Spend vs. Save – When Emotions Get Involved
It's a fact of human nature that emotion is involved in almost everything we do, from deciding whether to take flowers home to your spouse to pulling the plug on your day and leaving work a little early.
Emotion tugs at your heart strings in a way that affects your decision making, whether you realize it or not, and no matter how hard you may try to avoid it. And when strong emotions get involved, it can make decision making sometimes next to impossible!
The effects of emotions on spending is a common struggle for almost every generation, although it seems it is becoming more so the further away we get from what has become known as the Builder Generation (those born between 1901 and 1925). Each successive generation seems in general to get more sucked into the "American Dream" of more, more, more.
Emotions especially hold sway when it comes to certain holidays. I mean, think about days like Valentine's Day, Mother's Day, even Christmas (notice I didn't mention Father's Day – somehow emotions run thin for us dads it seems – ok so that was shameless plug)! When it comes to such holidays, don't you just feel compelled, maybe even obligated to spend more to show someone that you love them? Even if it's totally unrealistic?
Here are some Q & A's I came across some time back stemming from a Facebook chat that National Financial Literacy Commission members Kelley Long, CPA/PFS, and Clare Levison, CPA, had with consumers about the role emotions play in our decisions regarding money and finances:
How do you suggest managing the balance of emotion vs. logic? You have to allow yourself a vice. It's ok to put a little play money in your budget. Just make sure that it doesn't mean incurring debt or scrimping on savings.
How do you battle the urge for retail therapy? Here's how I've learned to avoid giving into emotional shopping: when I find myself wandering into a store when I KNOW I don't need anything, I say to myself, "Will buying clothes that I might want but didn't think I needed before right now help me get closer to my goals this year?" Reminding myself that I have savings goals, like a vacation and an iPad, helps me to walk away. It can also be very helpful to take a list, and if you feel too weak to stick to it, don't go into the store. Window shopping is not a good "fun" activity for everyone.
What are some of the worst and/or best ways to let emotions influence your finances? First, it's important for everyone to realize that, no matter what, they have an emotional relationship with money. Examining your money "story" is key to changing any financial habits if you're unsatisfied with where you are when it comes to your finances. There are many books and articles out there that can help uncover your money story and rewrite it in a way that works for you and your goals.
The thing is, it's important to start paying attention to any physical or emotional triggers that might cause you to engage in negative financial behavior. If you pay close enough attention to yourself, you will notice these triggers.
For example, do you shop to comfort yourself? Do you "reward" yourself with overly expensive dining or a night on the town when under stress?
Being aware of what is going on with yourself emotionally or even physiologically when you spent too much is the first step to figuring out how to deal with those situations. Once you know that, and you see it coming, you can make alternate plans to deal with the situation; plans that keep you out of the situation that typically ends in overspending.
Believe it or not, you can also use those same emotions that normally lead to excessive spending to your advantage to positively influence your spending habits. Make some goals for your finances that you want to achieve, and then remind yourself frequently what those goals are. A periodic "tickle" reminder from your smartphone calendar or a picture of something for which you are saving taped to your refrigerator can be important reminders that help you stay excited about staying the course.
Realize the role emotions play and use these emotions in a positive way, and you can take the stress out of your spending habits!
