As I read a recent article in DailyWorth, titled Beware These 9 Common Overspending Triggers by Milly Triffin, my thoughts drifted to how overspending is common in home construction projects. Here’s the excerpt from the article;
No matter how sensible with money you usually are, there are times when your budget is at risk of getting hijacked. “Emotionally charged circumstances make us prone to overspending,” says financial psychologist Brad Klontz, managing partner at Occidental Asset Management. “If we’re rationally challenged, we’re financially challenged.”
Here’s how it works: The prefrontal cortex is the part of our brain that deals with logical thought, including planning, impulse control…and budgeting. But when we’re in a heated situation, the amygdala (the brain’s emotional center), kicks into gear and overrides the prefrontal cortex. As a result, reason flies out the window, our feelings take over and we can end up making poor monetary decisions.
Building or remodeling your home is no exception. Your home is connected with numerous emotions. In addition if’s full of past, present and future memories. It’s difficult to not be emotionally charged when is comes your remodel projects or ground up construction. There is a lot at stake!
The key is to not react when your project goes awry. BREATHE, slow down and think through your choices. This could be the time you decide or choose to use the 20% over budget money. The point is to discuss your options and don’t react to the situation. If you feel hijacked by your emotions, talk through them with your spouse, close friend or contractor. Take a break, eat something and better yet, take a day or two to explore your options. In the end, you are better equipped to not overspend.