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Are You Making Money Decisions While Impaired?

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When you make a decision, it's important to think clearly. This is especially true when it comes to making money decisions. However, there are a number of ways in which your ability to make sound decisions can be impaired. Whether you are investing, or trying to decide whether or not you want to buy something, you need to watch out: Impaired decision making can cost you thousands of dollars over your lifetime.

Emotions

When your emotions are fully engaged, it's much harder to make a good decision. When you feel really good, it's easy to be careless with your money, buying things you wouldn't normally buy, and feeling as though you can handle more risk. On the flip side, fear can be just as detrimental, encouraging you to sell low after buying high when you are worried about the stock market, or missing out on an opportunity because you were to scared. Before you make a money decision, consider whether or not your emotions are impairing you.

Peer Pressure

There is a lot of pressure to be like others, and to live their lifestyles. Whether you feel like you have to buy the same expensive dinner as your friends when you go out, or whether you think that you need a bigger TV in order to fit in with the neighborhood and impress your family, caving to peer pressure can become expensive. On top of that, it can lead you to make spending decisions that are incompatible with your financial priorities. Then, you are stuck with little money — and the stuff you have might not even be what you want.

Physical Needs

Your physical state can affect your mental state, and your ability to make decisions. Interestingly, feeling hungry can lead you to think that you want other things, too, even if you are considering non-food items. This can mean that you might think that you want to buy something, even if you don't. Also, being hungry might mean that you make decisions quickly so that you can get on to having food and sating your hunger. Impulsive and impaired: Not a recipe for good money decisions.

Other physical conditions can affect your ability to make good decisions as well. When your body is tired, you can be irritable, anxious, and your thinking processes might not be as clear as they should be. Physical pain and discomfort can also impair your decision making abilities.

Decision Fatigue

It's also possible to make progressively worse decisions the more you make. It's called decision fatigue, and researchers think that it changes the way we consider different situations. As you make more decisions, your ability to make good decisions is eroded throughout the day. This means that you might be better off making money decisions earlier in the day, before the petty decisions of the day wear you down.

Before you make a money decision, stop and consider how you might be impaired. Once you recognize that you might be impaired, you can re-evaluate what you are doing, and possibly put off making the decision until you are in a better frame of mind, and better able to make good money decisions.

Finding Alternative Methods Of Getting What You Need

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We live in a society where it's fairly easy to simple to just head over to the store and buying something when we want it. Indeed, we often pay money for things without stopping to think that there might be a better way to acquire them.

You don't have to buy new all the time in order to get a good value. Here are some alternative ways to get what you need:

Buy Used

There are plenty of goods that you can buy used, and it's not just used cars that work well. Head to the local thrift store, or look in the Classifieds or online for items that you want to buy. You might be surprised at the quality of products you can get used. Check out estate sales and garage sales. Many people also have yard sales as they plan to move. This can be a great opportunity to purchase items in good shape. Before you buy new, consider whether or not it makes sense to buy used, and then make those purchases.

In some cases, you might not even have to buy. Craig's List and Freecycle are both full of items that people are getting rid of for free — and the items might even be in good condition.

Barter and Swap

You can also barter and swap for what you need. Since the recession, many people have started bartering and swapping for the things that they need. If you have some old exercise equipment that you don't want, you might be able to exchange for some yard tools that you are looking for.

It's also possible to exchange a service you can provide for other services, or even items. I have exchanged writing and editing services in the past. They key with bartering and swapping, though, is to make sure that you can come to an agreement in which all parties feel as though they are getting a good value. This can be a great way to save money on purchases, and stretch your dollars further.

Rent Items You Won't Need More than Once

In some cases, it makes sense to rent something that you'll only need to use once, or for a specific project. You might even be able to get out of paying money at all if you can borrow it from a neighbor (just make sure that you let your neighbor borrow things when he or she needs them). Renting something for a single use cost less than buying the item, and it prevents you from having another thing to clutter up your home.

Do You Really Even Need It?

Of course, sometimes it's best to take a step back and figure out whether or not you actually need to buy something at all. For many of us, luxuries and wants have been artificially transmuted into necessities. Don't let your wants turn into needs. Instead, examine your motives. Figure out why you are planning to make the purchase, and decide whether it's really something that you need. Can you do without it? If so, you can really save by not buying it all.