You have a great job; your boss often praises you for taking the right decisions beneficial for the company. However, when it comes to making financial choices for ourselves, many of us falter. There are millions of questions in our mind already filled with confusion. This anxiety and fear can be highly disastrous for a person’s long-term aims. Taking effective monetary decisions is not as tough. Follow these simple steps to improve your decision-making abilities:
1. Express your objectives clearly:
You cannot take effective financial decisions unless you are aware of your financial goals. Make a list of objectives and determine which financial instrument will best help you attain that goal. Ensure that the goals are realistic and time-bound.
2. Establish a budget (and stick to it):
Have financial discussions with your partner/family every month and determine how much money will be allocated to basic requirements, wants and savings. If you have adequate funds, you can take financial decisions without any stress.
3. Carry out thorough research:
Successful financial choices cannot be made in one day’s time; such decisions need detailed research. Once you select your investment vehicle, gather all the necessary information to help you understand how it can grow your wealth. Don’t just analyse the best-case scenarios of your preferred investment; assess the worst-case outcomes as well.
You need not spend months on research as that will take you nowhere. Establish a time-frame and adhere to it.
4. Be confident about your investment decisions:
Whether you are putting your money in equity, fixed deposit, mutual fund or SIP, do it with conviction. If you feel a particular investment is viable after doing in-depth research but your colleague says otherwise, don’t get influenced by his opinion. Have faith in your judgement, a vital factor to improve your finances.
5. Review your investment portfolio:
Many individuals take important investment decisions without having knowledge of their present portfolio. For example, you already have a large quantity of stocks and you buy some more, a wrong decision as there is no proper asset allocation. It is essential to have a good look at your current assets and liabilities so that you can take a concise decision.
These guidelines will enable you to take smarter financial choices, generate fruitful investments and ultimately increase your bank balance.