Emotional Finance

Emotional finance explores how emotions influence financial decisions and behaviors. It recognizes that individuals often make choices based on feelings, such as fear, greed, or excitement, rather than purely rational analysis. For example, a person might impulsively buy stocks during a market surge out of excitement, or panic sell during a downturn due to fear of losses. Understanding these emotional drivers can help individuals improve their financial decision-making, as awareness of one’s emotions allows for more rational, strategic choices in investing and managing money. Emotions play a crucial role in shaping financial outcomes.