How to Make Sound Money Choices Without Letting Your Inner Voice Create Fear
Here is how fear takes control of your money
Most money decisions are driven by emotions. We like to think of ourselves as rational beings who make rational decisions, but I have my doubts.
If that were true, we wouldn’t see obesity, people in debt, or other financial issues. Divorce wouldn’t exist, and no one would ever get fired.
If you’re anything like me and have spent some time on this planet, you know reality is quite different. All the research I’ve read suggests that we consistently make poor decisions, especially when it comes to money.
The main culprit is emotions, particularly fear. Fear is real, and it’s often in the driver’s seat when things go awry.
In this short article, I want to show you how fear affects us and how to eliminate this negative emotion. Let’s dive in.
Emotions drive money decisions
Our brains love shortcuts. Imagine your brain is like a busy chef in a kitchen. When it comes to making decisions, especially about money, it often wants to take shortcuts to save time and energy.
These shortcuts are usually based on how we feel rather than carefully thinking things through. Added to this is the powerful urge for immediate gratification.
The feeling of “I want it now!” can be strong, leading people to spend money on non-essential items instead of saving for important future needs.
Happiness and Fear
Two main emotions drive our behavior: fear and happiness.
When we’re happy, we tend to be more optimistic and may spend more freely, sometimes on unnecessary purchases.
Imagine you just received a promotion at work or won a small monetary award in a company competition. You’re feeling very happy and excited.
To celebrate, you might decide to splurge on something fun, like a new gadget or a fancy dinner, without considering saving the money for something more important later.
This is how happiness can lead to impulse spending.
Intense fear can lead to decision paralysis, preventing necessary financial actions and causing a short-term focus that prioritizes immediate security over long-term goals. A real-life example is FOMO — fear of missing out — which drives impulsive purchases.
Despite knowing the financial strain, the fear of being left out often leads to overspending and debt accumulation.
Our emotions come from our memories
We base our decisions on our emotions, which are influenced by old memories. Your feelings about money will vary depending on those memories.
For instance, if you often witnessed arguments about money when you were young, it might become a painful topic for you.
Here’s how it works in your mind: Think of your brain as a vast library full of books. Every day, you add new “books” (memories) to this library. Some are happy stories, while others are not so happy. The unhappy books often lead to negative emotions.
Now, imagine you’re walking through your library, and an old, dusty book falls off the shelf. When you open it, you recall a time that made you sad or angry.
Those old feelings can resurface, even if the event happened long ago. Our brains are excellent at remembering experiences that trigger strong emotions, especially negative ones.
It’s like the brain’s way of warning us, “Remember this? Be cautious!” To tackle this issue, we need to recognize that fear is simply an inner dialogue.
Fear is real, but it’s something we create ourselves. If you pay attention, you’ll notice that fear often stems from a story in your mind based on a painful memory.
Our brain is a survival mechanism, naturally inclined towards negative emotions and situations to keep us safe. This is why the mind generates more fear than happiness; it’s searching for a safe place and yearning for peace. The mind continuously creates fear, even when there’s no real danger.
A simple framework for overcoming fear
So, what can we do about it? How do we eliminate the fear of taking control and stop buying things we don’t need just because they’re on sale?
I’ve been studying the psychology of decision-making for the past two years and have come up with a few solutions.
One thing the brain doesn’t like is facts — numbers and stats often make fear dissipate. If a few people tell you, “It’s hard to find a job in this area,” you might believe them automatically without checking.
But when you look at government websites, you’ll often find that this isn’t true. Your brain sees graphs, stats, numbers, and your perception changes.
If you ask those people what they base their assumptions on, they’ll likely say it’s from their experiences, not solid data.
Remember, negative emotions and experiences are highlighted more than positive ones. This is why people usually share negative experiences.
When was the last time you heard about a wealthy person donating a fortune to a school? We are drawn to negative events, and the media sells these stories consistently.
So, next time you encounter fear about money, use solid data to prove the opposite.
As for FOMO, it’s a fear created by advertisers. They know people react strongly to negative things, so they exploit this.
Even if you know it’s just marketing, the moment the story enters your mind, you start to fear missing out on something you didn’t even want in the first place. It works, and that’s why advertisers use it so often.
Conclusion
In conclusion, understanding the psychology behind our decision making will help us to make more rational and informed choices.
By relying on concrete data and questioning assumptions, we can mitigate the fear that often drives impulsive purchases and unwise financial decisions.
And being aware of marketing tactics that exploit our fear of missing out can help us resist unnecessary temptations.
In the end, understanding and managing our fears is key to achieving greater control over our lives and making decisions that genuinely benefit us in the long run.
