Decision Making and Money Management

Decision making is a core skill that you need to develop in order to properly manage your money. At its root, money management is about making choices about earning, spending, and savings your money. Adults with ADD tend to have more difficulties with decision making than the rest of the population. When reading about money management, I think that most authors tend to assume that everyone who is reading their article has good decision making skills. The good news is that you can improve your decision making skills, here are a few tips to make better decisions:

1. Recognize when you are making a decision. Impulsive or habitual decisions are often overlooked when trying to figure out why you don't have the money to do the things you really wanted to do. Every time you buy a cup of coffee or buy a new DVD you are making a decision.

2. What do you really want to do? Developing goals and values will give you a framework to analyze your decisions. It is easier to make a better choice when you know what you really want.

3. Understanding the consequences. Any decision has the potential for both negative and positive consequences. Focus on the positive benefit of making a decision. For example if you had to decide between paying a student loan or your credit card on time, and you decided to pay your credit card, focus on the fact that you avoided the late fee and your interest rate did not go up, rather than the fact that your student loan is late. You need to realize that just because something negative happened as a result of your decision, it does not mean your decision was a bad one. Sometimes decisions have negative consequences no matter what you decide.

If you are able to consistently make better decisions with managing your money, it is very likely that your financial situation will improve over time.

Comments

[July Bucks]

This is a great idea to manage the budget and save money, so that it is easy to decide whether to "buy a cup of coffee or buy a new DVD" or not. We all save money to buy things we want but isn't it more pleasant just to spend than to manage, save and then to spend? =)) Is it worth trying?