Challenging the optimism bias

Being optimistic plays a big part in how we live our day-to-day lives. It allows us to keep going and not focus too much on what could go wrong. However, this optimism bias could have the opposite effect when it comes to making important decisions and setting financial goals.

Defining optimism bias

Optimism bias is a cognitive bias or hard-wired way of thinking that causes you to assume that everything will work out for the best. It makes us believe that we’ll live a long life, we’ll always be healthy and have a steady income. We understand that bad things happen, but we don’t think it could happen to us. While there’s nothing wrong with being hopeful, this way of thinking could mean that we’re not prepared if the unexpected happens.

In fact, our research1 shows that 39% of people believe that having a positive outlook will help them achieve their goals. We also found that as a nation, we’re naturally optimistic when it comes to thinking about our future. But is that a bad thing? Is there a difference between positive thinking and optimism bias?

The right side of positivity

Being positive contributes to our overall happiness and motivates us to continue working towards our goals. We may choose to see things in a good light, but we’re still aware of any potential risks and challenges. With optimism bias, we believe that there will always be a positive outcome and, this can cloud our judgement when it comes to making important decisions for our financial future. Setting long-term goals can also be challenging because we don’t think we need to look too far ahead. So, what’s the solution?

Do you think you have optimism bias?

It’s not always easy to identify optimism bias. To make sure you stay on the right side of positive, ask yourself:

1.     Do you think about the unexpected happening?

2.     Do you see the world through rose-tinted glasses?

3.     Do you think that everything will always work out for the best?

Finding a balance                       

We know that thinking about the future can make us feel uneasy. We don’t want to imagine that there’s a possibility we could become seriously ill, lose our job or have an accident. But by allowing ourselves to think about the long term, we can become comfortable with the uncomfortable and start putting plans in place. So, we can be both positive and prepared as we look ahead.

Whether you’re taking your first step to setting your financial goals, or you’re already thinking long-term, there is help available. If you would like any guidance from a financial adviser, visit 

The Money and Pensions Service is also there to help with guidance through their MoneyHelper service.


  1. Source: The research was carried out online by Research Without Barriers – RWB, between 18th February 2022 and 22nd February 2022, from a sample comprising 1,001 UK adults.