Are Your Emotions Ruining Your Money?

by Jason Unger

People are funny about money.

For a number of reasons, we tend to:

  • be protective of how much money we make
  • think we can spend more than we have
  • view having money as the biggest goal in life

But in reality, keeping your salary a secret has downsides. Debt is never a good idea. And money is only a tool to achieve your dreams.

So often, we don’t think about money rationally. Instead, we focus on how money makes us feel.

How often have you been excited to buy something new? The last time you looked at your credit card statement or student loan, how did it make you feel?

Money is emotional. We get a high when we spend it, and we feel down when we owe it.

If Money is Emotional, Math is Rational

Math, on the other hand, is the most rational thing in the world.

If there’s one truth about numbers, it’s that they can only add up one way. You can change the numbers, but you can’t change the results.

So if you’re working to improve your numbers — to make that emergency fund fatter, or that retirement nest egg bigger — why aren’t you acting rationally?

Your bottom line isn’t emotional. You shouldn’t be either.

How to Remove Emotion from Your Savings

If you’re looking to make smarter, less-emotional decisions about your savings, these are the only two steps you need:

  1. Calculate
  2. Automate

Calculating your goal tells you where you’re going. If you don’t know where you’re going, how can you ever get there?

If your goal is to save $10,000 over the next year, you’ll need to save $833.33 each month. It’s simple math, but you need to know what exactly it will take to get there.

Automating your savings removes you from the equation. If you set into place the process that will reach your goal automatically, you don’t need to get involved.

You don’t need to remember to put the money away. You can’t make excuses for why you didn’t save enough.

When I wrote Automatic Finances, the goal was to remove as much human error as possible. If you can treat your finances logically, then you won’t make emotional decisions you might regret.

Don’t let your emotions ruin your money. You’ll regret it.

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