It’s probably more difficult than we realize to extricate money from our emotions. Some of us spend when we’re happy. Others spend when we’re sad. Our childhood memories remind us of how much or how little we had. We equate spending money with personal success or we err in the opposite direction, hoarding every penny we are blessed with. Personal finance is just that – personal. Since there are so many different feelings at play each and every time we engage in commerce, it would be wise for us to reflect upon practices to improve our financial emotional health.
Wait A Designated Period of Time Before Making Your Decisions
It’s easy to respond without thinking things through thoroughly. Sometimes waiting a day, a week, or even a year will yield an incredibly different result. Set up a framework in your life that allows you to at least sleep on an un-budgeted purchase. Granted, this might mean that you miss out on a deal or your sought after item finds a new home. However, your delay could also save you both dollars and regret. For smaller items (Think: A new pair of jeans, a new tennis racket, kitchenware, or leaf blower), spend at least 24 hours before you make your purchase. For big ticket items (Think: furniture, a car, booking a vacation), spend at least a week during research and another day or two before you make your final decision. Purchasing a new home or deciding to change jobs should be something you spend at a minimum a month evaluating your current circumstances, setting a budget, and investigating opportunities before you make a leap.
Talk to Someone Else
Merely speaking our plan out loud can sometimes cause us to pause and reflect on whether or not we’re reacting to an emotion or truly contemplating our true motives. While you could certainly talk to yourself, it might make more sense to find someone you trust who can be a sounding board. If you’re married, this person needs to be your spouse. However, keep in mind that money can be equally emotionally for your spouse and cause conflict. Seeking wise counsel is not an excuse to blame or accuse your significant other for their choices, instead it’s your opportunity to get his or her honest opinion. Be vulnerable and have an open mind because you may realize it’s not the best choice right now or at all.
Recognize When You Are at Your Weakest
Carefully observe your own patterns of behavior and habits. If you know you spend wildly during certain emotional seasons of your life, put safeguards into place to keep you from making an unwise decision. Times of grief, stress, and lack of sleep can all influence the ways we approach money. When you are stretched thin emotionally or overtired, you almost always spend more than you would if you were well rested and whole. Whether it’s choosing to only bring a set amount of cash or even leaving your debit card at home, placing a boundary or intentional practice in between you and an emotionally driven investment can avoid a myriad of mistakes.
Reverse Your Role
If at all possible, try to look beyond your own personal circumstance. Is the decision you are about to make one you would advise your children or a young person you love to make themselves. Most of us would never wish upon another a poor choice we’d readily make for ourselves. Before you dive into a dire economic situation, pause and ask the question this question of yourself. If you wouldn’t tell someone else to make the same call, walk away as quickly as possible.
The worst thing you could do is to disconnect your heart and soul from your wallet. You were blessed with “gut” feelings for a reason. However, pausing to recognize the potential for emotional personal finance traps will never hurt you. Ask why you want to make the buy. Wait. Question your current state of being. Talk to someone else. And be sure you’d tell someone else to do the same thing. Each act of intention will bring you closer to a conclusion you can live with beyond today.
My book is now available: Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After. You can also check out Inspiration to Pay Off Debt: 30 Days of Encouragement from the Queen of Free
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[…] Kids growing up in this decade know less and less about physical money, and more about the ease of virtual spending. This conceptual shift requires a more deliberate effort by parents (and youth leaders and other adults) to teach them about personal finance: managing money well, living within limits, and avoiding the traps of emotional spending. […]