Humans are emotional beings, so we can tend to spend our money based on those emotions. Therefore, if you want to achieve financial success you'll need to improve your emotional skills. In that way, buying that pretty shirt or treating your bestie won't prevent you from accomplishing long term goals, like having your dream house.
Everyone wants to have more money in their bank account and most of the time they think that external circumstances are keeping them from being wealthy. While external circumstances -job, family, politics, economy- play an important role, they are not the only thing that matters as we sabotage our goals because we don't know how to deal with our emotions.
Since people have feelings (and that's great!) you need to find a healthy way to handle them without hurting your finances in the process. In this list you'll find 5 emotions that affect your money habits:
When we're sad
Even when it seems to be a great idea retail therapy is not a choice!
It is highly probable that if you're sad you won't feel like saving for future plans, but spending your money to feel better now even if that hurts your credit score.
Feeling angry?
Angry people take bigger risks and get madder when others question their choices. This emotion also leads to an "I deserve this" attitude.
If you're scared
Fear can be helpful or negative. It can prevent us to spend money on unnecessary things and protect us from danger. But at the same time, it can keep us from investing or achieving certain goals like retirement because we're afraid of the future.
Happy time, let's celebrate!
We're highly likely to spend more money if we want to celebrate a special occasion. It can go from a birthday party to a promotion or getting married. The more unique, the more we will spend because "this only happens once in a lifetime".
Now we're stressed out
Stress is a part of our life, the way people face it goes from drinking, eating and others spend money. People do this because when they are under stressful circumstances they just want the peace that no-brainer choices give: getting a pizza instead of making some dinner is a good example.
Emotions and branding
On the other hand, people make emotional associations with brands. Using a product from a certain brand creates an emotional response. If it's positive then the consumer has a good experience and that, over time, turns into a happy memory. That's why there are people who are in love with a brand, it's a love that goes beyond the brand features and benefits but it's more about feelings and they don't know how to explain their connection with the brand.
How can I control myself and keep away from overspending?
Focus on long term goals
When you feel tempted to spend money on small things remember the big goal that you have in mind. Those big goals are those things that will have more impact in your life, like buying a house or getting the car fixed. It would be convenient to ask yourself "is this bringing me closer to my goals?"
Have a budget
Set a limit in the amount of money that you can spend every month. Make a list of all the mandatory expenses like rent, gas, food, electricity, etc. Then ask yourself "how much money am I comfortable spending every month without affecting my finances?" Maybe you can have a bank account just for mandatory expenses and another for fun and entertainment, in that way you'll prevent overspending.
Set boundaries with others
Your sister is getting married but she lives in another city. You feel obligated to go but the idea of paying for an airplane ticket, hotel room, food and not working for 1 or 2 days makes you sick. What should you do?
You would like to go, but you don't feel comfortable spending so much money and that's okay. Explain to her that you won't be able to be there, but you'll send her a present and you can meet whenever she goes to your town.
Remember that you have to be your best friend, you know you love others and that doesn't mean that you should put their priorities first. But keep your goals at the top of your mind and share and give presents to others if that doesn't interfere with your dreams. If you have the money to spend on others without breaking the bank and this won't prevent you from achieving important goals then it might be a good choice!
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