It is a known fact that money is more than the digits we see sitting in our various bank accounts. It is more than those figures that we see because it is closely tied to some major factors which include the knowledge and skills that a person have gained over a period of time doing or feeling certain things or the events that a person have passed through in life. Also, the emotional state of a person whether happy, sad, depressed, fear, anger is also a factor that shapes our usage of money.
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These factors can determine whether or not you will make decisions that will make or mar you financially. We are prone to making certain financial decisions that will be met with regrets or otherwise in days, or weeks or months to come based on either our present emotional state at that time or the values that we hold as individuals.
Financial decisions are often driven by fear and greed among others. Fear, for instance can make a person quickly make decisions that are not well thought out like selling their investments when there is a downturn in the market. Greed on the other hand pushes people to make risky investments that promises unrealistic return even when it is crystal obvious that it is not possible.
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Based on previous experiences of losing money to an investment or based on the present emotional state of a person (depressed, unhappy) he or she may fear losing money than making money. Also, you're prone to making bad decisions when you adopt the "following the crowd method", whereby you make decisions without fully understanding the investment.
However, there are some approaches that can be adopted to overcome making financial decisions with emotions. One of them is automating your savings and investments which will totally remove making these decisions with emotions. These applications do not work with emotions but the instructions you have given them like saving a particular amount weekly.
It may also be advisable to seek the services of a professional like a financial advisor that can guide and keep you in check against emotionally driven financial decisions. Some years back, a friend introduced an investment to me which have to do with investing some amount of money which will be yielding weekly returns over the course of 365 days. I knew from the beginning that it was not a reasonable investment and I didn't invest (at first).
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But, I was under constant pressure for more than four months to join the investment and she sent me proofs of getting her weekly returns to further make me change my mind. However, after constant pressure I yielded to investing and made a decision against my wish due to the incessant advise, pressure and luring. To cut the long story short, the investment crashed just after about two months that I joined. I allowed emotions to get over me to make a decision that i knew wasn't right. I would have overcome the Fear of Missing Out if I had seeked the help of a financial advisor
