3 Steps for Making Better Money Decisions

by Miranda Marquit · 0 comments

We all want to make better decisions with our money. This is especially true after we’ve made a serious mistake. However, even if you haven’t messed up your finances, it can still be desirable to make better financial decisions. After all, you could be maximizing your financial situation with better decisions.

It’s not always easy to get in the mindset that allows you to make better financial decisions, though. Too often, we aren’t even aware that we could be doing something better. Or, if we are, we aren’t sure how to change the way we make decisions. Here are 3 steps to follow that can help you make better money decisions:

1. Figure Out What You Value

It’s amazing how few people actually take the time to look at what they really value. What is important to? Whether it’s important for you to help others, live a debt-free life, or be able to spend more time with your kids, you need to know what you value. What things are most essential in your life? Most people are happiest when they can connect with others and have good experiences. After taking a close look at what you value, you might find that “stuff” isn’t high on your list.

Keep in mind, too, that what you value most might change, depending on your stage in life. During your peak working years, you might value weekends off to spend with your family, and making sure that you are setting aside enough for retirement. Later, you might value traveling or volunteer work more. Re-evaluate your short-term and long-term goals in light of what’s most important to you right now.

2. Acknowledge What You Need to Get What You Value

Next, you should look at what needs to happen in order to get what you most value. Most of the time, you need a plan. If you want to live a debt-free life, you need to make a plan to pay off your current debts, and work out what you need to do to avoid debt in the future. For those who find it important to give to charity, you need to look at your finances and make sure that you are making your contribution first.

Perhaps you need to change your schedule a bit in order to get what you value. Could you give up an hour of TV each day to work on a home business that will lead to financial independence down the road? Take a hard look at what it takes to bring your lifestyle and your finances in line with your values, and make a plan for getting there. It doesn’t have to be all at once; you can make small changes over time.

3. Before Spending Money, Ask If It Advances Your goals

Once you know what you value, and you have a plan in place, it’s time to put your money where your mouth is. Before you spend money, ask yourself if the cost is worth it in terms of helping you reach your goals, or if it will benefit your finances. While the occasional frivolous purchase isn’t a bad thing, the reality is that we are happier when our spending aligns with our deeply held values and helps us reach our long-term goals. Ask yourself if your expenditure will advance the cause, or help you live in greater harmony with your values. If you can answer affirmatively, your money decisions will be better for your personal financial situation.

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