Why we aren’t rational when it comes to personal finance
We all like to think that we are perfect rational and emotional humans who can do it all. We have faults and everything is perfect, if we have a set back we have to have the perfect come back. THAT IS WRONG! Everyone is far from perfect and we can look no further than our personal finance practices. Personal finance in its essence is very simple, but there are numerous ways to complicate it. And while it isn’t always easy to pin point what causes irrationality in life. We can see it in personal finances. So lets look at 5 irrational things that happen in personal finance and what we can do to fix them.
- We can buy our way out of emotions
Discretionary spending we are sad or upset is a very temporary sense of happiness. It doesn’t last long and contrary to popular belief can damage your finances if you don’t get it under control. When we are upset we have a tendency to do or try everything possible to make ourselves feel better. And not all of these options are good options especially when you factor in the financial consequences. Not all problems can be solved with money, some can such as if you need new tires for your car. But if you are trying overcome a traumatic event, buying things won’t necessarily make it better.
2. All you need to be wealthy is a high salary
