How To Make Better Financial Decisions

You want to get things right. You want to look good. You’re smart and capable and want the world to know it. Yet, when it comes to financial decision making, you often put yourself through a financial self-interrogation that leaves you exhausted and uncertain.

Maybe your internal dialogue sounds something like this:

• What will my friends and family think?
• Am I paying too much or too little?
• Should I wait for a better opportunity to come along?
• Is now a good time to invest?

In my experience, these are just a few of the dozens of questions women ask themselves when faced with financial decisions large and small. And while it’s healthy to pause and think before you write that check or slide that plastic, you can also unnecessarily prevent yourself from enjoying the fruits of your hard work and disciplined savings.

As an alternative, I’d like to offer 3 simple steps that will increase your comfort and confidence and help you make better financial decisions.

Start With The Why Behind Your Financial Decisions

I believe every decision, financial or otherwise, should start with the question “Why?” This will promote a thorough reflection of what brought you to this choice in the first place. Whether it’s a decision about savings, spending, paying down debt, or something else, I think “Why” is much more important than the “What” or the “How.”

Focus On The Financial Decisions You Can Control

Let’s face it, we don’t know what we don’t know. Yet, we’ve been led to believe that we should wring our hands worrying about all the things we don’t know instead of focusing on the things we know and can influence. You can’t control the investment markets, or interest rates or future prices of things you might want to buy. And there’s no way to control what your family or friends will think about a decision you make, so don’t spend time worrying about it. Instead, focus on things you can control, like how much you save or spend and the timing of the goals you want to accomplish. I think you’ll find this to be a liberating exercise and this is the foundation of creating your own financial plan for the future.

Tune Out The Noise

Whether it’s buyer’s remorse or someone calling your decision-making into question, there are always plenty of opportunities to second guess what we’ve done. However, if you’ve really considered why you’re making a decision and are focused on the things you can control, the next step is to tune out the noise. We’re exposed to more and more noise every day from TV, the press, from our family, from our friends and co-workers, who each want to share their opinions about what they would have done in your shoes. And while they likely have your best interests at heart, remember that their “Why” might be very different from yours. And maybe they’re focused on other areas of control than you are.

Putting All The Financial Pieces Together

Just because you’ve thought through your personal “Why” and are focused on the things you can control and have done a good job of tuning out the noise around you doesn’t necessarily mean you won’t make some mistakes along the way.

However, I believe having a sound decision making process that you can rely on as you’re faced with money choices will help you avoid making decisions that could haunt you emotionally and financially in the future.

And if you’ve already made a decision that makes you uncomfortable, think about why you made your choice so you can learn from your experience, and then leave it in the past. That’s another thing you can’t control.

Tagged as: financial decisions, Financial Planning, women and finance, women and money