Some studies suggest that we make around 35,000 decisions every day. That’s about 2,000 choices per waking hour. Fortunately, most of these decisions—like what to eat for breakfast or which shoes to wear—are made quickly and without much thought. However, major life decisions, especially those related to finances, require careful consideration. Making smart financial choices involves thorough analysis, research, and keeping emotions in check.

Here are 13 strategies to help you improve your financial decision-making.

1. Create a Comprehensive Financial Plan

You are more likely to reach your goals if you have a clear vision and a solid plan to get there. Keeping your long-term objectives in focus will help you make better financial choices.

Research shows that individuals who maintain a financial plan tend to make wiser decisions and achieve better financial results. They save more, invest wisely, manage debt effectively, and stick to a budget.

The Boldin Retirement Planner is a powerful tool that can help you develop a strong long-term plan.

2. Take Your Time When Making Decisions

Rushing financial decisions can lead to mistakes. One key lesson from Nobel Prize-winning economist Daniel Kahneman’s books Thinking, Fast and Slow and Noise: A Flaw in Human Judgment is that slowing down improves decision-making.

You may feel pressured to act quickly—whether it’s buying a stock, booking a trip, or making a big purchase—but most financial decisions don’t require immediate action. Instead of reacting impulsively, develop a decision-making framework that aligns with your overall financial strategy.

A good rule of thumb is to sleep on major financial decisions. Waiting at least 24 hours before making a choice can lead to better outcomes.

3. Be Aware of Your Emotions

Emotions such as stress, fear, greed, shame, and optimism can influence financial choices, sometimes leading to poor decisions.

Kahneman notes that people tend to be both overly optimistic and highly loss-averse. This means they underestimate risks while fearing losses more than they value gains. These opposing forces can lead to irrational choices.

Understanding these emotional tendencies can help you make more logical financial decisions.

4. Rely on Algorithms When Possible

Kahneman has stated that in many cases, algorithms outperform human judgment.

Whenever possible, use data-driven tools to guide financial decisions. Algorithms can process vast amounts of information quickly and objectively, avoiding emotional biases like overconfidence or fear of loss.

The Boldin Retirement Planner is one such tool that helps you compare different financial scenarios and make well-informed choices.

5. Consider Decisions as Part of a Larger System

No financial decision exists in isolation. Each choice you make can create ripple effects that impact future opportunities and priorities.

Kahneman advises viewing financial decisions as part of a broader category of similar choices you will face in the future. This perspective helps ensure consistency and prevents short-term thinking from derailing long-term goals.

6. Think Through Different Possible Outcomes

It’s natural to have an idea of what you expect or hope will happen, but things don’t always go as planned. Considering potential challenges before making a decision can help you prepare for unexpected situations.

Running “what if” scenarios using the Boldin Retirement Planner can boost your confidence in making the best choice.

7. Understand How Regret Affects Decisions

Kahneman suggests that regret is one of the biggest obstacles to sound financial decision-making.

People often make poor choices based on the fear of regret rather than actual probabilities. This mindset can lead to overly cautious or overly risky financial behavior.

Recognizing the role of regret in decision-making can help you avoid choices based on fear rather than logic.

8. Ask the Right Questions

If you don’t ask the right questions, you’re unlikely to get the right answers.

Many people focus on whether they can retire early or how much money they need for retirement. While these are important questions, they don’t account for key factors like lifespan and expected expenses.

The Boldin Retirement Planner allows you to adjust variables like spending and longevity to get realistic answers about your financial future. Before asking when you can retire, first create a detailed future budget.

9. Seek Advice from Trusted People—Especially Those Who Think Differently

Getting feedback from trusted individuals can provide valuable insights and prevent costly mistakes. Seeking out differing perspectives can also help balance emotional decision-making.

Kahneman suggests that the ideal advisor is “someone who likes you but doesn’t care about your feelings.”

A financial advisor can provide objective guidance, but it’s important to consider their motivations. Ask yourself:

• What does the advisor gain from their recommendations?
• What biases might they have?
• Is their advice based on data or anecdotes?

Boldin Advisors offers affordable plans that include on-demand guidance from fiduciary advisors. Schedule a free session to learn more.

10. Automate Your Finances

Automating savings, investments, and bill payments helps remove emotion from financial decisions and promotes consistency.

11. Avoid Focusing Only on Short-Term Benefits

People naturally prioritize short-term rewards, but financial decisions also impact the future.

It’s important to consider immediate consequences—like having more or less money available this month—but also the long-term impact. For example, spending $100 on a night out won’t make or break your finances, but doing it weekly could delay your retirement by years.

12. Consider Different Perspectives

One way to overcome emotional biases is to view financial decisions from another person’s perspective. Ask yourself:

• How would someone else handle this decision?
• Who benefits or loses from this choice?
• What would a friend or colleague do in this situation?

This approach is especially useful when buying financial products. Understanding the seller’s motivations can help you make more informed choices.

13. Establish Rules to Guide Financial Decisions

Not all decisions can be based on algorithms. When data isn’t available, setting personal rules can help ensure consistency.

For example, your investment strategy should follow a logical plan. If the stock market drops significantly, you should already know how you will respond. A well-defined Investment Policy Statement (IPS) can provide a structured approach by outlining:

• Investment goals
• Strategies to achieve them
• A framework for making changes
• A plan for handling unexpected market events

By following these 13 strategies, you can make better financial decisions and build a secure future.