<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=3003101069777853&amp;ev=PageView&amp;noscript=1">

The role your emotions play in high-stakes decisions

By Sam Instone - May 01, 2024

The role your emotions play in high-stakes decisions

You make thousands of decisions every day.

Very few are 'high stakes' ones that have a profound impact upon your entire future life.

But when it comes to these, understanding your emotions can have a transformative effect.

It's an Olympic year, which usually means we're going to see reporters asking athletes how nervous they were when they were competing.

Often, the answer the athletes give is that they weren't nervous, but were excited.

Emotions are interesting.

They seem intuitive - like we should know what they are.

And yet, when pressed, many of us don't know what emotions are or the role they play in our lives.

People are emotional

You're a human.

Thus, you experience the human condition.

The human condition is what it means to be a human.

Part of being human is experiencing emotions.

This is important. On the surface, many believe making good decisions is about removing emotion from the decision-making process.

But that goes against our natural wiring.

Emotions serve a purpose, so instead of avoiding emotion, we should strive to understand what emotions are and what their purpose is.


Emotions are information

Imagine navigating life like being a captain on a sailboat.

There are various aspects of the sailboat that represent different aspects of your life:

  • The water you're sailing in represents various areas of your life.
  • The steering wheel (or helm) represents your values and direction.
  • Any leaking of the boat represents your weaknesses.
  • The sails represent your unique strengths.
  • The weather represents uncontrollable life events.
  • Other boats represent your relationships.
  • And your destination represents your purpose or goals.

This can be an interesting way to view life because it helps us identify various aspects of living.

It helps us parse out what we're going through to better understand our experience.

There's one aspect I haven't yet talked about, which is the compass. The compass is information about what's going on. It helps us navigate with complete information.

The compass represents our emotions. They act as a guide to give us information about what's going on.

Emotions start with the body

Neuroscientist, author, and emotion researcher Lisa Feldman Barrett argues that emotions aren't something that happen to us.

In How Emotions Are Made, she says that emotions are predictions about what your body needs to do based on past experience. Emotions are constructed in the moment.

For example, if our bodies sense we might be in danger, our pupils might dilate so we can see any potential threat more clearly. Our hands might get cold as blood recirculates to areas of the body that will be needed to either fight or run. We might breathe faster to anticipate physical activity.

All this is based on what you've experienced in the past, as a prediction of what we may experience in the near future.

Emotions start in the body. They are physiology.

Physiology plus narratives

Our brains are meaning-making machines. We're typically extremely uncomfortable with uncertainty.

So, we find patterns, even when there's no pattern.

We create cause-and-effect stories, even when there's no cause or effect.

And we create narratives. When we feel something in the body, we tell ourselves a story about it.

In other words, we put a story around the physiology.

Imagine feeling butterflies in your stomach.

Maybe your breathing gets faster and shallower.

What does that mean?

Well, it means nothing yet because those butterflies are nothing but sensations in the body. Without context, we don't know anything.

But we're uncomfortable with not knowing, so we create a story based on the context.

Remember the reporters asking Olympians if they were nervous?

They ask that because they'd be nervous if they were about to compete in front of the world. The reporters with little or no experience competing at that level would craft a scary story around those feelings.

Thus, they get nervous.

The athletes, though, have been there before. They like it. This is what they live for.

The same sensations with a fun story around them become excitement.

The physiology of nervousness and excitement are the same. The only difference is the story.

You don't have to ignore your emotions. They're an important part of being a human. At the same time, you don't have to identify with your emotions, either. They're just information.

Pay attention to the raw data of your emotions and see if you can identify the story you're telling yourself. That story might not be accurate.

Maybe you'll be able to tell yourself a better story.

Hearts over charts

When it comes to investing, the process is (or should be) dull and boring. Investment charts shouldn’t really put a spring in your step.

However, the outcome of investing is where the magic happens.

The outcome of investing has real-world consequences. Investing wisely over many years results in wealth you can spend to maintain and improve your lifestyle and create meaningful experiences and opportunities with your family and loved ones.

The outcomes of investing impact areas that are dear to your heart. They're emotional.

Family, friends, experiences, and causes you care about.

So, while the numbers and charts are important, it’s worth remembering what outcome you're working towards.

There’s little point in creating money and then not putting it to use.

Understanding this can impact the way we approach our financial decisions.

Instead of seeing every goal as a maths problem, we can open up the decision-making process to the elements that lie in the heart, not just on the chart. 

Our challenge to you

Money is emotional. Making it, saving it, and spending it.

The next time you need to make a financial decision, force yourself to discover the elements relevant to the challenge that might not be visible on a chart, but instead comes from the heart.

This approach will likely lead to fewer long-term regrets and a more fulfilling life. Money is not a maths equation, and not everything needs to be optimised.

Money is important, but the real-life outcomes that result from money are what should excite us.

P.S. Choosing what type of financial firm you trust as your sage guide when making financial decisions, is one of those few 'high-stakes' decisions that will have a profound impact upon your entire life trajectory. If you're intrigued by what I mean about this - please email me with any questions and I'll do my best to help.