Each of us makes many decisions every day – what to wear, what to eat, what to do with our time, what show to watch, … the list could go on and on. But how often do we think about how we are making our decisions?
This is something to think about when it comes to the decisions that we make about how we use our money. There are a few simple steps that can help you make good money decisions.
The first important step is to be clear on the choice you are facing. For example, suppose there was a stretch of highway that was icing up in winter and accidents were occurring. You are asked to solve the problem. Well, is the problem to get the ice off the highway – or is it to warn the drivers of the ice – or is it to make sure cars and drivers are able to handle the ice – or is it to get the traffic off the highway when there is ice – or, … well, as you can see, there are many ways to look at the problem. Your options, solutions, and the cost will depend on the problem you decide to try and solve. So Step #1 is Define the problem clearly!
Consider another example. Let’s say your decision is to decide what to do after high school. Step #2 is to List your options or alternatives. Your options may be: university, college, training, travel, entrepreneurship, skilled trade, and so on. Think through the different choices you have.
Step 3 – Think about the things that are important to you. It may be that you want to stay with friends. It may be that you have a passion you want to focus on. You may “want to be your own boss” – or you may want to work with and help people, or work with your hands, or join a profession – or travel and see the world. Think about your “criteria” – what’s important.
Step 4 – Compare your options with your criteria. See how each option stacks up on the basis of what matters to you and what you care about. Your personal “values” will come in to play on many of your decisions.
Finally, step #5 – Make a decision! And, as easy as it sounds, this can sometimes be the hardest step. But, if you follow these steps, you should have more confidence in the decisions you make – and it will help you to take that last step and hopefully make a good decision.
Making decisions is something we do every day. Making good decisions will affect our happiness, well-being, and success. For those important decisions – and many of our money decisions – try and follow steps like these to help you make the best decisions you can.
By Gary Rabbior
Canadian Foundation for Economic Education (CFEE)