristics and state of mind affect financial decision-making means there is ample opportunity for meaningful behavioral interventions that help people to save, such as those being tested at Common Cents Lab.


Past experiences with making financial decisions can either help or hinder your decision-making process: positive experiences can enforce beneficial financial behavior, while negative experiences may deter you from engaging with financial institutions. Contrary to popular belief, those with less disposable income are more likely to better assess financial decisions than those with more disposable income, as they typically have much more experience making decisions and assessing the cost while keeping financial constraints in mind.

Time and availability of options:

This may seem obvious, but the more time you have to make your decision, and the more options you have to choose from, the more likely you are to make a choice that will be most beneficial for you.  Conversely, this has harmful effects for people who need to work multiple jobs, or those without the financial capacity to hire a financial adviser—which is why we need more programs and policies that provide support for people with lower incomes. Creating a higher minimum wage, developing stronger social support programs, and increasing access to beneficial financial services are a few ways states and municipalities can provide much-needed support to people who are looking for assistance when making financial decisions.

Financial decisions can feel like a burden, but there are many ways you can put yourself in the best position to make decisions that are in your best interest:

Check if you are in a good state of well-being when making decisions: Checking in with yourself to make sure you are feeling happy, healthy, and confident can help ensure your mind is clear of distractions.

Invest in your financial literacy and consider the big picture: Building up your understanding of personal finance can help you develop healthy habits when it comes to managing your finances. Framing your decision within the context of your overall financial situation can provide you with a holistic understanding of your choices and their potential impacts.

Research the pros and cons: Taking the time to learn more about the decision you are making, seeking advice from knowledgeable individuals who you can trust, and evaluating the pros and cons of your decision can build up your confidence in your choices.

Broadly, all of us should advocate for more support from federal and state governments to help mitigate potential harm from financial decisions. Policies and programs designed to support low and medium-income families, such as free childcare or enhanced social services, can help people reach their savings goals, increase their confidence in their financial stability, and give them more flexibility by providing a safety net. This, in turn, can lead to increased chances of upward mobility, leaving people with more energy to focus on financial matters, and giving them more time to assess their options.

Financial decision-making can be a time-consuming and difficult process, but systemic changes that provide more social services for low- and moderate-income individuals can make massive differences for those who are living paycheck to paycheck.

This blog post reflects the author’s personal views and opinions, and does not represent the views and opinions of Beneficial State Bank and/or Beneficial State Foundation.