The Price of Emotions


When I was 18 years old I purchased a 1983 Chevy Camaro Z28.  To be honest, I couldn’t afford it.  It was one of those scenarios where I ended up working just so I can pay for the car.  My dad tried to talk me out of it, but I didn’t listen.  Know why? 

Because I was an 18-year-old young man.  I was emotionally insecure, I wanted to be liked, maybe even a little envied by my friends. I was also dating this cute little red-head I really wanted to impress.  I made a totally emotional decision and it cost me plenty.  Have you ever been there?

Regardless of what you chose to spend your money on, there’s always an emotional side to financial decisions.  We’re emotional beings so it’s no surprise that we are influenced by our emotions.  But, we’re not made up of emotions alone, we also possess logic, the ability to think and reason. 

To make good financial decisions, especially when the stakes are high, we must be aware of how we think and feel as we process through financial decisions.

Much of the marketing today is focused on getting us to react emotionally; to feel rather than to think.  How will you feel driving in that new car with the hand-stitched leather steering wheel, plush leather seats, and mahogany trim?   What will your girl friends think of you when they see you in your new outfit and designer pursue with matching shoes?

It's great that we have choices and that we can enjoy many things in life.  However, a large majority of us don’t have an endless supply of money, so we must be careful how we spend it.  Spending based on feeling alone will usually lead to regret and financial hardships.

Some of the things we tend to spend more money on due to our emotions are homes, cars, name brand clothes, jewelry, beauty supplies or treatments, tools, and hobbies.  To do better in our spending we have to become more aware of the motives behind our spending.

3 ways to reduce emotional cost when buying

1. Be Aware of Cultural Messages

We are influenced by what we see.  In the course of a normal day, we are exposed to hundreds of images, dozens of commercials, and numerous advertisements.  Although we may not connect with all of them, some do appeal to us and they make an impression. 

Over time advertisements influence our spending decisions.  We’re also influenced by other people, what they possess and what they buy, especially celebrities.

Identify and know the difference between a need, a want, or a desire.  Set financial goals so you’re clear on what you want to accomplish. This will help you resist cultural messages that go against your plans and will help you avoid emotional decisions.

2. Spend using a written budget

We cannot close our eyes and completely ignore everything that looks appealing to us.  That’s why having a plan for your finances, a budget is so important. 

A budget allows you to set limits to your spending based on your available resources and your financial goals.  It’s making informed decisions ahead of time that lines up with your goals and keeps you from making purely emotional decisions.

3. Plan for fun stuff

One of the biggest problems I see in most financial plans is not budgeting for fun and recreation.  This is especially true when finances are tight.  Everyone needs some recreation and fun in their lives. 

When we don’t intentionally set money aside each month to spend on recreation and fun, we find other ways to meet this need, often by making a purchase we think will do it, such as a new car or a dream home.  Unfortunately, these items cannot provide the periodic fun and recreation we need, leaving us vulnerable to repeating this cycle.

All that’s really needed is just a small amount every month for doing activities that are fun and relaxing, like going to a ball game, a movie, having coffee or dessert with a friend.  These fun and relaxing activities, when done regularly, provide a sense of well-being and satisfaction, leaving us feeling grateful and less emotionally needy.  


A friend recently made the point that you can purchase a good vehicle for $10,000 to $12,000.  In my experience, this is accurate.  “Anything above this price,” he said, “is simply an emotional cost that’s added to the cost of the vehicle.”  So, if you’re buying a $25,000 vehicle, you’re buying $12,000 of value and $13,000 of emotions. 

I figured I paid about $3,000 of emotions the day I bought my Camaro.  I totaled the car, but I did get the girl.  She even married me!  After 28 years of marriage, I'm quite sure it wasn't because I had a nice car.