Financial Decisions And Emotions
From what to eat, where to shop, what to post online, and with whom you spend time, average adults come across plethora of choices the moment we start the day. With abundance of choices there is likelihood that a wrong decision is made. What scare us is the fear of making a wrong decision.
One wonders is there a way to make a better decision in social life or at work? One also ponders does emotions play a key role in making a sound decision? The million-dollar question over here is; are we equipped to take control on our feeling in order to make a right decision?
Many a times we purchase an item out of our impulsiveness not realizing it was not really needed. It is our desire to make clever 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 some of the misjudgments people make emotionally while they make financial decisions:
Ignoring financial issues:
It is important to address financial issues, such as increasing debt, as soon as they occur. Ignoring these issues can have a negative impact on your financial picture the longer you avoid addressing them instead of facing 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 told 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) subconsciously trigger “I deserve this” mindset. Such person frequently tell himself “I deserve this”. When confronted with such a situation the person should in fact do some soul searching and assess could it be because he is angry or upset. The right way to address such a situation is to overcome the anger. Making oneself happy with a small purchase is just a one time or a short-term solution.
Don’t let your emotions make decisions
One has to reconcile with the situation and not being washed away with irrational feelings, this is so true when it comes to managing finances. There are times when emotional attachment gets strong because of affiliation with things like property and old household items. To let go of such emotions or items get unbearable.
While emotions should not be ignored, and one should consider the idea of being guided through them for certain occasions but remember that there are going to be some spells in life when the financial aspects won’t be aligned with emotional aspect.