Understanding our money behaviour: Emotional reasoning

Emotional reasoning happens when you use emotions to drive your decisions and actions. When you engage in this type of thinking, you often acutely feel the reality of something without it having any basis in fact.

Have you ever thought along the lines of, “I’m scared about investing. I don’t know enough and it makes me nervous. That’s a sign that I shouldn’t do it. A high interest savings account is my best option.”

Your emotional reaction defines its reality, and you may disregard or dismiss any observed evidence in favor of the assumed “truth” of your feelings. 

There are some practical ways you can challenge this pattern of thinking. For example, ask yourself whether your perception of the situation is rational and based on evidence or based in emotions. You may ask yourself, “Have I dismissed more positive explanations for my emotional findings?” or, “Are my feelings affected by a bias that I need to reevaluate?”

It can also help to remember that feelings do not dictate self-worth or present circumstances nor predict the future.