Making Financial Decisions
Life is a series of choices and a nearly continuous exercise in decision-making. As soon as you get up in the morning, you are making decisions about what to wear, when to walk the dog, what to prepare for dinner and what you will put off until tomorrow.
Some decisions are minor and relatively inconsequential and others are quite large with lasting consequences. Some decisions only impact you while other decisions can affect other people. Some decisions are yours to make alone, and others require negotiation and compromise.
Chances are that no one else will notice or care if you wear black or blue pants today. Your employer and co-workers will notice and care if you don’t show up for work, though. Your 6-year-old daughter probably won’t ask you every day if you put money in the jar that you are using to save for her college education. But your 18-year-old daughter will care greatly if she is unable to pursue college because you failed to save and invest.
How you make decisions, including those involving finances, may be based on your overall personality type. In addition, watching your parents, teachers and friends can affect how you think, feel and act about money.
Some people are able to make choices quickly and confidently. They are able to review the options available and analyze the pros and cons of the various paths. Others act impulsively and let the chips fall where they may. Guilt and a deep sense of responsibility are drivers for some. Procrastination and the fear of making mistakes prevent others from doing anything at all. These people struggle with even the basic, day-to-day decisions.
Figuring out your “money personality” and understanding which decisions are important to you and which don’t matter can help you be financially successful. When it comes to making major decisions in your life, it is easier if you have a process. If you don’t even know where to start, consult with a friend or fiduciary advisor to work through the situation.
Research and gather relevant facts and information about your choices and list the pros and cons of each. Make a list of all the things that are important to you and rank them by order of importance. You might even assign a numerical ranking to each item on the list, giving you a method to eliminate some of your options. This will leave you with a more manageable number of routes to consider, and then you can decide what the deal breakers are. Don’t try for perfection, because this will prevent you from moving forward.
Let’s say, for instance, that Tom and Susan face an important milestone. They can no longer negotiate the stairs in their home and walking and driving in the snow and ice has become dangerous. Family and medical facilities are too far from the small town they love. Finding a new home in a new city and moving there seems daunting until they focus on their top priorities and agree to compromise.
First, they talk to their children and decide which one would be able and willing to help most when needed. Moving close to that child also would mean easy access to great medical care and a much milder climate.
Next they agree on the must-haves in a home: one level with a patio, a homeowners association to mow the lawn and shovel snow, a secure neighborhood and close proximity to family. Of course, they limit their search to an affordable price range, which they also have discussed. Once they know what is important, finding the right home became much easier.
Decisions can be made much more effectively and efficiently if you have a process for evaluating your options. And doing nothing is also a conscious decision that may have its own consequences.
This commentary originally appeared March 4 on TheCasperStarTribune.com
By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them.
The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.
© 2017, The BAM ALLIANCE