Posted by Tim Stobbs on September 10, 2009
Gut feelings are interesting things. Sometimes they uncannily right, while others times they suck at getting close. Case in point, I recently had ignored my account balance for a while, so when I did finally move all the money to savings and pay off the Visa bill I had a gut feeling I was going to be short some money. End result: I’m sitting on a surplus of $100, so much for gut feelings and math eh?
Yet at the same time think about the number of times you invested in something because it felt right. I know I like to think my checking of company reports and new bits for the company should be the deciding factor but at some point it really comes down to my gut feeling saying this is good or not. If it says not, it almost takes a mountain of evidence to the contrary to make me change my mind.
So what is the value of the gut feeling? Actually a fair bit. You have to consider in life we almost always are making decisions with incomplete information. We can decide what to eat for breakfast sometimes before opening the fridge or seeing what’s on the shelf. We don’t know everything that we have for options, but we decide anyway based on feeling. That gut feeling is basically the sum of our knowledge to that point on that decision based on emotion rather than logic. We use it all the time and people can pretend about being logical all the time, but often we are not (sort of like Spock from Star Trek).
In personal fiance we like to pretend we are logical that we use numbers to guide our decisions, but at the same time we are often prisoners to our gut feelings. The point is to understand which one was used to decide something and accept that all decisions don’t have to be on logic. Case in point, if we all ate logically the world won’t have cheesecake, candy or chocolate bars. So remember, your not always logical, it’s ok. Just accept it as normal and do the best you can. You will be happier if not wealthier for it.