What’s the point of integrating our emotions into financial decisions?
We can be led to believe that all financial decisions are a simple equation. We can run the calculations and get a YES or NO without having to consider the emotional impact!
It is true that calculations are a big factor in making financial decisions, but without integrating our emotions and values into the decision-making process, we could end up making decisions that a calculator says YES to, but your plan says NO to.
For example, a calculation may tell us that it doesn’t make sense to pay off low interest debt, giving us a NO answer, but the emotional security that paying off that debt provides you give us a YES answer, and many times, that emotion can outweigh the numbers.
Also, a calculation could tell us that starting or expanding a business is too big a risk, but the risk to you being stuck in an unfulfilling career when you have entrepreneurial ambitions could again trump the numbers.
Humans are not ‘econs’, which essentially means we are not always economically rational. By embracing the emotional side of being human, we will make decisions that will balance the calculations with our emotions, leading to decisions that both make sense by the numbers and fulfill our personal values
So where have you seen your emotions play a role in financial decisions? How has this led to better outcomes for your financial future? Email me (below) and tell us your story.
