How to Make Better Financial Decisions

Any advice stated within this article is the author’s personal opinion and is to be taken as a guide to making decisions and should not serve as a substitute for the readers own judgment. This article contains affiliate links – see our policies and procedures


Want the key to making better financial decisions?  OK. Sure. Just wait. Just a little bit more. Was that tough?  Well that was only about 2 or 3 seconds. If you want the key to making better financial decisions, you’ll have to wait a little longer than that, and to do that, you will need one of the four keys to making better financial decisions: patience.  


No matter if you’re looking to purchase a new home, buy a new car, or just make a major financial decision not stated here, the four keys to making financial decisions will be applicable in all of these situations and more.


Try to look at making better financial decisions as a state of mind that can help you be decisive and make the right choices in crucial moments that will have significant impact on your financial future.







When the time comes to make an important financial decision, chances are the clock won’t be ticking down the seconds or minutes.  You will have at the very least, hours, but most likely, days, weeks, if not months.  You have time.  The worse thing you can do in those decisive moments, is pressure yourself to make a hasty decision, or let someone else pressure you to make a decision without thinking it through.


For example, if you’re looking to buy a new car and you’ve found yourself at a car dealership, most likely the salesperson will consistently push you to make a purchase.  That’s not okay, but unfortunately that’s the car sales culture.  Don’t focus on them, focus on your goal:  find the best car for the best deal.  If you happen to be looking to purchase a new car, here are a few things you should keep in mind before going into the shark tank:

  • 20% rule – Try to have a down payment on hand that’s at least 20% of the car’s value.
  • The Means – Stay within your means, a car payment on a new vehicle shouldn’t cost more than 10% of your gross (pre-tax) monthly income.
  • Research – If you want a good vehicle, have a solid definition of what exactly “good” means.  Consumer Reports does a great job of providing up to date information on many makes and models.  If reliability and safety ratings are a part of your criteria, and they should be, consumer reports is a great place to start.
  • Background check – Before you purchase a vehicle, even if the dealer says it’s new, be sure to get a background check on the vehicle.  You can easily do this with Car Fax.  All you need is the car’s VIN number and you’ll be able to get a detailed history of any major events in the cars history such as accidents.  Keep in mind that most car dealerships will offer a free Car Fax.

To go through all of these steps before purchasing a vehicle, you will certainly need patience.  The time and money it will cost on the front end, will certainly benefit you on the back end.

KEY #1 Summarized – No matter if you’re purchasing a car, or not, this key still applies.  Be patient, look at as many variables about your decision as you can, do some research, and make the best decision that you can with the information you have.

*GreenThreeLife is not affiliated with Consumer Reports or Car Fax.*









No matter how big or how small a decision may be, planning can certainly help with the decision making process.  Having patience, as mentioned before, can assist you with the planning process.  Take some time to sit down and write out, type out, or even text out your goal and make a road map to get there.  Take some time to think about the end, where you ultimately want to be once the decision is made, then determine the means to get there.

For an easy way to go about this process, think about five simple questions: Why? Where? What? How? When?

WHY? – If you’re buying a car, think about why you are buying it.  Do you really need a new vehicle?  Is it for your family?  Do you travel long distances and need to save money on gas?  Try to think about why you are making a decision.  Think about the circumstances that brought this situation about.  That may help provide you some cues on how to move forward with your plan.


WHERE? – Stop for a minute and take an honest look at your current financial situation at present.  Your monthly income, your monthly expenses, your credit score.  At least one of these things, if not all, will factor into your final decision.  Knowing exactly where you are financially, will contribute greatly to you coming up with a plan to get you where you need to go.


WHAT? – Take some time to write out EXACTLY what you want to accomplish.  This should be a one sentence, two sentence max statement that declares your desired outcome.  For example, “I want to get the safest, most reliable, fuel efficient vehicle that I can afford, for the lowest price possible.”  Knowing exactly what you want, will assist you in knowing exactly how you’re going to get it or if you can get it.


