Making Smart Financial Decisions - ABLE National Resource Center (2024)

FAQs

What is the trick to making smart financial decisions? ›

Create a Monthly Budget

The best solution to this problem is assessing your income and expenses and then creating a monthly budget. This way, you don't miss out on any important payments, save for the future and have room for non-essential expenses as well.

Strong financial knowledge and decision-making skills help people weigh options and make informed choices for their financial situations, such as deciding how and when to save and spend, comparing costs before a big purchase, and planning for retirement or other long-term savings.

Pay Off Debt and Stay Out of Debt

To get started, focus on your most expensive debt—the credit cards and loans that charge you the highest interest. Once you have paid off all of these debts, focus on paying off your mortgage. For your mortgage, consider splitting your monthly payment in half and paying bi-weekly.

Financial literacy is the knowledge of various aspects of personal finance and the ability to make smart decisions about money.

Someone who's financially literate would be able to set a budget, manage a bank account, and achieve a good credit score. Financial literacy could also include more complex skills like managing debt, buying insurance, investing, and retirement planning.

There are three types of financial decisions- investment, financing, and dividend. Managers take investment decisions regarding various securities, instruments, and assets. They take financing decisions to ensure regular and continuous financing of the organisations.

What is the wisest financial decision you can make? ›

SAVE & INVEST – It's never too early to start saving for future goals such as a house or rerement, even if you are only able to put aside a modest amount. Saving is a key principle; people who make a habit of saving regularly, even small amounts, are well on their way to success.

Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

This helps you have a better financial future. If you have a good understanding of financial concepts, you can make wise investment decisions and save for retirement. Financial literacy can also help you plan for unexpected expenses, such as a car repair or a medical bill.

Effective decision-making is a valuable skill in any workplace, no matter your job. Having the capability to make good and quick decisions can help you become more productive because it helps you save time and make better use of resources.

Locking in a cheap mortgage, when rates were low, was one of my best decisions. We must all take the rough with the smooth, it is said, which is something I thought of when reflecting on my financial journey over the years.