Improve your sense of tranquility and mental well-being in the New Year by reducing cognitive dissonance – starting with your finances.
The holidays can be joyful, but social pressures, clashing cultural and family traditions, over-eating and spending invariably also leave many of us with a “cognitive dissonance hangover” once all the festivities are over.
Cognitive dissonance is the psychological discomfort that arises when our beliefs, actions, or values are misaligned, or we’re confronted with evidence that challenges deeply held convictions. It’s the sense of discord that results from unresolved internal contradictions. If we use it as a prompt for honest self-reflection it can be a powerful catalyst for both personal growth and social change. Conversely, ignoring cognitive dissonance often leads to chronic stress, anxiety, guilt, and shame. 1
The beginning of the New Year is an ideal opportunity to forgive ourselves for past mistakes and consider how to replace the discomfort of cognitive dissonance with internal peace by intentionally aligning our highest values with our goals, habits, and yes–since this is a financial column–our finances.
Identify Your Values and Areas of Internal Conflict
Financial choices are a practical place to start aligning your actions with your values. Reflecting on how you earn, spend, save, give, and invest can help you identify where your values and actions may be out of sync. Start with a list of core personal values such as generosity, integrity, sustainability, etc. If you’re struggling, search “core values list” online for inspiration. Psychologist and author Brene Brown has an easy to find list that includes an exercise on living your values.2 Narrow down your choices to a handful that feel most important to you.
Next, consider your goals: What brings you meaning? What do you want to accomplish or change in the world?
Once you’ve clarified your values and goals, examine how they intersect with your finances. Do the ways you earn, save, spend, give, and invest reflect or contradict your values?
Our brains are very good at protecting us from discomfort, so be aware of mental habits like confirmation bias, rationalization, or avoidance that may obscure misalignments. Do specific tasks like budgeting or doing taxes cause you discomfort? Are there areas you simply avoid at all cost? If so, these may signal cognitive dissonance.3
Align Your Spending and Saving with Your Goals and Values
Evaluate if any of your saving or spending habits bring up that uncomfortable feeling. For example, you may value sustainability and believe you are not materialistic, yet feel anxious about not having what others have, leading to impulse purchases. Rationalizing this with thoughts like “It’s sustainable” or “I deserve it” could cover up underlying needs for belonging or security. Identifying these motivations lets you set spending and saving goals that help you fulfill those needs while staying in alignment with your values, helping you build better financial habits and decrease cognitive dissonance.
Align Your Giving and Engagement Strategy
It’s impossible to eliminate all cognitive dissonance since societal contradictions are ever-present. Sometimes, the discomfort you feel points to issues beyond your individual control, like systemic injustice or poverty. In these cases, consider how you can engage more with causes that matter to you—through politics, philanthropy, or community work. Adjust your giving strategy for greater impact: set up recurring donations to charities, volunteer your time, or support local mutual aid efforts. For even greater impact, you might give beyond traditional norms, change careers to one that better reflects your priorities, or run for office.
Align Your Investments with Your Values
Reflect on which industries or companies create products that hurt people or the planet, and consider excluding them from your portfolio. You can avoid the worst offenders—such as companies involved in weapons, private prisons, or fossil fuels—without dramatically increasing portfolio risk, though reduced risk is not guaranteed.
Use your power as an investor for positive change. Participate in shareholder engagement by voting on key company issues or choose funds that practice responsible engagement. If you want even more direct effect, consider impact investing—putting your money into projects like solar energy or affordable housing. While this can be riskier and may offer lower returns, it’s a powerful way to align your investments with your principles.
To get started, work with a financial advisor familiar with responsible investing, or research mutual funds and ETFs labeled as “ESG,” “responsible,” or “fossil fuel free.” Review their investment strategies and shareholder practices to ensure they align with your ethical goals. Resources like the nonprofit As You Sow can help you get involved in shareholder engagement.4
Reducing cognitive dissonance, especially around your finances, can boost your sense of tranquility. While you can’t resolve every contradiction, these steps can help you feel more purposeful and at peace in 2026.
This material is intended for educational purposes only. You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost. LongView Asset Management, LLC is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.
[1] https://greaterbostonbehavioralhealth.com/rehab-blog/understanding-cognitive-dissonance/
[2] https://brenebrown.com/resources/dare-to-lead-list-of-values/
[3] https://thedecisionlab.com/biases/cognitive-dissonance?&adw=true&utm_campaign=21+Biases+-+Cognitive+Dissonance&utm_medium=ppc&utm_source=adwords&utm_term=leon%20festinger&hsa_mt=b&hsa_net=adwords&hsa_ad=500704987107&hsa_src=g&hsa_cam=12416038273&hsa_kw=leon%20festinger&hsa_grp=119028028715&hsa_tgt=kwd-95192063&hsa_ver=3&hsa_acc=8441935193&gad_source=1&gad_campaignid=12416038273&gbraid=0AAAAADQTTnv7_PF9sq4mBn-G-2KmxZ6Dq&gclid=Cj0KCQiAgbnKBhDgARIsAGCDdlcwZZDCiiZIN4p61Lgdmmg4gIxuGdGBaMFloD_XDpT1fNdffCoAkacaAgNnEALw_wcB
[4] https://www.asyousow.org/