At some point, everyone has to make a big financial decision: buying a house, taking out a loan, or something similar. Are you prepared to make that decision when it arrives?
Major financial decisions can be stressful–they’ll often impact you for years to come. That’s no reason to shy away from them, though. A carefully considered investment or purchase may well be worth it.
The key phrase there is ‘carefully considered.’ It’s important to analyze your financial decisions (and their repercussions) carefully before making that final call.
There are several ways to improve your financial literacy before tackling a major decision. Read on to learn five expert tips that will help you control your finances, setting you up for success in your decision-making.
1. Set Priorities
The first thing you need to do when considering a financial decision is to get your priorities in order. Is this big expenditure important to you? Is it worth it? Will it conflict with your other goals?
Figure out what you need and focus on that first. Then, you can look at what you want and plan accordingly. If you have multiple needs, categorize them so you can tackle the most important ones first.
2. Make a Budget
If you’re wondering how to improve finances, start with a budget–make one if you don’t already have one, or reevaluate it if you do. Figure out how the decision you’re making will impact that budget going forward.
Budgeting can be difficult, so it may help to hire a financial advisor. You can visit www.jalawrence.net/marietta-financial-planning to see how a financial advisor can help you.
3. Consider Interest Rates
Many big financial decisions are so big because they impact you for years. That often means they have interest rates attached. Whether you’re getting a loan or opening a savings account, interest rates are important.
Always strive for the lowest interest rate possible on a loan–otherwise, you’ll be paying it off forever. On the other hand, shoot for high interest rates on savings accounts, since the accumulated interest goes to you.
It might sound counter-intuitive, but you should budget some money on fun things that aren’t related to your financial goals. Experts agree: a little bit of entertainment spending actually helps you in the long run.
4. Don’t Neglect Fun
If you never buy yourself anything fun, you’re quickly going to burn out. You’ll get frustrated by your goals and budget, and you might end up overspending on an entertainment splurge to compensate.
5. Make a Pros and Cons list
If you’re still struggling with a financial decision, try making a list of pros and cons for it. What will you gain from it? How much will it set you back? Does it interfere with your other goals?
Lay out every positive and negative you can think of. If the bad outweighs the good, that should be a clear indicator of how to proceed.
Make Your Financial Decision With Confidence
Grappling with a financial decision can be draining, but there are ways to make it easier. If you follow the financial advice outlined above, you’ll be able to make even the toughest financial decisions with confidence.
Not every financial decision is a huge one. Are you looking for more day-to-day advice on how to handle your finances? Check out our blog for tips on investments, banking, and more!