Emotional Decision affects financial decisions: Warning
Bheema has grasped the lesson of asset and liability very well. He is now prepared to face the next lesson though he is not expecting it, the lesson on “Emotional Decision affecting your finances”. Ram’s teaching of Personal finances has made the life of Bheema good, not completely due to Bheema’s mindset that he knows everything. As he began to apply the lessons in his life he started to see the surge in numbers but as fast as it surged so was the downfall of the numbers. His repeated failures after little success forced him to seek help from Ram by shedding his ego.
Bheema’s face is filled with anger about finances, sadness about his life, frustration with learning etc.; His Emotional Decision has affected his finances. He drives so fast that he almost kicks the front gate of the Ram’s house with his Bike. Ram rushes out of his home hearing a huge noise suspecting it to be an accident. To his Good time, there was no minor or major injury for his friend Bheema. Ram understands that Bheema needs to step further in the world of personal finance by looking at his face as he has gone through all these phases during his initial steps into the world of Personal Finance.
The Hidden Danger: How Emotions Shape Your Financial Destiny
Ram cools down Bheema and walks him into his home, then gives him refreshments. An hour later, Bheema is relaxed. Bheema doesn’t speak but Ram begins knowing this is the Right time he asks, where did you mess up now?
Bheema: You are asking as if you are a fortune teller
Ram: No, with the experience of Personal Finance
Bheema: What should I tell you? again the same thing
Bheema: I purchased Gold
Ram: That is an asset, which means it is good news. Hope you are not influenced by Emotional Decision
Bheema: Yes, that is why the Price of the gold has decreased
Ram: Decisions backed by numbers succeed not by emotions
Bheema: You always tell me something
Ram: The world of Personal finance is vast, you are learning little by little
Bheema: Whatever it may be, Just tell
Ram: The Prices of Gold rise only when the global economy gets affected either due to political stability, trade war, climate change, wars etc however the prices do not rise when there is no uncertainty in the global economy
Bheema: Why is it so?
Ram: Economic crisis raises the price and Economic growth decreases the price of gold you have to know this before Investing else you are making an emotional decision
Bheema: you won’t tell me anything until I suffer
Ram: Every time you are in a hurry to stop the conversation as if I am Insulting you, aren’t you?
Bheema: Leave all those things in an angry tone
Ram: Again the same mistake
Bheema: Throws an empty glass towards Ram
Ram: Ok, leave it
Bheema: I am leaving
A few minutes after Bheema leaves, Ram thinks about how to stop his friend from making errors due to his emotional decision even though it is not his intention. Even eminent people in the field of personal finance have made errors by getting trapped in their emotions. He further realizes there is no way to do it except by controlling one’s emotions.
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1. What are the two major emotions that affect your financial decisions?
Greed and fear are the major emotions that affect our financial decisions
2. How to get rid of those emotions?
You can’t get rid of those but you can control it
3. Can Personal Finance defeat Emotional Decision?
Of course, Personal Finance Education contains the impact of Emotional Decisions and how to prevent it
4. Which is a risk-free Investment option?
Gold, because it can defeat Inflation, Global economic uncertainty, and no fear of depreciation, except for small fluctuations.