Financial Decisions And Emotions
From what to eat, where to shop, what to post online, and with whom you spend time, average adults are faced with a plethora of choices from the moment we wake up. This is one of the reasons why we usually find it difficult to make the right decision. But it’s not so much as the number of options that seem scary; it’s the likelihood of picking the wrong choice.
Is there a single right way to make better decisions in life and work? What is the role of emotions in decision-making? Can we really control how we feel to obtain the desired results?
Have you ever purchased something in the spur of the moment and realized when you made it home that you didn’t really like or need it? Everyone wants to make smart financial decisions, but unfortunately sometimes emotions can get the best of people in the heat of the moment, having a negative impact on their long-term financial situations.
The following are common mistakes people make by allowing emotions to get in the way of financial decisions:
Ignoring financial issues:
It is important to address financial issues, such as increasing debt, as soon as they occur. Ignoring or avoiding these issues can have a negative impact on your financial picture, and it is a better decision to face them head-on.
Learn to move on
One of the key issues people have is quitting when they’re ahead. When things are going well, it’s easy to keep pushing. Regrettably, this isn’t always the best strategy. The economy, the real estate market, the stock market, consumer demand — all these things experience ebbs and flows. Just because something is going good or bad doesn’t mean it will continue to do so forever.
Anger leads to “I Deserve This”
Anger can be a scary emotion. Many of us were taught that anger is bad. And certainly, if it causes you to lash out or even turn violent, then your anger has become a genuine issue that requires professional assistance. For most of us, though, while anger is a normal response to something that upsets us, we tend to defuse our frustration or anger by treating ourselves with a reward. Anger (and disappointment) is one of the biggest fuels of a “I deserve this” mindset. When you find yourself saying (whether mentally or out loud), “I deserve this”, one should to ask themselves if they’re angry or upset instead. It’s okay to be angry or upset but buying yourself something is a short-term solution. Truly addressing your anger or frustration is the better answer.
Don’t let your emotions make decisions
The process of reconciling what you know to be true in your head, with irrational feelings, is not an easy one in any aspect, and that includes your finances. For some, the example might have shown itself with this major consciousness. But for you it might be the consolidation of a deceased loved one’s estate or letting go of your tendency to hoard items simply because of the emotional security they bring you.
While emotions should not be ignored, and one should consider the idea of being guided through them for certain occasions, but remember that there might be some spells in life when the financial aspects won’t be aligned with emotional aspect.