Helpful questions to ask yourself before making a major financial decision
Major financial decisions can have a profound impact on our lives, both negative and positive. What constitutes a major financial decision means something different to everyone. So instead of defining what a major financial decision is, let’s look at questions to ask before making a major financial decision according to your personal situation.
1. Was this planned?
If your answer is “yes”, that’s great! You have more flexibility to pursue your decision. It’s important to recognize if this is a want or a need as that may change your perspective on the urgency of a decision. Determining if it’s within budget will also help steer you towards a final decision. Make sure you’ve educated yourself on the decision at hand and don’t discount the voice in your head – listen to your gut to determine your verdict.
If your answer is “no”, you don’t have as much wiggle room. Do as much research as you can to create flexibility for yourself (i.e. can you negotiate the amount owed or the due date of the bill). Determine how this forced decision will impact your immediate future and what fiscal decisions are still within your power to control. Delay or accelerate the controllable fiscal decisions so you can lower the negative impact on your long-term goals.
2. Are there pros and cons?
List out the potential positive and negative implications of your decision. Does one list carry more weight?
3. Am I motivated or unmotivated; why?
Decisions are emotional and can lead to impulsivity or procrastination. Allowing impulse to overrule calculated decision-making can be risky with a major financial decision. If you’re moving too quickly, sleep on it. If you’re procrastinating, set a deadline.
4. Did I communicate with people affected?
If your decision will have a direct impact on others, such as a partner or children, it’s usually worth it to have a conversation before you pull the trigger.
When making a major financial decision, take educated risks when afforded the luxury, get the advice of many if it’s helpful, and remember there will rarely be a perfect answer. Do your research and trust yourself to make the right decision for your situation