This is an excerpt from Dollar Scholar, the Money newsletter where news editor Julia Glum teaches you the modern money lessons you NEED to know. Don't miss the next issue! Sign up at money.com/subscribe and join our community of 160,000+ Scholars.
I can’t tell you how many hours I spent crying over The Notebook in the mid-2000s.
It was a sleepover tradition for my high school girl group. We'd order pizza and gossip about who liked who (and who like-liked who) until someone inevitably put in the DVD. Clutching boxes of Kleenex, we’d sit in front of the TV, devouring Noah and Allie’s epic love story. By the end, we would be sobbing so hard we could barely hear the dialogue.
As an adult, emotions are tricky — and often laden with guilt. Even in personal finance, there’s a common personal finance “rule” to never let yourself get emotional about money because it can lead to unwise decisions.
But, as evidenced by my Notebook tears, I’m inherently an emotional person… and I don’t think that’s a bad thing.
Is it ever OK to be emotional with my money?
According to Lindsay Bryan-Podvin, financial therapist and author of The Financial Anxiety Solution, the answer is yes. In an email interview, she confirmed that money and emotions don’t necessarily need to be kept in separate spheres.
In fact, “taking stock of how your emotions show up in your relationship with money can help guide you to making more aligned and wiser financial decisions,” she says.
When experts advise against mixing money and emotions, what they’re really suggesting is to avoid making major long-term financial decisions based on short-term feelings that could later fade.
Say I check my 401(k), freak out about how much it dropped due to stock market volatility and impulsively pull all my money out, incurring a huge penalty/tax bill and jeopardizing my retirement. Deep down, I know that strategy doesn’t make logical sense — but it doesn't register because I’m so scared.
Emotions impact all our choices, says Jorge Barraza, a consumer psychology professor at the University of Southern California. They’re never absent, so characterizing something as an emotional decision does me no good.
The way he sees it, feelings are simply information our brain uses to make choices. And "getting emotional" isn't always a hindrance to making the right ones.
Imagine I read an article about how Roe v. Wade, the landmark abortion case, was overturned in June by the Supreme Court. As a woman who values people’s freedom to make choices about when to be pregnant, I get mad — and I channel that anger into a charitable donation to an organization like Planned Parenthood.
Without my rage, I probably wouldn’t have reacted that way. My emotions were a “go signal” that let me confidently make the financial decision to donate to a cause I believe in, Barraza says.
Uncertainty, he adds, can be useful, too: a red flag that something else is going on. My hesitation before clicking “submit” on the UberEats checkout page where I’ve loaded $30 worth of Wendy’s into my cart can be a warning bell of sorts.
“From a financial standpoint, when we feel anxious about making a decision, it may be because it's too risky," Barazza says. "Our emotions are influencing us to pump the brakes.”
As such, Bryan-Podvin says she encourages clients to think about financial and emotional “alignment,” or making sure that their savings, spending and investing habits match up with their values. (She recommends doing this by using apps like Upwise or simply keeping a journal.)
“While there’s not much we can do to change inflation or stock prices, what we can do is use our understanding and awareness of our unique emotions around finances to find a sense of control,” she says.
On that note, Buffie Purselle, author of Crawl Before You Ball: Breaking the Cycle of Generational Poverty, recommends building emotional expenses into my budget.
Spending $7 on Starbucks or going to Target after a hard day helps me feel better, so there’s no need to cut it out — but I should bake it into my emergency fund.
“We need to explain the term ‘rainy day fund,’” she says. “People always think that means [you save for when] your car breaks down, but it could mean you’re sad, someone dies in your family, you broke up with your boyfriend or girlfriend, or you didn't get that promotion at work.”
The bottom line
Contrary to popular belief, it’s actually OK to combine emotions and money. If I’m careful, I can use my feelings to inform my financial decisions.
“When we separate our emotions from finances, it can help curb anxious or impulsive decision-making, but we also erase the power of our emotions as a positive influence on our financial lives,” Bryan-Podvin says.