Financial decisions are influenced by emotions from "summary" of The New Psychology of Money by Adrian Furnham
The decisions we make about money are not always as rational as we might think. In fact, they are often heavily influenced by our emotions. This is a concept that has been explored in depth by researchers in the field of psychology. When it comes to financial decisions, emotions can play a significant role in the choices we make. For example, fear can cause us to make decisions that are overly cautious, leading us to miss out on potential opportunities for growth. On the other hand, greed can lead us to take unnecessary risks that ultimately result in financial loss. One of the reasons why emotions have such a strong influence on our financial decisions is that money is closely tied to our sense of self-worth. When we experience financial success, we feel a sense of pride and accomplishment. Conversely, financial failure can lead to feelings of shame and inadequacy. In addition to our own emotions, external factors can also impact our financial decision-making. For example, societal norms and peer pressure can cause us to make choices that are not in our best interest. Advertising and marketing techniques can also manipulate our emotions and lead us to make impulse purchases. Understanding the role that emotions play in our financial decisions is essential if we want to make more informed choices. By being aware of how our emotions can influence our behavior, we can take steps to mitigate their impact and make decisions that are truly in our best interest.
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