Financial Intelligence & Emotional Spending

Financial intelligence perhaps takes a backseat in the throes of emotional spending, as many of you experience during the festivities.

Crowded marketplaces, delivery boys zooming around on bikes and a glittering display of new acquisition and decorations on social media speak of ‘binge spending’. It’s not a comfortable feeling to be ‘locked down’ during festivities. But we faced it in the last two years, and then we learnt to face our fears and devise a practical strategy.

We also learnt a lot about emergency funds, cost of living and lifestyle expenses and assumed the lessons would last for a lifetime.

Now it looks like emotions can’t be divorced from finances, not at least in India.

Let’s take a broader view and it’s not just about Diwali or the upcoming wedding season.


Financial Intelligence Unit in India is an agency that receives, processes, analyses and disseminates information about suspect financial transactions.

Can our brain detect unhealthy spending, and act as a financial intelligence unit? Perhaps it does but gets overruled by an emotional center and a social structure that dictates certain things just need to be done.


  • Your child wants something that is not really needed and can derail your budget for a while. But can you ignore the plea in tear-filled eyes?
  • Somebody in your family or social circle decides to buy something with a personal loan or invest in a house with a home loan and wants you to stand guarantor. You know it has a negative impact on your credit score, but can you refuse?
  • There are three upcoming weddings which call for an investment in travel, clothes and gifts. Can you shy away from that?
  • It is quasi-mandatory to buy something of value on Dhanteras, and there is a strong competition ensuing in your social circle. Do you give in and buy something you don’t need?

Do you even remember the financial lessons that you’ve imbibed and learnt in the last few months or years? Congratulations to you, if you have stuck to goal-based spending, and are in line with your financial goals! Kudos to your good money sense, if you dipped into a festival fund specially created for the purpose.


What creates dissonance between the logical and emotional parts of your brain? The ethos that you want to follow, clashes with somebody else’s ethics or logic or emotions. We’ve grown up with the lessons that relationships need to be placed above every else. Those who place money and financial security on priority are seen as cold, selfish and unsocial.


Preserve mental health and radiate positive energy


Cleaning and decorating the house, performing religious rituals to worship the Goddess of Wealth all creates anticipation of good things.

Experiments on the placebo effect show positive results even when the patient is made to think that he or she has been administered treatment.

There is recent research and some books on the Power of Intention. Researchers say that people in trouble benefit from joint affirmations and prayers offered in a group.  They assume it is the power of positive vibrations and a universal intent created by the group exercise.

Let us treat our rituals in the same manner, and radiate positivity. Maybe the energy brings in prosperity for a while. Keep repeating.

Budget Expenses

Give a budget to every family member, and the freedom to buy whatever they want. It appeases the emotional part of being cared for. If you think they are blowing money on non-essentials, gently let them know of alternatives, advantages and disadvantages. If they still insist on going their own way, let them be.

Putting financial intelligence to good use

What are you giving your domestic staff like maids and drivers? Can it be a health insurance premium instead of the gadget or phone they are asking for?

Spend some time talking to them and explaining the nitty gritty of personal finance. They will be grateful to you forever. Be especially kind to female workers.

Have that money conversation with your parents, and check if they need an investment that yields a monthly income, or increased amount of health insurance. They may not have much use for fancy clothes, boxes of rich sweets and nuts or decorative candles. Maybe they just want to spend time with you. Don’t deny it if feasible.

The lure of gold

The yellow metal boasts of a set of loyal admirers. But many of us are moving to digital gold to save the trouble of keeping it secure, and the money lost in ‘making charges’ for jewelry.

Know the pitfalls of digital gold, before you take the plunge.

Make it healthy and environment friendly

Let the children know that you are burning money when you burn crackers. Ask them to think about animals who suffer a lot due to firecrackers. Don’t get carried away with social media messages talking about preserving culture. Your physical and financial health is more important.

Research healthy recipes and cook along with the whole family. Make it a fun exercise. Needless to say, you will save on medical bills later.

What causes emotional spending?

Download the book “Decoding Money Habits” here.

What is your financial IQ? Test here.

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