Prices are up and you're avoiding your numbers. Here's what's happening in your brain.
Tariff-driven price rises are hitting everyday goods. The urge to stop looking at your spending? That's the ostrich effect.
The price of everyday things went up, and it wasn’t random
CNBC reports that researchers at the New York Federal Reserve found the cost of 67 categories of goods was 2.9 percentage points higher as of February because of tariffs. Without the levies, the New York Fed team found that prices for the products they studied would have pulled back by almost 1%. So that creeping feeling at the checkout, or when you’re buying supplies or kit for your work, it’s real. It’s not you being bad with money. The prices genuinely moved.
Now, here’s the bit I want to talk about. Because when prices move and we feel like we can’t control them, a lot of us do something very specific. We stop looking.
This is called the ostrich effect
Galai and Sade named it: the ostrich effect is the tendency to avoid information about your finances when that information feels threatening or painful. Like the ostrich with its head in the sand, right.
So prices go up. Your grocery run costs more. Your software subscriptions have crept. The materials or tools you buy for your work are higher. And because you didn’t choose any of that, because it feels external and unfair, your brain decides the least uncomfortable thing is to just not check the numbers this week.
And then not next week either.
And suddenly you haven’t looked at your spending in two months.
This is not laziness. It’s not weakness. It’s your brain doing exactly what it’s wired to do: avoid the thing that feels bad. The problem is, avoiding the information doesn’t change the information. The prices are still there. The money is still going somewhere. You just don’t know where.
Why this hits self-employed people harder
If you’re employed, a pay rise or a cost-of-living adjustment might come through eventually. You’re not negotiating that yourself.
But if you’re a coach, a therapist, a consultant, a freelancer, someone in the trades, your revenue is often tied to a rate you set months ago, or a package price you wrote last year, or a day rate you haven’t revisited. Your costs go up with everyone else’s. Your income doesn’t automatically follow.
So the gap quietly widens. And the ostrich effect means you’re less likely to spot it, precisely when you most need to.
The New York Fed’s report also notes that consumers are still expected to pay elevated prices into 2027. This isn’t a one-month blip you can ignore until it passes.
What’s actually happening in your head
The ostrich effect links closely to what Kahneman and Tversky identified as loss aversion: the pain of losing something feels about twice as strong as the pleasure of gaining the equivalent. When you look at your bank account or your spending and the numbers feel bad, that’s a loss-flavoured moment. Your brain wants to protect you from it.
And Richard Thaler’s work on mental accounting is in here too. We tend to keep vague, separate mental pots for money, and when one pot feels uncertain or scary, we stop updating it. We just sort of… leave it at the last number we felt okay about.
The result is that your mental picture of your finances drifts further and further from reality. And the longer the gap, the worse the moment of catching up feels, so the longer you wait. It compounds.
One small thing for this week
Not a full audit. Not a whole financial review. Just this: open your last three months of statements and write down one number. Total what you spent on the everyday stuff that’s been creeping, your supplies, subscriptions, food for the business, anything that isn’t a big planned purchase.
Just the number. You don’t have to do anything with it yet.
What you’re doing is pulling your head up. You’re breaking the ostrich loop. Because the ostrich effect loses its grip the moment you have actual information in front of you. The number, whatever it is, is just a number. It can’t hurt you the way the not-knowing can.
Then, if you want to think about what that means for your pricing or your costs, that’s a conversation worth having with a qualified financial professional who knows your full picture.
If you want to go deeper on this
If you’re self-employed and your money still feels chaotic even in good months, this is exactly the kind of thing we work through in The Money Story Method, my 12-week one-to-one programme. It’s not just about the numbers. It’s about why you’re avoiding them, and how to build a setup that makes looking feel less awful.
Or if you’re not ready for that yet, The Thursday Money Note goes into this stuff every week: the behavioural side of money, written for people who earn well and still feel behind. You can find the link in my bio.
Source: CNBC Economy
Joel