Why we aren’t rational when it comes to personal finance

Andrew Leung
4 min readNov 29, 2023
Photo by Lidia Nemiroff on Unsplash

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.

  1. 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

Wealth is not just about how much you make, its also about how much you keep. This is a key point, you have to retain income so that you can grow it into wealth. It is not uncommon to see as income rises expenses rise as well in an attempt to keep up with peers in the new income bracket. It is important for you to remember that you still need to give your income time to grow. Wealth itself is not always an easy resource to cultivate. High income is a boost to help accelerate the growth of wealth, not a crutch for poor saving habits.

3. Debt is a normal and ok thing to have

While being in debt is a more common occurrence than it should be for many people. The state of being in financial debt is not something that should be normal and is not something you should make a regular occurrence. Debt typically comes with high interest rates which will eat into your ability to grow wealth. High levels of debt can also affect your credit score which…



Andrew Leung

I will be sharing the plain and honest: truths, pros and cons as well as my experiences of Personal Finance, Side Hustles, and Investing.