Why You Should Give in to Money Emotions
If we talk about your money, then there is one truism: Do not let your emotions take over you the upper hand : you do not want to sell when the market is collapsing , to spend money on something that you can not afford when you are in a bad mood or constantly give money to your loved one without any conditions.
But succumbing to emotion in certain circumstances can be a boon to your finances. That’s why.
When you are emotional about something, it usually means that you care. And research shows that we tend to make decisions based on our emotions , even if we know better in theory. So why not use this? Instead of focusing on arbitrary goals and measures of success, think about what matters most to you and use that to chart your financial course.
And as Carl Richards, Sketch Guy, wrote in the New York Times in 2013, sometimes the exact numbers just don’t support what matters most to you. For example, putting aside more money for retirement and lowering your tax bill at the same time might be the smartest move on paper, but it doesn’t take into account your other goals, such as buying a home (definitely no longer a “best” investment). or go on your dream vacation.
Looking to start a small business? Open a separate high-interest savings account specifically for this purpose and give it the name of your future company. Seeing this and visualizing your business will certainly be more inspiring than entering a goal in an Excel spreadsheet.
“One of the main reasons we misbehave is because we only respond to emotions, not facts. But the opposite is also true, ”writes Richards. “When we only look at the facts and don’t take the time to understand our emotions, it can create regret and make it difficult to behave.”
As Richards writes, when we simply take facts into account, we do not anticipate how we will feel about our choices – we need to think about our decisions, both financially and emotionally. You don’t want to save X percent of your paycheck every month just because “this is what you have to do” to the detriment of your emotional well-being. Obviously, you should save money, but you should also consider the opportunity cost emotionally and financially.
There is more to life than just numbers on a piece of paper.