Emotions are reflected in everything a person does, including shopping, saving, and investing. Losing your control can limit the proper management of your expenses, deviate from your financial goals, and incur over-indebtedness.
The importance of having emotional intelligence is to identify the emotions that most influence when making economic decisions, among which is fear.
This feeling can make you lose sight of opportunities like investing in profitable businesses or the stock market for fear of losing.
This emotion should not be confused with a conservative profile or control of investment, savings or spending. Being in control of your money is vital. The problem is that the lack of information or financial advice makes you make the wrong decisions.
Similarly, sadness, in many cases, is usually a mortal enemy of your wallet. This feeling of pain leads many people to buy goods and services that are not necessary, but because they want to fill that emotional void, they resort to acquiring “things” without prior planning.
Happiness, the opposite of the previous emotion, could also make them make poor decisions regarding their income. This is because they can feel “giving”. And it’s not bad. The problem is when you lose sight of keeping the budget “to the letter” and spend more money than budgeted.
The feeling of guilt is often a bad advisor to your personal finances, as many people resort to excessive and recurring spending on gifts or money as a way to “make up” for their lack towards someone.
Overconfidence is dangerous for your finances. This emotion, contrary to what is believed, leads many to not protect their money, fall into expenses and make financial movements without assessing the risks.
When the impact that a financial decision can have is minimized, the consequences will be dire. A healthy optimism is good, but you must identify when it will blind you. Put your “feet on the ground” and adjust with your economic possibilities.
Likewise, there is envy, that mental state or misfortune for not possessing what the other has. Envying the belongings of others can lead you to incur expenses without control, for wanting to lead a similar life.
Remember that income, economic needs, financial goals, debts, and monetary commitments are different in people, even if they have the same salary range and age.
Don’t forget that “keeping a cool head” is vital when making smart financial decisions.
Don’t let emotions take a heavy toll on your wallet.
Guidelines to avoid emotional spending:
1- Identify the emotions that make you spend more and avoid economic decisions when you have them.
2- Change your bad consumption habits and try to make your expenses more efficiently.
3- Pay your debts and save before spending on unnecessary items.
4- Educate yourself on personal finances or seek advice from a specialist in the area.
