Making SMART Decisions

Decision Making

Careful decisions and wise use of resources can help you achieve your financial goals

Reviewing the success or failure of past decisions helps you make better decisions

Management

The process of organizing and using resources to achieve predetermined objectives

Identify resources

Setting goals

Making decisions

Solving problems

Evaluating results

Good management skills can help you achieve all the goals you set for yourself

Sense of Direction

Some people always seem to know what they want and where they are going

They seem to know what is important and what is not worth serious attention

This sense of direction and purpose is often a key factor in separating people who achieve what they want from those who do not

Sense of Direction

Developing this sense of direction and purpose requires a clear understanding of personal needs, wants, values, goals and standards

Needs and Wants

Needs-items you need to survive: food, clothing, shelter

Psychological needs-feelings of safety, security, love, acceptance, approval and success

Wants-Items you would like to have; not essential for life

Values

Personal beliefs about what is important and desirable

Influence the way you live and think, your decisions, actions and behavior

Values differ among people

Values govern and direct your life, even if you are unaware of them

Values

Identifying your values will give you a sense of control

Values

Some important values for many people are:

A loving family

Loyal friends

Good health

A meaningful career

Financial security

Inner peace

Values List

Some people need to make a list of everything that is important to them

As you meet new people and have new experiences, what is important to you may change

As life unfolds, values will also change

Some values become more important and others less so

Value System

Guides your behavior and provides a sense of direction in your life

As you continually make different decisions, eventually a value system is created

Value Example

If you value doing well in school, you will participate in class, complete your homework and prepare for exams

If loyalty to friends is high in your system, you will help your friends when they need you

If popularity ranks higher than loyalty, you may find it difficult to stand by an unpopular person or cause

Ethics

A moral principle or belief that directs a person’s actions

Ethics often conform to accepted standards of right and wrong

Ethical behavior

Honesty

Fairness

Reliability

Respect

Courage

Tolerance

Civility

Compassion

Ethical Behavior

Expected from businesses, government and indivduals

Unethical Behavior

Usually considered wrong

Sometimes illegal

Unethical Behavior

Taking office supplies from your work

Surfing the Internet on company time

Returning used merchandise to a store

GOALS

An objective you want to obtain

Usually closely related to values

Example

If education is one of your values, preparing for college might be one of your goals

This goal might motivate you to begin a savings program to pay for advancing your education

Goals

You can set goals for almost anything in life

“To Be” Goals

Related to personality and character

Includes career choices

“To Do” Goals

Cover the endless list of things you might want to accomplish

Examples: Learn to play the piano

Make the basketball team

Go to college

Travel

Organize your life

“To Have” Goals

Easy to identify and continually change

Include the endless list of routine purchases such as socks and toothpaste

Also include higher priced items for which you need to plan and save

Examples: A new watch

A car

Concert tickets

Evaluating Goals

No one has enough resources to reach all of his or her goals at one time

You can get the most from your resources by planning how and when to use them

You will be able to control your life better

Identifying Goals

Rank in order of importance

You can direct our time, energy and money to the goals that are most important to you

SMART Goals

S=Specific

“Getting rich” isn’t a goal

For a goal to work it has to be specific

You need to have a number and work towards that number

SMART Goals

M=Measureable

Once you have a specific goal, you need to be able to measure your progress

SMART Goals

A=Attainable

I’d love to write and publish a book. Doing so is on my “bucket list“. I can easily fantasize what it will be like to hold my own finished book in my hands, and display it proudly on my bookshelf. Even better if it hits the bestseller list! I’ll go on Oprah! I’ll get a six-book deal! I’ll be the next J.K Rowling! That’s not a goal; it’s a daydream.

SMART Goals

R=Realistic

Goals need to be realistic and related to your real life

I’d love to walk on the moon someday, but doing so isn’t a goal of mine. It’s totally unrealistic. If you want to make radical changes to your life, that’s fine. Goals can help you do that. But they need to start with small, specific, attainable steps.

SMART Goals

T=Time Bound

Your goals need to have a time frame

When you set a goal, give yourself a concrete time frame in which to accomplish the goal

Saying, “I want to save $5,000 for a trip to Argentina over the next 18 months” is a much more attainable goal than saying, “I want to save for a family vacation.” I know exactly how much I need to save, and how much time I need to do it in. Figuring out how much to save each week becomes a simple math problem, and I can easily check my progress as I go along.

Short Term Goals

Goals that you want to achieve within the next 3 months

Medium-Term Goals

Goals that you want to achieve within 3 months to a year

Long-Term Goals

Goals that take you more than 1 year to achieve