Make good money decisions

make good money decisions

When you are trying to make good decisions about money – it is so tempting to just focus on the numbers and ignore everything else – right?  Wrong.  If that were the case, we could let our calculators make the decisions for us.

When you start to think “This looks good on paper, but I’m not sure how it will work in practice” – that’s when you start to understand the complexities around financial decision making.  There’s what the numbers suggest you do – and then there is your life.  And life gets messy sometimes.


Are you a calculator or a decision maker?

What’s the difference?  A calculator is someone or something that can manipulate really complex numbers and come out with a numerical answer.  A decision maker, however, takes this number and uses it as part of a wider set of information to – you guessed it – decide upon something.

It’s a little bit like the difference in being the tool or being the craftsman.

However, we often fall into the trap of thinking that we need to be better calculators to become better decision makers – especially when it comes to money.  Traditional finance is all about reducing a massive complex network of things and people down to one simple number.  But it is a myth that this is a better way to make decisions about our lives.  It’s like having ‘42’ as the answer to the meaning of life, the universe and everything (see * below).  If you don’t ask the right question, all you’ll have is a useless answer.


Most financial training makes us calculators

Your financial capability will improve with better numeracy – so it is definitely a good idea to increase yours.  You can go to the UK National Numeracy website to find out more and do a self-assessment.

Formal financial training does make us feel more capable when it comes to money.  However, things start going wrong when everything is reduced down to one simple number.


Life makes you a decision maker

How about those times when the numbers add up, but something doesn’t seem right to you?  What happens when you have to make a compromise?  This is where feelings in your body (gut feelings) start firing up hormones which make you feel queasy.  Or you have a complex situation involving your family and other people – who do not see eye to eye with you.

In fact, life is full of complexity.  You may have a set of numbers that tell you to go down Path A – and yet because of the reality of your situation you are forced down Path B.


Make good money decisions

Understand that the numbers are important.  Financial literacy is important.  But there are many other considerations you need to make when making a decision.  Where  you are in life, your goals, the people around you, expectations of the future, and keeping yourself safe (to name just a few).  The numbers will not encompass these aspects.


Try this with your next money decision

Next time you make a financial decision write down as much information as you can about the following areas and how they relate to the decision:

  • What do the numbers say?
  • How does this affect me and I will need to live?
  • How does this affect my immediate family?
  • How do I feel when I am making this decision? What could be the reasons for those feelings?
  • How could this affect my financial security in the future?
  • What are the consequences for myself, my family and my lifestyle that I might not have considered?


Get as much as you can on paper – and then have a look at the information you have in front of you.  Consider everything that you have written down – because it is important – before you make a decision.  And then state out loud why you have decided one way, or the other.


If you are struggling with an important money decision and you need some trusted guidance, book in for a free 30-minute consultation with me here.

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* read The Hitchhiker’s Guide to the Galaxy by Douglas Adams if you want to find out more.  (NB this is an affiliate link.)

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