We are humans. We have emotions. Our emotions entice us to make certain financial decisions. They get us to make unwise financial decisions. I cannot afford a new mac but I will buy it anyways because … Any random reason will do because all you are trying to do is fill in facts to justify your unwise emotional decision. How about this one? I am going on a vacation I cannot afford because I deserve it. Yes you do but you also deserve the debt hangover from this decision.
How can I stop my emotions from driving financial decisions? It is hard but it is doable. First of all, don’t buy anything until you have given yourself time to think it through. For example, don’t go shopping without a grocery list. When you are at the store, stick to the list. If you have difficulty sticking to the list, leave $2 to reward money to buy a chocolate for yourself for sticking to the list. You had the opportunity to think through the list. At the store, your emotions are in the driving seat.
The same rules apply to big ticket items. Suppose you are looking to buy a car. Your emotions say Tesla but your finances say used corolla. Start by writing down your requirements. You need to commute, shop for groceries, and occasionally drive 300 km to go the ocean. How many passengers? 1 or 2, mostly. Do you tow anything? No. So you don’t need a truck. Do you often carry lots of stuff? No. So you don’t need an SUV or a big trunk. So pretty much any small to medium car will be fine. Now search the Internet and find out which cars are available in those categories. Find out which ones offer good fuel economy, are reliable and have low maintenance. By now, you should have a tiny list. Pick the one you like the most among them.
You used facts to narrow down to list of vehicles that best fulfill your needs. At this point, let you emotions go wild and pick one from them. If you absolutely do not like any of these cars, reset a few requirements and create another list.
