Financial Planning And How To Be Smart In Spending

Monday, December 21, 2009 | comments

A financial psychologist once said that to make smart decisions regarding your money, you need to let the logical side of your brain rather than the emotional one to dominate. Avoid being emotionally attached to your investments. There are people who would cling to certain stocks because they inherited from their parents and their parents used to love them or because they work for the company and selling would be disloyal.

Before purchasing something evaluate whether the product or service is worth that price in enjoyment considering how you will use it and if you can get the same quality for less. Beware of retaliatory spending; do not ever go on a shopping spree because you are stressed, or you have had a fight with your partner or an argument with your boss. No matter how better you think it will make you feel, it will damage your financial health.

It is wise not to cling on to debt. For instance, there are people with money in their savings account earning less than two percent, and have debt in their credit cards that are being charged more than fourteen percent. It is good to save for a rainy day, but if you have more than enough savings you can pay your debt and save on huge debt card interests. Then rebuild the savings, not the debt. For emergency purposes; you still have the credit cards (now with zero balances), and you can tap them in.

If you make a mistake in your investments, do not go the way you anticipated or stay in denial; losses do not go away just because you did not look at them. Asses where you are and figure out what to do instead of waiting for things to get worse.

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