IF it comes to finances, not a few people actually do have brain smart stupid things with their money. Yet to take intelligent decisions about money, you just need to play with logic. According to Brad Klontz, a financial psychologist, when dealing with financial intelligence, size is everything. Logical side of your brain is much smaller than the emotional side.
To make intelligent decisions about money, you need the logical side that dominates. However, once you are tempted by greed or fear, then the emotional side of going berserk. Well, here is included:
1. Falling in love with the investment
Falling in love with stocks can make you fall into the abyss. According to Laura Tarbox, a financial planner in Newport Beach, California, not a few of his clients hold on to their stock ownership is concentrated, because it is an inheritance from his parents. Or, they are reluctant to sell because he worked in the enterprise, and feel disloyal if let go.
In the investment world, such relationships are not healthy. Tarbox revealed, someone recommended to not put more than 10 percent of his wealth is locked in just one stock.
2. Chasing a fantasy
Past performance are not indicative of the results in the future. An extensive study of market data over a period of 19 years, have consistently found that investors poured their money into investments”hot”, just as investments began to”cool.”
According to Klontz, losses to investors caused by their tendency to”walk with the herd.”If you do not want a herd trampled, you should arrange an appropriate investment strategy with your goals and consistent run.
3. Tempted sale item
One day you’re walking into an electronics store and see two different television sets are sold for USD $ 5,000,000.00. However, one of television that has had the normal price of USD $ 6,500,000.00. Now, television which would you choose?
If you think logically, should you choose a television that clearly has a good review. However, according to Matt Wallaert, a consultant at LendingTree, most people will choose a television that was on sale.
Even though the average day someone does not want to spend that money for a set of television, when he felt compelled to buy it on sale because they think the price is cheaper. Quite often, we are fooled by the lure of discounts that make us too easy to spend money, for something that was not really necessary.
4. Vengeance
You do not need it. You also do not want it. But, no one can forbid you to have something if you want.
Psychologist New York, Bonnie Eaker Weil calls it with the term””pissed-off purchases (POP). Weil conducted a survey prior to writing his latest book, ‘Financial Infidelity’, and found that expenditure due to POP estimated at U.S. $ 424 million annually.
Shopping as a form of revenge rebound like that, according to Weil, can occur when you feel angry or upset with her husband, boss, father, mother, or even his own friends. However, selega whatever you feel when you are spending money on the rebound, it adversely affected the financial health of you.
In addition, this relief will be quickly turned into regret once you get home and see things that cost a useless bag tore.
5. Too spoiled children
Not a few parents who still bear necessities of life that his son had grown up, because I wanted to be a good parent. ”Usually it starts with good intentions. Basically they want to be good parents,”explained Klontz.
Some parents may not bear to see their children having financial difficulties and need help. However, there will be no good if it turned into a continuous dependence. What’s worse, if they are forced to sacrifice their retirement savings and let go of the dream to live comfortably because they have to always pay the bills of the child.
In the face of a child who has grown up, advice Klontz, you must have a clear idea about the extent to which assistance should be given, how long, and whether it can help make a child self-sufficient again. If there is no clear plan, it might as well keep giving them fish instead of fishing.