There are a good number of things in life that does not mix and making financial judgment with high emotions is just one of them. Think of being drunk and texting your ex or even driving while intoxicated, there are things best not done together. This is because it usually leads to wrong decision making and you get to hold the short end of the stick.
There are money hacks that you can greatly benefit from but it is important to know that you need to separate your money decisions when you are high on your emotions. This often leads to mistakes along the way and these can be costly for your finances. One wrong ill-advised move could cost you thousands of dollars of your hard earned money.
And these does not have to be major financial judgement scenarios. Think of how you are trying to go on a diet but binge on sodas every night before bed. You might think that it does not have any effect whatsoever on your health. But you might be surprised to find out that this was one of the biggest factors why you kept on putting on weight.
It might be that you take it as a nightcap on a very stressful day at the office ot an escape from the never ending work at home. It is the only time where the children are sleeping and everything is clean around the house and you take a bottle of our favorite soda bottle to end the day. Not knowing that it is taking you further away from your goal of losing weight.
Common scenario when your emotions might get in the way of your finances
The same can be said about financial judgement especially when you are running high on emotions. Here are some of the reasons that can lead to challenging financial situations after the fact.
- When your child goes off to college. Student loans may be worth it but you need to carefully weigh the pros and cons especially if it involves your budget. As you child starts to pack and leave the house for higher education, you might be tempted to offer co-signing their student loans just to have a connection with them even when they are in college. This is a noble effort but it would be better to start investing in a college fund early on rather than signing off your credit score for their college payments.
- When you have to take a new job. New people and new work surroundings might scare a lot of people and they might lose sight of their financial goals. It could be that your new office mates loves to gather around after office for some drinks and because you want to be on their good side, you go with them every night to the expense of your weekly budget. Not to mention the fact that you get home late and you lose time supposedly for your family. That financial judgement can ripple out to other areas of your life.
- When you need to move to a new place. This is similar to taking on a new job but on a bigger scale. Imaging having to adjust and try to get along with not just new workmates but neighbors as well. You need to adjust with the new routes that you need to take every week doing your grocery runs and other chores. You also need to look for a new school for the children and look for a trusted carpool within your neighborhood. All these stress can add up get you to decide on your finances rather unwisely.
- When you want to retire in a different country. Forbes.com explains that there are a lot of retirees looking at retiring to another country is choosing Panama overall. It might sound like an adventure and it could be but this is over and above just transferring to a new neighborhood because this is a totally different country and dealing with the culture is a big barrier. One advantage retirees take advantage of is the low cost of living but the new culture could also put their financial judgement to the test.
- Life changing events. People are most affected emotionally when they experience life events like getting married, the passing away of a loved one or even with a new addition to the family. It can also be because of divorce where CDC.gov shares that 3.6 for every 1,000 marriages end up in divorce. When you undergo intense emotions, there is a tendency that it can cloud other areas of your life including your finances.
Dealing with money matters under stress
There are tips to make smart decisions during sale events but this is not all you need to think about when you are dealing with financial judgements under duress. It is more complicated than just a sale event and weighing what you want versus what you need. Here are a few things you can look into when you are faced with money decisions.
- Take a moment to asses your feelings. The most important thing you need to do is never make a decision when you are full of emotions. You need to check your emotions out the door when you will be dealing with money matters. You might want to cool down first and let your emotions ride out before you go back dealing with your finances.
- Pinpoint the main reason. While you are taking a break from making money decisions, a little introspection and assess your feelings and emotions. If you are mad at your children because of a petty thing and your financial judgement is to take them out of your will and you pass away, they get nothing.
- Be open-minded with the options. If you need help with your situation, then get one because you do not have to do everything on your own.If you suffered death in your family, let other people help like relatives and friends so you do not have to commit to money decisions while you are grieving. There are other people who are able to do both but end up either missing out on their grieving stages or mismanaging the financial decisions that they had to make.
- Embrace change. Change is constant and your financial judgement should take that into consideration. You might be feeling downtrodden at a certain point in your life but that will change so you need to make sure that your finances are able to adjust as well. When you feel that nothing is going right with your life, you decide to quit your job but that will only add up to your problems. You need to make sure that when your situation changes, you still have the finances to support your needs. You might find yourself having to deal with a lot more than you can handle.
A lot of things will happen in your life and these ups and downs will put your financial judgment to the test. You just need to make sure that you are able to hold your ground and not commit to anything that you might regret later on in life. Have you heard of those people who woke up married to someone they do not even know because they were out depressed one night? It might happen in the movies but the same thing can happen to your finances – one wrong decision now because you are full of emotions might end up being one of the worst mistakes of your life.