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Wednesday, March 12, 2014

TIPS FINANCIAL: 10 Steps to Making Better Financial Decisions

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In everything we do, there are always consequences. The gravity of these consequences usually rests on the kind of decisions we make. If we make the right ones, we get the right consequences. The thing is, decision-making is a fairly common thing. We are all faced with countless decisions every day, from the potentially life-changing to the downright arbitrary. In order for us to ensure a certain quality of life, we have to make decisions of a certain quality. How do we do it? Here are a few pieces of advice.
Keep emotions out of it.
No good can ever come from a decision made under emotional duress. If ever you are in a state wherein you are extremely emotional, avoid making decisions that carry really heavy ramifications. These are decisions that involve your finances, your career, your personal relationships, or even your physical health. Unless you are sure you can be completely objective about a major decision, then just forego the decision-making until you have calmed down.
Take some time.
No matter how certain you may think you are about a particular decision, always take some time to think about it. Sleeping on it is a very effective way of taking a step back and ensuring you have a clear head when you ultimately make your choice. Resting up before making a decision prevents the possibility of making choices influenced by fatigue. Fatigue makes people rush through the decision-making process in order to just put the discussion to an end. A fresh mind in the morning has a better shot at making a rational, informed decision.
Practice some conviction.
When making decisions, especially ones that involve your finances, it is important to prevent wavering whenever anything challenges that decision. Let us say you have decided upon a budget that you plan on using in order to improve your financial situation. A lack of conviction makes it hard, impossible even, for you to follow through on any of your plans or decisions, preventing you from achieving any of your goals.
Understand how much control you actually have.
Rational decisions are ones made with a full understanding on the scope of control one has over any given situation. Let us say you are out to fix your credit card debt. What are the specific factors you can control? What are the ones you absolutely have no control over? You cannot control the addition of interest towards the money you owe, but you can control paying that debt, how much you pay, how often you pay, how often you use the card, and others that can improve your credit record. The point is, your decisions should revolve around things you have a direct influence on and leave very little, if any, to chance.
Be willing to adjust your decisions.
If you pursue a course of action and it turns out to be wrong beyond any doubt, be willing to accept that and then make a better one. Allow yourself the luxury to change your mind so you can properly adapt to new information and changes in your situation.
Embrace silence.
Take the time to make your decision free from any distraction. Amidst quiet, whatever form it may take for you, is the ideal setting for you to make important decisions. A place, time and state of mind, wherein you can emotionally free yourself from bias and mentally free yourself from uncertainty, is highly recommended when you are planning to make a major decision. Distractions lead to clouded judgment and hasty choices, two things that may give your more problems than solutions.
Consider everything.
When you are making a crucial financial decision, be sure to take every detail into consideration. From every ringgit you make down to the last ringgit you spent, to all of your transactions involving money and obligations that require you to pay, everything. When you are trying to make a decision that would solve your money problems, it is best to make an informed decision, and an informed decision is one wherein every angle has been covered.
Keep your eye on the prize.
Whatever decision you make, it has to be in line with whatever you claim you want to achieve. Whether it is getting a promotion or just clearing yourself of debt, a singular focus on your intended goal goes a long way into helping you achieve it.
Prioritise.
Determining where every aspect of your finances stand in the hierarchy of importance to you helps you make a decision that effectively takes on your bigger problems first.
Do it for you.
Lastly, in any decision involving your improvement, do not do it for anyone but yourself. Whether it is financial or otherwise, do it for you alone.
CompareHero is the leading Malaysian financial comparison platform, aimed at helping Malaysians save time and money. Visit CompareHero here.

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