Making Financial Decisions
I like to call the filters by which we make financial decisions through our Money Principles. We all have them, the real question is how conscious are you of what they are.
Were they someone else’s principles that you unconsciously adopted as your own? For many of us this is the case. We adopted what we experienced and learned in the household we great up in and or from those who have had a great impact in our life.
The ultimate question is how are they working for you? Are you getting where you want to go? Are you confident you will create what you truly desire?
Only you can answer these questions for yourself. It starts with knowing what you really want, and then being willing to learn all the possible ways to achieve it and then CHOOSING what is best for you now. These will change over time as life changes, but you need to start now.
Here is a list of things to begin to consider when it comes to your principles of money. It’s not an exhaustive list, but it’s a great place to start. If there are things you don’t understand, or have never considered, then it’s a great place to start.
Cash flow needs
Personal / Business – what does it really take each year, each month, each day to operate?
How much liquidity
Reserves / Opportunities – what is a good amount and right to you have available at any time?
Current Asset Allocation
Diversification – nature and risk – where are you currently playing?
Investment objective – today and tomorrow
Cash Flow / Growth – what do you need most and when?
Debt as a tool for growth – what does it look like?
Monthly / annually / long-term – by when do you need your return?
Knowledge level = risk
Lower return – often these are safer investments
Higher return – this may have more risk – what are your parameters for assessing risk?
Desired asset class allocation
Return on Investment (ROI)
When do you get paid?
What return limits are okay with you?
Today and tomorrow – set up now for longer term picture.
How often review
What you focus on expands – make sure you have money dates that help you stay in the driver seat.
The more conscious you can be about the principles you are using to make decisions with, the higher the likelihood of achieving your goals. Just start!
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