Being emotional with money: is it okay to mix emotions and finances?
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I can’t tell you how many hours I spent crying The notebook in the mid 2000s.
It was a sleepover tradition for my high school girl group. We’d order pizza and gossip about who liked who (and who liked who) until inevitably someone would play the DVD. Clutching boxes of Kleenex, we’d sit in front of the TV, devouring Noah and Allie’s epic love story. By the end, we were sobbing so much that we could barely hear the dialogue.
As an adult, emotions are tricky and often guilt-ridden. Even in personal finance, there is a common personal finance “rule” to never get excited about money as it can lead to unwise decisions.
But, as shown by my Laptop tears, I’m inherently an emotional person… and I don’t think that’s a bad thing.
Is it ever okay to be emotional with my money?
According to Lindsay Bryan Podwinfinancial therapist and author of The solution to financial anxiety, The answer is yes. In an email interview, she confirmed that money and emotions don’t necessarily have to be kept in separate spheres.
In fact, “taking stock of how your emotions play out in your relationship with money can help you make wiser and more informed financial decisions,” he says.
When experts advise against mixing money and emotionswhat they are really suggesting is to avoid making big long-term financial decisions based on short-term sentiments that might later fade away.
Say I check my 401(k)freak out about how much it went down because of stock market volatility and impulsively took out all my money, incurring a huge penalty/tax bill and jeopardizing my Retirement. Deep down I know the strategy doesn’t make logical sense, but it doesn’t register because I’m so scared.
Emotions impact all of our choices, says Jorge Barraza, a professor of consumer psychology at the University of Southern California. They’re never absent, so characterizing something as an emotional decision doesn’t do me any good.
As he sees it, feelings are simply information that our brains use to make decisions. And “getting excited” is not always an obstacle to making the right decisions.
Imagine I read an article about how Roe v. Wade, the historic abortion case, was tipped over in June by the Supreme Court. As a woman who values people’s freedom to make decisions about when to be pregnant, I get angry, and I channel that anger into a charitable donation to an organization like Planned Parenthood.
Without my anger, I probably wouldn’t have reacted that way. My emotions were a “starting signal” that allowed me to confidently make the financial decision to donate to a cause I believe in, Barraza says.
Uncertainty, he adds, can also be useful: a warning sign that something else is going on. My hesitation before clicking “send” on the Uber Eats payment The page where I loaded $30 at Wendy’s into my cart may be something of a warning bell.
“From a financial standpoint, when we feel anxious about making a decision, it may be because it’s too risky,” says Barazza. “Our emotions influence us to hit the brakes.”
As such, Bryan-Podvin says she encourages clients to think about financial and emotional “alignment,” or making sure their saving, spending and investing habits match their values. (She recommends doing this using apps like upwards or just keep a journal.)
“While there isn’t much we can do to change inflation or stock prices, what we can do is use our understanding and awareness of our unique emotions around finances to find a sense of control,” he says.
On that note, buffie purselleauthor of Crawl Before You Ball: breaking the cycle of generational povertyrecommends including emotional expenses in my budget.
Spending $7 at Starbucks or going to Target after a hard day helps me feel better, so there’s no need to give it up, but I have to work it into my emergency fund.
“We need to explain the term ‘hard times fund,’” she says. “People always think that means [you save for when] your car breaks down, but it could mean you’re sad, someone in your family dies, you broke up with your boyfriend or girlfriend, or you didn’t get that promotion at work.”
The bottom line
Contrary to popular belief, it’s actually okay to combine emotions and money. If I’m careful, I can use my feelings to inform my financial decisions.
“When we separate our emotions from finances, it can help curb anxious or impulsive decision-making, but we also erase the power of our emotions as a positive influence in our financial lives,” says Bryan-Podvin.
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