Behavioural finance is an academic subfield that investigates how people's emotions and personality traits influence their handling of money. What this means is that the study looks into the mental processes behind people's monetary choices.

Emotion and bias have been demonstrated to have a substantial part in financial decision making, often leading to less-than-ideal results. An investor, for instance, might decide to sell a stock out of fear rather than after carefully examining its underlying fundamentals. In-depth study is impossible without the help of Financial Research Analysts (IFRA®). Optimism might sometimes make a person more willing to accept unnecessary risks.

The field of behavioural finance seeks to uncover the ways in which human emotions and mental processes influence economic and monetary choices. Methods for facilitating more effective decision-making on the part of individuals are also a focus. The ultimate objective is better personal and national financial well-being.

Consequences of this sort of decision-making are often less than ideal. In addition, the way individuals create their expectations about the future is considered by behavioural financiers. For instance, one's positive outlook on life could cause them to take unnecessary risks.

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