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

FAQs

What is the trick to making smart financial decisions? ›

Setting specific, measurable, attainable, relevant, and time-bound (SMART) goals provides a roadmap for your financial decisions and helps you stay focused on what truly matters. Create a Budget and Track Expenses: A budget is a powerful tool that allows you to take control of your finances.

Understanding and managing your finances allows you to make smarter choices with your money, leading to greater financial stability and independence. It's not just about making ends meet but about maximizing your financial potential.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Needs: food, water, shelter, sleep, clothing, medicine. Wants: fancy cars, expensive clothes, big houses, luxurious vacations.

The most common way to use the 40-30-20-10 rule is to assign 40% of your income — after taxes — to necessities such as food and housing, 30% to discretionary spending, 20% to savings or paying off debt and 10% to charitable giving or meeting financial goals.

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 must a smart financial goal be? ›

However, the goals cannot be vague, such as 'I will buy a house when I have enough money'. Goals should be 'SMART': specific, measurable, achievable, relevant, and time-bound. Be specific and as detailed as possible when setting goals.

Before making a decision, gather relevant information from credible sources. Analyze financial data, market trends, and potential risks to make well-informed choices. Evaluate Options. Consider multiple alternatives and evaluate their potential outcomes.

Character, capital (or collateral), and capacity make up the three C's of credit. Credit history, sufficient finances for repayment, and collateral are all factors in establishing credit.

The foundation of financial success is money management. Financial success isn't just about earning more; it's about managing what you have wisely. Here's why learning how to manage your money is essential: Understanding where your money comes from and where it goes is the first step in taking control of your finances.