We all make decisions with our emotions. That means if we want to understand how to make better decisions, we need to understand our emotions. So let’s try to figure out what emotions drive your financial decisions.
Question #1: What emotions do you have around money? Feel free to answer this question in whatever way feels right to you.
Question #2: When you look at your close friends or significant other, what emotions do they seem to display around money and money issues?
Question #3: When you were growing up, what emotions did your family display around money and money issues?
Question #4: Think about the times you’ve spent money that you are unhappy about. What emotions were you experiencing when you spent the money?
Question #5: Look at your answers to Question #4. What are these emotions connected to? Do they connect to your social circle, past experiences, family, what you see in the media?
Question #6: Think about times when you spent money wisely, or when you made smart decisions to not spend money. What emotions were you experiencing?
Question #7: Look at your answers to Question #5. What are these emotions connected to?
Exercise #1: Think of ways to strengthen either the emotions that have surrounded good decisions, or the connections to those emotions. Be as creative as you can!
Question #8: This question is especially important if you are spending too much on your housing, whether through a rent or mortgage. What emotions were you experiencing when you chose your place of residence?
Question #9: What are those emotions connected to?
Question #10: If you are spending too much on housing, ask yourself about the emotions you experienced when you made your decision. They may very well have been positive emotions. Or you may have been driven by trying to avoid negative emotions associated with the place you lived before. Either way, what can you learn about the way emotions can drive you to make an unwise decision?
Question #11: Think about your methods of transportation. What emotions have surrounded your decisions?
Question #12: Again, what are these emotions connected to?
Question #13: This question is particularly important if you eat out a lot. Think about the money you spend on food and drink of all kinds, as well as drugs, cigarettes, etc. What emotions surround your decisions about food, alcohol, drugs and going out to eat?
Question #14: Again, what are these emotions connected to?
Exercise #2: Look at your responses. Look at the emotions that surrounded good decisions and the emotions that surrounded unwise decisions. Do positive emotions lead to good decisions? Always, sometimes, never? In other words: is it true that if something feels good then it is good?
Exercise #3: Let’s do the same thing for negative emotions. Do negative emotions always lead to bad decisions? In terms of whether or not you made good decisions, does it matter whether the emotion was positive or negative?
One of the key lessons in this class is that your emotions often cause your brain to “answer a simpler question.” Your mind likes to come up with answers. And often, when faced with a difficult problem, your brain will just simplify the question. This is probably not helping you.
Exercise #4: When you look at the unwise financial decisions you’ve made, where can you see this process of emotional simplification happening? How did your emotions, whether positive or negative, cause you to avoid a complex question?
Exercise #5: Look back at the wise decisions you have made. Is there a particular emotional feeling you get when you make a good financial decision? Is it an easily described emotion, or does it feel more complex?
Exercise #6: The emotions that drive you to good decisions may not feel comfortable in the moment, and they might be momentarily weak compared to emotions that drive you to make unwise decisions. Can you come up with ways to strengthen the emotions that drive you to good decisions, and also come up with ways to recognize and identify the emotions that drive you to unwise decisions?
Exercise #7: Your emotional brain likes to simplify difficult questions. Can you come up with ways to interrupt that simplification process? Can you come up with ways to remind yourself to answer the more difficult financial questions, instead of just taking the easy way out?
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