Financial Literacy
For Your Future



Decision Making Guide

Everybody must make many decisions each day as a part of normal living. Decisions must be made because we can’t have everything we want and each choice involves both expected benefits and costs. Just because we make so many decisions doesn’t mean that we are all good at it. Each of us can recall decisions that we have made that have not resulted in the outcomes expected or desired. In other words, we make mistakes and the consequences may be devastating. To reduce the number of decisions that can be evaluated as mistakes and/or reduce the devastation a bad choice can cause, more time and structure need to be incorporated into making important decisions. To help make “good” decisions, the following decision making guide is offered to help:

  • Define the problem, understand the question or describe the decision making event. Be sure to understand the context or environment in which the decision will be made.    
  • Clarify your values and remind yourself of your major life goals. Connect these to the decision making event. Knowing what is really important to you will establish criteria for weighing the expected benefits and costs of each alternative course of action.    
  • Identify alternative decisions that can be made to address the problem, question or event. Remember that some choices don't have to be all or nothing. Combinations of actions can be good alternatives. As identifying alternatives is a major part of good decision making, people may seek input from others through reading or direct contact.    
  • Evaluate the alternatives by determining and weighing the expected benefits and costs of each possible option. This may result in a small list of “acceptable alternatives” that will then need to be ranked and ordered.     
  • Seek input from others to select and rank your alternatives. This is an important step and should not be forgotten.    
  • Make a decision and take action. Remember that once a decision is made, it should be evaluated often and changes should be made as new insights or changes of expected costs and benefits are determined. 

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