Strong financial knowledge and decision-making skills help people weigh options and make informed choices for their financial situations.
Good financial decision-making isn’t an art or a science, but there are some smart guidelines you can follow to help you achieve your goals.
Check Out 10 Steps on How to Make Better Decision With Your Money
1. Less ego = more wealth
Saving money is the gap between your ego and income, and wealth is what you don’t see. Wealth is giving up what you can buy today in order to have more in the future. No matter how much you earn you will never build wealth unless you can put a lid on how much fun you can have with your money right now.
2. Manage your money in a way that helps you sleep at night
When making any financial decision ask yourself “does this help me sleep at night?”. Everyone has different goals but if your decision helps you sleep better, it’s the best decision for you.
3. To be a better investor increase your time horizon
Time is the most powerful force in investing. With time, little things grow big and big mistakes fade away.
4. Become ok with things going wrong
It’s possible to be wrong half the time and still make a fortune. This is because a small number of things account for the majority of outcomes.
Practically, this means you should measure the full results of your portfolio rather than individual investments. When you measure individual investments, it can make winners look more brilliant than they are, and the losers look more regrettable than they were.
5. Use money to gain control over your time
The biggest dividend that exists in finance is the ability to do what you want, when you want, with who you want for as long as you want. Controlling your own time has the biggest impact on happiness so make decisions with that in mind.
6. Be nicer, less flashy
No one is impressed with your possessions as much as you are. You gain more by being nice than having nice things.
7. Save for savings sake
You don’t need a reason to save. Life is full of surprises and savings that aren’t earmarked for anything helps you deal with life’s inevitable surprises.
8. Define the cost of success (to you) and then be ready to pay for it
Nothing worthwhile is free. Most financial costs – uncertainty, doubt, and regret – don’t have a visible price tag. View these as fees rather than as fines.
9. Avoid the extreme ends of financial decisions
Everyone’s goals and desires change over time and the more extreme your past decisions were the more likely you are to regret them as you evolve.
10. Embrace a little risk
Risk pays off over time but that doesn’t mean all risk is good. Avoid risks that could ruin your reputation, relationships, or ability to take future risks that will pay over time.