99% Of All Bad Money Decisions Are Based On Two Things
We all do it.
Bad money decisions, like most other bad decisions, are most often made because of human emotion. While sometimes bad information or another person’s activity can cause us to be misled and make poor decisions, there’s no question that allowing our emotions to rule our wallets is much more often the cause which drives so many of us to make horrible financial choices. But it’s not like there’s a broad spectrum of emotions at play in our money decisions. In fact, if you really boil it down, that emotion you feel when you’re about to make a terrible decision with your money is most likely either greed or fear. That’s it.
Fear causes you to hide your money in the mattress, afraid to be broke.
Greed causes you to invest in the Next Hot Thing without even knowing what it is, or what it does, also causing you to be broke when it doesn’t pan out.
Fear causes you to lie awake at night, sick with worry about bills, and expenses.
Greed causes you to lie awake at night, sick with envy at other peoples’ cars, and houses, and vacations.
Fear causes you to deny yourself experiences, luxuries and happiness because you worry you’ll be judged for being wasteful or extravagant, even though it may be well within your budget.
Greed causes you to overindulge in experiences, luxuries and happiness, believing that these things are essential to your sense of self.
All of the financial resources and counselors and self-help books out there, at their core, are trying to get us to reduce the power that those two negative emotions, greed and fear, have over our financial lives.
The most successful, wealthiest people in our society are those who can safely walk the tightrope between the twin chasms of fear and greed, without straying too far to one side or the other.
If you want to get richer, you have to take emotion out of the equation. That’s really the biggest determining factor in whether or not you’ll be able to build wealth is can you stop listening to the nagging little voices of Greed and Fear and make logical decisions. Do that, and you’ll be more successful than you can imagine.