Financial planners keep on suggesting people to make a good and wise financial decision. However, how can we know that the financial decision we make is actually the good and right one?
As the awareness to be more literate in terms of finance keeps on skyrocketing, it is no wonder that financial literacy is salient. By financially literate, people will possess the necessary foundations to decide what to do with their wealth.
Ergo, what is the correlation between financial literacy and financial decision? To begin with, one’s financial decision arguably reflects how literate one’s is in managing the wealth.
That said, what is considered a good financial decision and how can we know if we already make a good one? Here are some indicators that can be your assessment materials.
Also Read: Financial Literacy is Currently a Foreign Term
Your Financial Decision Must Prioritize Your Future
First things first, it is arguably the most vivid indicator that a good financial decision prioritizes the future. This is so for, in the future, it is advised that people have enough wealth so that they can peacefully enjoy their old days.
Accordingly, prioritizing your future finance includes several decisions. Starting from allocating your current money for retirement savings up to avoiding overspending, they are prime examples of such prioritization.
The Decision Includes Emergency Funds
Sometimes, we encounter a moment in which we require a certain amount of money at an unexpected time. This is where the importance of having emergency funds lies.
By delegating some of our current wealth for unpredictable moments, we can mitigate the financial damage we might encounter at any time. For instance, we can start to invest in health insurance or any forms of passive income.
Every Decision Should Be According to Records
If you ever afford something and you do not remember what it is about, then it might hint a bad financial decision. In the most logical sense, every decision must be according to data or records.
For that reason, it is always wise to track your savings and spending. Also, building a financial roadmap to predict how much you need for a certain goal in either short or long term is also paramount.
Also Read: Financial Roadmap for Investment and Savings
