Mixing money and emotions is never a good idea. Strong emotions like anxiety, jealousy, guilt and overconfidence can often cloud your thinking and steer you away from making rational financial decisions.
But we are humans and at times we give logic a pass and our emotions get the better of us. It’s natural to feel jealous of your friends’ financial prosperity, or feel guilty about not meeting your teenager’s financial demands, or get anxious about your investments performing poorly on the stock market. However, it is important to not let emotions get the better of you and drive the most important financial decisions in your life.
Read on to know about some of the situations when mixing money and emotions almost never ends well.
Buying & selling a property
Real estate transactions are perhaps one of the most important financial decisions in anyone’s life. But when dealing with big stakes and making decisions related to the purchase and sale of property, it is difficult to throw emotions out of the equation.
To avoid letting excitement, fear or anxiety impact your decision, it is a good idea to take a few days to calmly think over your decision. Ask yourself – Why are you buying or selling this property? Is it just because of a good price or is there an emotional angle attached to it? Putting in the homework and doing some research will always help you make an informed decision without being carried away by your emotions.
Getting married & staying married
Be it planning a wedding or managing money with your spouse, it is important to keep making wise financial decisions. Most people dream of a big, lavish and memorable wedding. But that doesn’t mean you have to break the bank to make your big day memorable. Always keep the bigger picture and your long-term financial security in mind, and stay within a budget when planning the festivities.
Even once you’re married, it is a good idea to allocate some time each week or month to talk about finances with your partner. Be honest and talk about your financial goals and how to optimize your current financial situation. Being practical and open to your spouse’s opinions about money can help you avoid conflict in the marriage.
[Related: Is money causing a rift in your marriage?]
New salary negotiations
Do you think that your hard work and noteworthy performance at work warrants a promotion and pay hike? Most people look at the salary negotiation discussion as a stressful one. Many don’t even give it a go fearing outright rejection.
To be successful in negotiating a higher salary with your employer, you must keep anxiety, fear, insecurity, and self-pity aside. Plan the discussion thoroughly and jot down the talking points. Preparing a convincing email could also work where a face-to-face discussion isn’t possible.
Making new investments
When it comes to your investments and planning for the future, you should tread very carefully while managing risks and making well-informed and balanced decisions. Impulsive investment decisions made while being driven by strong emotions like greed or fear can be detrimental to your long term financial prosperity. Do your ground work and access professional advice if you have to, before making a decision about managing your investments.
Dealing with the loss of your spouse or parents
Yes, it is tough to think straight if you have lost a loved one. With overwhelming emotions of loss and sadness to cope with, dealing with any financial challenges or decisions at such a time can be next to impossible.
You could appoint a family member or trusted relative to help look at the practical aspects of managing finances in such a situation. This could include getting your legal inheritance in order, claiming life insurance benefits, managing outstanding debt commitments and such.
[Related: How To Make The Most Of Your Inheritance]