Emotional Intelligence – Why is it important ?

The term emotional intelligence or EQ is a fairly new term that is being recognised today as a key predictor of personal success. In practical terms, EQ refers to the ability to become aware of one’s own and other people’s emotions, as well as the ability to process them and adapt one’s behaviour to achieve a more constructive outcome.

How often do we react in an emotionally charged state instead of responding in a rational objective fashion? One could argue that this is to be expected, as we are creatures of emotion after all and not robots. Nevertheless, wouldn’t it be incredible if we could learn to tap into our emotional DNA and process it in such a way that it results in a desired positive response.

The first step to developing EQ is developing a sense of self-awareness. If we can learn to become aware of certain trigger points early on and if we are able to identify key emotions as they arise, it may help us to anticipate certain types of behaviour that we habitually engage in. There are certain tell-tale signs of emotional stress we can teach ourselves to look out for, such as muscle tension, shallow breathing or change in our posture. Learning to look out for these signs can help us become aware of these triggers early on.

The second step is to acknowledge the feelings we are experiencing without dwelling on them for too long but understanding what type of behaviour is normally triggered by these emotions. Let’s just think about two typical emotions that we all experience, fear and anxiety. What does that generally unleash as a response? It starts generally with a feeling of being stressed, followed by a subconscious response that may often result in an outburst or internalisation of emotional anxiety. Unless we become aware of this pattern and make a conscious decision to change the subconscious response, we will keep getting the same result.

Probably the most difficult part is learning to process our emotions and changing our behaviour patterns. This may be in the form of taking greater responsibility for our actions, seeing things for what they are without any attachment to things or learning to be tolerant and open minded.

Some techniques for dealing with our emotions are meditation, breathing exercises or mindfulness training. This all helps in creating a sense of self-awareness and early detection of emotional situations that can make us prone to irrational and destructive behaviour.

What role does EQ have in financial planning? Investor behaviour is most commonly also driven by emotions. Unfortunately, most people’s investment decisions are influenced by two emotions, in particular, fear and greed, which leads to disastrous consequences most of the time. What is the first thing that comes to mind when you hear or read a headline such as, “Global markets plummet as US-China trade wars intensify” or “ Markets surge as economic sentiment picks up”? If we can accept our feelings for what they are, instead of reality, and if we are able to process and evaluate what is happening inside our heads before we react, we may end up making wiser decisions in the future.

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