How Do Emotions Influence Financial Decisions?
22 January 2025 | Decision Making, Financial Literacy, Insights, Personal Development, Psychology, Question a Day Question a Day How Do Emotions Influence Financial Decisions? Emotions are the invisible hand behind many of our financial decisions, often steering us in ways we don’t even realize. While we like to think we’re rational creatures when it comes to money, the truth is more like a soap opera: fear, greed, joy, and nostalgia take center stage, often creating drama that our bank accounts have to clean up. In this blog, we’ll explore the fascinating interplay between emotions and financial decision-making, backed by psychological insights, evolutionary theory, and real-world examples. Plus, we’ll sprinkle in some fresh ideas, like "emotional diversification" and the Emotional Financial Quotient (EFQ) , to help you tame your feelings before they raid your wallet. Let’s dive in! 1. The Role of Emotions in Financial Decisions Emotions act like the impulsive friend ...