1/13/2024 0 Comments Money decisions![]() This could be perfectly acceptable for your situation if, say, you’ve spent the last 10 years maxing out your retirement plan, you saved up the amount you need to cover your travel expenses, and you have a plan for continuing to work and earn an income when you return. Who is to say that spending a year traveling is “wrong” and putting everything you have in your 401(k) is “right”? When you apply those labels, you clutter up the situation with things that aren’t objectively true. When you struggle to make good financial decisions, making things “right” or “wrong” won’t help. “Right” And “Wrong” Aren’t Useful Labels, So Use These Instead In fact, doing so can leave you feeling unfulfilled and unsatisfied because you’re not considering what you actually want to do with your life. If your cash flow shows you spend more than you make, that’s a problem - regardless of what your values are.īut you also don’t need to feel obligated to always do what a spreadsheet says is “best” from a numbers perspective. You cannot ignore what the numbers tell you that’s your financial reality. If you align your spending with what’s most important, building budgets suddenly becomes much easier if you know what you want to save for, you can suddenly find more intrinsic motivation to contribute more to savings and investments. ![]() It’s what the money allows you to do in your life that matters. More money on its own is not a true goal. What are your core values? What really matters? Why are you trying to earn more money or invest wisely? Choices about how to use your money will be easier if you know what’s truly important to you. Good decisions come from understanding where these two things meet. Acknowledgement of your financial reality.Clarity on your values and priorities, and. ![]() The very first steps to getting a strategy in place for decision making are these - and without them, you will not be able to make good choices with your money: To Improve Your Ability To Make Good Money Decisions, You Need These 2 Things Too much information leaves us paralyzed with uncertainty, and unable to simply choose one path and act (which, even if we don’t choose the optimal action, is usually better than standing around doing nothing at all). And the more information you must interpret within the context of your life, the more likely you are to get stuck in analysis paralysis. They have finely-tuned filters that can help you sort through what’s true and what’s false.)Īnother pitfall? Even if you can sort through what’s true and false, that still leaves a massive amount of good data on the able. (This, by the way, is part of the value of having experts on your side.
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