HOW? – Once you know where you are financially, the how is the easiest part of the process.  Let’s say you know exactly what vehicle you want, and a 20% down payment equates to $7000.  Now it’s just a matter of figuring out how much money you can set aside each week or each month to attain that goal.  If it will take you a year to set aside a sufficient down payment and your current vehicle is giving you trouble, you may have to reconfigure your plan.  Perhaps you’ll have to find a way to make more money, or cut your expenses.  If that still doesn’t fix the problem, you may have to get a vehicle with a lower overall price tag.


WHEN? – Knowing what to do and how to do it is important, but knowing when to do it is just as important.  Look at your timing.  Whether your financial decision is an urgent matter or can be delayed for a few weeks or months, make sure you implement your decision at the right time.  Let’s say you have found the home of your dreams but you’ve only saved half of the necessary down payment and it’s a sellers market.  Is it wise to make the decision to buy the home despite your circumstances?  Probably not. 

Even if it’s really the home of your dreams, ask yourself a simple questions, is it the only dream home on the market?  Is it possible that you can find another home later on?  The answer is yes.  By forgoing a rushed decision now and continuing to save your money, you will put yourself in the position to make a better financial decision later.


KEY #2 Summarized – Similar to the first key, planning can be implemented and applied in any situation.  Make a plan and ask yourself the tough questions to ensure you make a wise and informed decision.

For example, if you’re thinking about getting a credit card, the same rules apply.  Where are you financially?  What exactly do you want?  How are you going to make it happen?  And when is the best time to implement your decision?  If you have a low credit score but you want a credit card with low interest rates and great rewards, you may have to wait to apply.  The best decision may be to improve your credit score first, then apply for the credit card later on when you’ll have a better chance of actually getting it.  

Student loans? Refinancing? Small business loan?  No matter what the situation entails, if you’re patient and apply the four keys, you’ll have a greater chance of making a better financial decision.










This is probably the most important key to making better financial decisions.  Your intentions will ultimately determine where you are going.  If you aren’t honest with yourself about your intentions, then no matter how patient you are, or how well you plan, you most likely won’t make the best decision.

Before making any financial decision, take some time to honestly think about why you are making the decision.  Or if a situation arises that’s outside of your control, and you have to address it, be honest about your reasoning for the end goal.  Do you really need it or just want it?  What’s the best possible outcome of this scenario?  How am I defining what is best? Am I making a wise financial decision or am I opting for extravagance over economy?

If you’re looking to make the best financial decision, then most likely that will involve avoiding the purchase of luxury and comfort items.  There is a time and place for everything, try to avoid high priced purchases or even small ones you think won’t matter, at least for now.  Once you are in a better financial situation, all of the luxuries that you had to forgo along the way will still be around.  After you have a great credit score (at least 725 or above), an emergency fund in place (6 months of monthly income put aside), you’re debt is under control (debt is no more than 40% of your gross income) then you can say, “Okay, let’s go a little extravagant this time.”  

Key #3 Summarized – If you’re honest about your intentions when making purchases and pass up on frivolous items that you don’t need, when you finally do decide to make that luxury purchase, chances are you’ll still make a sound financial decision.  You can be economical about your luxury purchase and spend within your means without over reaching financially.






KEY #4 – REFLECT – Right Decision? Wrong Decision?  

After you’ve made a financial decision, take some time to reflect on the entire process.  Did you make the right decision?  If so, why?  If not, then why not?  Did you succeed or fail in the planning stage, execution, or were your intentions misaligned with your financial interest?  

Go back through each step and see where you can improve the next time.  Whether your satisfied or dissatisfied with the outcome; don’t dwell on it, takes notes on what went right or wrong, look at what you need to improve upon, and move on.  Making better financial decisions won’t happen all at once, it’s a process.  You’ll get better at it as you gradually  continue to make plans, act on those plans, and reflect on the outcome.

Ultimately you’ll have to be the one that decides what’s best for you.  Sometimes you’ll have the benefit of taking months to make a financial decision, and sometimes life will present you moments that require your decision within a much shorter time frame.  That’s okay, no matter the timeline, you can look at the options in front of you, make a plan, and take action with the information available to you.  No matter how these decisions or moments come about, the first key to making better financial decisions will always apply; be patient.









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