Decision making is an important part of everyday life. Because it is a common event, many people think the process is simple and anyone can do it well. This opinion is simply not true and, in fact, it is one of the major reasons so many people make poor choices. 

Decision making is complex and varies greatly between individuals. It is imperative that decision makers understand the context of their respective choices and factor in the important features related to each event, problem, or question. These features can include time considerations. Short term consequences compared to long term consequences of a choice may be different and depending upon your goals could influence what you choose to do. Buying a new automobile now in comparison to saving for college tuition later in life is a good example of how time, goals, and valuing goals come into play. 

This example highlights another important factor in selected decisions-that being flexibility. Many decision making situations are all or nothing. Once a decision is made the other considered options go away. That is the case when a decision is made to spend all of your newly acquired income on things that depreciate over time. It is not the case when the choice is made to purchase assets or save. 

Some people like to be flexible and “keep the door open” for more options later. After all, we all realize the emergencies do happen and having a financial cushion can help people from using high interest revolving credit to get through issue. Be sure to consider this when thinking about your decision and following the guide.

Application Insights-Should I Have A Savings Account? is not to be viewed as an answer sheet of how you should think or value things or what choice should be made. It does represent a selected list of possible insights that many people may have as they tackle this choice making case. Remember that decision making in any arena is a personal activity and it is all about you. Your responses to the guide’s questions and activities are yours. Nobody has your values, experiences, desires, emotions, or goals that you put into the decision making process. Everyone should, however, follow the guides direction or process so all important factors can be identified and considered by every individual. The result of following the process as described in the guide will give you the confidence that you have considered the important factors and blended them into being you.    

• The question of establishing a savings account or not when money is available is the focus of this case. However, related questions exist as to how much should be saved, for how long, and should the savings plan be continued when “extra” money is difficult to come by? Each of these questions is important and related to savings. When time permits each of these should be addressed in a systematic manner.
   
• A savings account can be viewed as a vehicle for reaching high valued goals later in life.  Knowing what you value and how much weight each goal has now and in the future is critical in making a good choice. Indentifying expected costs and benefits of each possible alternative course of action must factor in the time dimension. Savings open up opportunities in the future and close options that are more immediate. Weighing the value of owning a new car today or saving for college or a new car in the future complicates the decision and these thoughts must be done to reduce the chances of making a choice that is based upon incomplete analysis and thought.
   
• As indicated above, many direct and indirect options exist when considering a savings account. To say no the savings may end the process, but remember that the factors you thought about (immediate gratification, owning stuff, spending on others, adding to your security-buying insurance) are now available for other possible choices. Don’t forget your choices regarding savings have value in other arenas. To say yes to savings now forces you to consider more related questions. How much should I save? Maybe saving 80% of my acquired money and spending 20% is a good compromise. Should I save in a traditional savings account with a very low interest return or maybe a certificate of deposit for a longer period of time is the better choice. What about investing in things that may increase in value. Is it best to save only extra funds or should I have a small amount taken out of my pay check and placed in my account as if I am paying a bill? Probably more importantly, savings could be considered a state of mind. In other words, a decision to save may change your view of life. Maybe now longer term is more important than it once was. Living without as many things may be a lifestyle change, and not living paycheck to paycheck makes you a new person.
   
• The evaluation process, given what has been stated previously, is now complex and very important for you both now and in the future. Be sure to place values on both short and long term options. It is easy to think about riding around in that new, safe and dependable car, but it is more difficult to value the acquisition of a longer term view of life. Are there benefits to not worrying about paying all my bills? Can I place a value on having money in my pocket that I can actually spend anyway I want or not spend at all? Given the fact few people experience financial freedom, how can I tell if I will like the feeling-a lot?
   
• Seeking input from others could be very helpful. Be sure, however, you seek input from both sides. Maybe, if possible, find someone who has obtained financial freedom and ask “how does it feel or is it worth it? Seeking advice from financially strapped no savings friends may be too biased a sample and for some, “misery loves company”.
   
• Make a decision and take action. Remember that once a decision is made it should be evaluated often. In this case, if you decided to save, changing course if your evaluation suggests it is relatively easy.    

ADDITIONAL SOURCES

1) Savings Account Pros and Cons.