Whether or not it’s your favorite “ism”, if you’re reading this blog, it likely drives the society around you.
I have the firm belief that our society is designed to separate you from as much of your money as possible. We must, as responsible adults, constantly combat the ever-present bombardment of advertising that we absorb during most of our waking hours, often times without even noticing it.
Marketing and advertising are weaponized psychology.
The seemingly trivial sums of our habits and preferences are significant (check out your Money Multiple).
While hemming in your budget is a noble pursuit, there are other areas of life that people often overlook. These are the sporadic but all important events that surround birth, matrimony, and death. Because of the often-times overwhelming emotions that accompany these events, our brains short-circuit and we willingly shell over far more dough than we would normally.
My wife and I had a baby a little over a year ago. Did we waste money with gadgets and toys we never used? Yes, and other people, though well-intentioned, also forked over more than they should have.
Weddings are parties with a 100% or higher premium. Put the word “wedding” in front of anything and it’s like a 100% on coupon. Use my special code “wedding” and I guarantee you’ll be poorer. Throw a party for 50 people and compare the costs to a wedding with 50 people. Sure, there are costs that don’t overlap, but spec out how much each meal costs or an open bar goes for.
Funeral homes often upsell services and items like urns and caskets. A corpse does not need the casket to be decked out like Elvis’ Cadillac. Purple velvet and plush pillows, while a nice thought, serve no purpose. However, because people are in shock and mother deserves the best, they get duped into spending thousands of dollars on a purely palliative (for themselves) purchase. The mark-ups on these items are only made possible by the world-shattering chaos created by a loved one passing away.
Other examples of emotional arbitrage are also driven by distress. Former couples, during a divorce, often sell homes hastily in order to put the deal behind them or to sabotage their partner. When the stock market dives, people run to sell their stocks and protect their nest egg.
When you feel yourself getting emotional (positive or negative), train yourself to also be vigilant about your finances. Ask someone you trust to help keep you in check if you begin to lose reason.
Always remember that the bills are bigger with an emotional trigger!