Although Ben Affleck and Jennifer Garner are currently rumored to be rekindling their romance, when the couple first split up a year ago, the actor took it hard. Unlike his wife, Affleck stayed tight-lipped about their relationship’s demise, but his heartbreak revealed itself in other ways—like when he indulged in some major retail therapy: Two weeks after their separation announcement, he was seen cruising around L.A. in a brand-new, sporty Dodge Challenger.
“A lot of people discount the role of emotions in their money life, and are unaware of how they subconsciously drive their financial decisions,” says Atlanta-based psychologist Mary Gresham, Ph.D., who helps clients work through financial issues. But overlooking this key factor can seriously sabotage your bottom line (especially when you don’t have Affleck’s bank account).
Here’s how five common feelings can throw you off your financial game—and how to get back on track.
Affleck is Exhibit A that a spending spree can temporarily distract you from your worries. “When you’re sad, you might shop in order to get a dopamine rush,” Gresham says. (Dopamine—a.k.a. the pleasure hormone—helps regulate the reward center of the brain, and can buffer you from unpleasant feelings.)
Not only does gloom-induced buying mean that your purchase decisions are reactive rather than rational, but your spending is also at risk of snowballing. “The rush you get is immediate, but brief,” Gresham says. “You need to keep buying more and more to maintain momentum.” Plus, that post-spree hangover can leave you feeling even more bummed out the next day.
Keep the urges at bay by finding healthier ways to score an instant mood lift: “Exercising, hanging out with friends and spending time in nature will increase your well-being in a positive way,” Gresham says. Like with shopping, you’ll still crave more of those activities over time, but they’re good for you. Plus, you won’t be filled with regret the next day, which can pull you even lower.
If you feel like an imposter when it comes to making good money decisions—and terms like mutual funds and ETFs make your head spin—you’re likely to doubt yourself, which can paralyze you from taking necessary financial action.
To help you get off the sidelines, recall positive financial moves you’ve made over the years: Check out how your 401(k) balance has grown, calculate how much you’ve chipped away at your debt (and how much you’ve saved in interest charges by doing so) or give yourself a pat on the back for paying all your bills on time and protecting your credit score. Seeing your successes should increase your confidence.
Further improving your financial IQ will also give you a boost, which is why Gresham suggests incorporating money lessons (like, ahem, those you get on Grow) into your daily routine.
Scored a date with that hottie in your building? Rocked a job interview? It’s natural to want to treat yourself to something fun, like an expensive night on the town with friends or a luxe spa day. But splurging every time you’re happy is a surefire way to derail your budget—and create an unhealthy association between excitement and pricey presents.
“When you feel excited about an accomplishment, the impulse is to reward yourself,” Gresham says. “Instead, make a list of non-monetary things that are meaningful to you,” like hitting up your favorite fitness class (like the free ones offered at Lululemon, Nike and R.E.I.), inviting a friend over to share a bottle of wine or giving yourself permission to zone out in front of the TV.
Maybe your buddies are planning a blowout Vegas bachelor party or your besties are meeting up for a Sunday brunch and shopping. Your funds are limited…but you also don’t want to pass up a good time.
“Humans are social creatures who want to be part of the group, and at the heart of FOMO [“fear of missing out”] is an intangible worry that you won’t be connected,” says Amanda Clayman, Ph.D., a financial therapist in N.Y. “The problem is that we often make choices based on very limited information about other people’s financial lives. We think that if they’re spending money, they can afford it—and so can we.”
Don’t risk falling into the red for the sake of your social life; instead, try to find a middle ground that makes you feel included without sacrificing your money goals, like skipping a friend’s schmancy birthday dinner and meeting up for a post-meal cocktail. Or get creative about ideas to hang with friends on the cheap, like going for a hike or hosting a potluck dinner.
You can also use your FOMO as fuel to accomplish your money goals even faster, so you won’t have to turn down pricier social invitations in the future.
Think you’re awesome when it comes to investing? Sorry to break it to you, but research has consistently shown that overconfidence leads to poor portfolio performance. Super self-assured people believe they have superior skills when it comes to choosing stocks to invest in, as well as the right time to hop in and out of the market. In truth, cocky investors tend to trade frequently, leading to high fees and lower returns than those who’d stayed the (more passive) course.
“What it comes down to is irrational exuberance: When you are too confident that something will work out, you may not be fully cognizant of the risk you may be taking on,” Clayman says. “As Warren Buffet famously said, ‘Be fearful when others are greedy.’”
If you tend to get carried away by the thrill of chasing big gains, take steps to protect yourself from making bad decisions. “Create specific investment plans and goals and don’t stray from them, even if you’re in the throes of an emotional state,” Clayman says.
Believe it or not, this can be just as satisfying and confidence-boosting as making quick trades. Simply remind yourself that you have spot-on intuition, and that you made the decision to go in a certain direction with your portfolio. So resolve to stick with your original plan—at least until your next quarterly review.
June 20, 2016