Our topic today is one that is often overlooked in the area of financial planning. I don’t know about you but for me, there are times that I make resolutions concerning my spending and financial goals and still end up doing the opposite. Upon reflection I realize that there are certain habits and beliefs that underpin the financial decisions that I make. Once I am aware of these, I can have peace with my decisions as well as make any necessary changes that I see fit.
One example of this is around food. Growing up in Cameroon,West Africa, it is a common experience that there are certain animal parts that are reserved for certain people e.g. the chicken gizzard should be eaten by the man. It was also not uncommon for certain foods to be reserved for my father or the baby of the house. I made up my mind that when I am older, everyone in my house will eat the same thing and explore different cuisines. Thus, I tend to spend more on feeding my household.
Emotional Intelligence (EQ), as defined by Six Seconds, The Emotional Intelligence Network, is a set of competencies that allows you to apply thinking and feeling to make optimal decisions. Emotions are essential to effective decision making and motivation. Therefore, if used effectively, you’ll be better able to influence others, to communicate and stay focused on a critical path.
Financial emotional intelligence, or FEI, is the ability to manage emotions and behavior around money effectively. It involves understanding your relationship with money, your attitudes and beliefs about money, and how these factors influence your financial decisions. Some aspects that can influence your financial decision making are:
- Personality Type
- Culture
- Habits e.g. hoarding, using shopping as therapy
- Learned behavior e.g. from parents, relatives or caregivers
- Social pressure e.g. Christmas shopping
Taking note of the emotional triggers that cause you to spend impulsively and creating an effective management system to curb spending will enable you to reach your financial goals faster.
Are you looking for an objective accountability partner to help you set and achieve your financial goals? We’d love to hear from you at info@laeteon.com.
You got this!
Ngwing K.