Emotional Transactions

A lot of people are spending money they don’t have, buying things they really don’t need. Most of these buying decisions are made on an emotional level.

Regardless of the reason for your purchases, our cravings for several items, whether cars, jewelleries, shoes or clothes have financial implications. Every dream or desire has a price.

Most times our financial decisions have emotive undertones; they are the picture of our deepest emotional yearnings. A person may incur some of these expenses to impress people who don’t care and who really don’t matter to thier lives.

I have an uncle who used to splurge his salary a few hours after he was paid every month. His payday philanthropy was legendary, as he gave everyone who asked him for anything, any amount during those hours. He enjoyed been a nice guy.

You could tell when he had been paid, because the whole world just seemed to revolve around him at month end. His transactions were consistently emotional.

He was a brilliant at his job, but was miserable with his money. He couldn’t hold a job for a long time and he was always broke.

It is so easy to overspend. Products are constantly marketed on TV, billboards, Internet as well as in magazines and newspapers. You need to be strong-willed to resist all forms of impulsive temptations.

You need to understand what influences your spending and be clear about what your needs and wants are.

A need is something you must have, that you cannot do without. You need to eat to live hence the need for food. A want however, is something you would like to have, but isn't absolutely necessary. Another jewellery piece is a want because you do not really have to wear it for survival. My PlayStation 5 Console is a want not a need. My PS 4 already scratches that itch already.

Knowing the difference between a need and a want, and handling expenses with a sense of priority, will make a significant impact on your spending behaviour and your financial future.

When you want to buy something, ask yourself – "Is it something that I need?" "Can I afford the money to buy it?" "Should I be buying that now?" "Is it Important and urgent?"

These are salient questions to ask on your way to creating new expenses. Your personal budget and cash flow will help you answer these questions. You must work with your budget, to avoid emotional transactions.

If it is a want, consider not buying it or spending less for something similar so that you can put more into your savings. It is easy to learn to say ‘no’ to purchases you cannot afford or you do not need now.

When you do this, you are spending wisely and living within your means. Making sensible purchasing choices and spending wisely will prevent you from creating financial difficulties for yourself and others.