Financial decisions are among the most crucial ones we make in our lives. If you’ve ever looked at your credit card bill or bank balance and wondered where the money went-believe me, you are not alone. Studies have found that emotions are one of the key factors that determine purchasing decisions. Buying high-status products isn’t only about flaunting one’s status, someone could also be willing to spend a lot of money on something for completely personal reasons, such as emotional healing or overcoming frustration. Here are some emotions that can aid or hinder your financial decisions.
- Sadness
Being sad does have an impact on spending patterns. How many times, for example, have we gone out shopping to make ourselves feel better when we are sad? Research shows that when we feel down, possession of material things gives us some sense of self worth and happiness. Even though material goods do not increase each individual’s self worth in the long run, it does, however, mentally satisfy the person. This helps the person to shift the sadness into happiness, and boost self esteem, at least temporarily. The touch of materialist items, the newly bought smell of fragrance immediately releases happy hormones.When the happiness wears off, repeat purchasing begins and it becomes what the society calls “Retail therapy”. Some researchers discovered that when people are sad, they spend more money, which is known as the “sad-spending” effect. Splurging on items that make us happy when we are sad, definitely has an influence on how our credit card bills/ bank balance behaves.
2. Loneliness
When we feel lonely, isolated, and battling with anxiety, rather than making connections with people, we tend to look for immediate pleasure which can be received through something materialistic. Studies show that social isolation encourages possession of materialistic goods. This could also be due to the fact that we no longer have to worry about being rejected or accepted. However, self love taken way too far beyond the love you could actually give yourself may lead to massive debt which later may make the self love self depressed.
3. Anger
When in anger, by all means, the best is to hide that credit card, but the rage will, however, drag us through the shopping mall to buy something unnecessary. Anger causes us to make rash financial decisions and makes us take bigger risks by blinding us to the consequences of our actions. With no evaluation whatsoever, we just keep clicking that online shopping cart to calm your nerves. An anger trigger factor will most definitely trigger our bank balance. In moments like these it is best to take a walk in the park than walk to the mall and refrain from making financial decisions or any important decisions in general.
4. Fear
We’ve all been influenced by something someone else said about us at some point in our life. People’s remarks and impressions of us over time might truly form our own self-perceptions. This can lead to a fear of being judged by others and high anxiety, which can affect so many facets of our lives as we navigate through relationships, careers, and financial wellbeing. When we are highly anxious, this is a hint that our surroundings are unpredictable and out of our control. We gravitate towards safe and trustworthy choices when making buying purchases in this state to lessen the risk and uncertainty we are facing in our life.
But when fear makes us feel unworthy or being judged, we tend to compare our lives, accomplishments, and financial situation with others. And, most of the time, we believe that everyone else is doing better than us. So rather than attempting to manage or improve our lives in a more sustainable manner, our emotions lead us to take the easy way out, causing us to spend our hard-earned money on expensive things that are out of our budget, just to feel more powerful.
5. Happiness
Happiness comes in different forms, but the happiness that comes from loving yourself and accepting your reality is a game changer. Self-love promotes the development of coping skills and allows you to put negative feelings into context before acting on them. Which means, when we are having a difficult day, we find sensible ways to cope instead of blowing all our money to feel better momentarily. According to research, happy people are more effective at using their money to boost their pleasure by making better purchasing decisions. When we are content with your life, we are less swayed by the opinions of others. we become more self-assured and build strong self-esteem. Having a high sense of self-worth is essential for mental health and financial wellbeing.
That being said, happiness also can cause us to spend more money than we intend. Sometimes, when we’re out with our friends and having a good time, it’s easy to get caught up in the moment and spend excessively. At times like these, we need to find a way to be reminded of your spending on a regular basis so that we can get back on track.
Financial wellness isn’t about spending less; it’s about spending smart, being aware of exactly what you require and reaping long-term advantages. However, emotional spending can be one of the biggest thieves of financial progress. Shopping is a lot easier nowadays, with methods such as “buy now, pay later”- it’s just a matter of sitting in front of the laptop or mobile and shopping, which might be perilous when we are in a mood that encourages impulsive purchases. Therefore, it is healthier to develop financial habits that will help us to take control of our daily finances and stay on track regardless of the mood we are in.
