Today’s Hack:
While it may seem like your financial decisions are all about the numbers, emotions play a big part in what you do with your money! How much should you let your emotions decide and when should you turn more towards logic? We’ll discuss that on this episode.
Other Retirement Facts:
Are your financial decisions primarily made based on logics and math or more so with your emotions? Both play a part in your decisions as you develop a financial plan that works best for you.
Fear and greed are major drivers when it comes to emotional financial decisions. Make sure you understand how those emotions (among others) drive you when it comes to your financial planning. If you make your financial decisions based too heavily on your emotions, be aware of the pitfalls. Are you acting too conservative out of fear? Or are you too aggressive and setting yourself up for too much risk?
When should you allow your emotions to play a part in your financial planning? Remember, it’s okay to account for your emotions, you are human after all. Consider both the math and what you’re comfortable with when making a decision. Some people will focus more on realities or logic and some more on emotions, which might mean if you are married that your spouse is more on one side than you are.
Working with an advisor can help you navigate how to manage both the emotions and the math of the financial decisions ahead of you, such as when to pay off the mortgage or how to best address taxes in retirement. Do you let your emotions overtake financial decisions?
Also in this episode of Phil’s Tax Hacks, we look at a recent headline as well as a question from the mailbag.
0:54 – Phil shares his latest big purchase.
2:58 – In the News: Wells Fargo CEO banned from banking industry.
5:48 – What emotions drive people to make financial decisions?
7:16 – What mistakes do people make with emotional decisions?
8:34 – Are there times to let your emotions factor in?
11:28 – Understanding what taxes look like long-term may mean addressing some emotional vs. logical decisions.
13:44 – Mailbag: Any problems with selling company stock in order to buy land?