IN every aspect of our lives, we are ruled by a (mysterious) force known as our emotions.

These stop us from being rational and from making decisions, which may be to our benefit – just as often these decisions affect our money.

But there are ways to overcome this force, to harness its power for good, once we know what we are dealing with and how it makes us behave.

Don’t hang on: loss aversion

This force can cause us to hold on to an investment for too long.

Often, shares in a company will fall and keep on falling and we are afraid to sell because we don’t want to experience the pain of realising the loss.

Once we know we are being affected by loss aversion, we can act to cut our losses, and move on.

Unfollow the crowd: herd behaviour

Copying others helps us to make mental short cuts about what is right or wrong.

But sometimes following the crowd – known as herd behaviour – makes us act without thinking.

When everyone is raving about an investment or property location, it’s best to take a step back and look at the fundamentals before you make a decision.

Get a move on: procrastination

The force that stops you from doing what you know you should be doing but don’t is called procrastination.

It may be a delay in setting up a monthly budget or deferring a review of your investments.

Either one could cost you money, but once you know you are procrastinating you can do something about it.

It’s easy to fall victim: overconfidence

Feeling brash can be empowering in many cases, but you must be wary of the effects of overconfidence when it comes to your money.

Previous bullish investment decisions may have paid off, but you must not let success cloud your judgement in future.

Take each opportunity on its own merits and don’t assume you have special knowledge or insight.

Consider the future: hyperbolic discounting

It’s easier to delay starting a pension than to want the latest internet-connected television because we consider the effects of our decisions less the further in the future they fall.

This preference for immediate gratification is known as hyperbolic discounting.

But it’s worth considering how important a decision on your future can be, and imagine how much worse off your future self could be if you don’t act sooner.

High-profile doesn’t mean high-quality: availability bias

It’s not unusual to be swayed by information that is prominent or newsworthy, say if a high-profile technology company brings out a new product or service.

But this availability bias, as it is known, may cause us to also favour these firms from an investment point of view.

Again, it’s always best to take a considered view of an investment and not be influenced by factors that may be well known but not well explored.

We can’t all have a Jedi-master-like control over our emotions.

But once we know how our feelings affect the decisions we make, and our investment choices, we can take steps to make improvements to our wealth.

Neil McLoram works in business development at wealth management firm Brewin Dolphin, based in Newcastle.

The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin. No director, representative or employee of Brewin Dolphin accepts liability for any direct or consequential loss arising from the use of this document or its contents. Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation which is subject to change. The information contained in the text is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. The value of investments can fall and you may get back less than you invested. The information is for illustrative purposes only and is not intended as investment advice.