The following post is from Christina of Northern Cheapskate:

Making decisions
photo credit: stuartpilbrow

The quickest way to sabotage your personal finances is to make lousy decisions with your money.  Whether you made one big bad money move, or several smaller ones, it’s important to step back, look at what went wrong, and then follow these tips for making smart decisions in the future:

Give yourself some time.

It’s easy to make a mistake when you’re feeling rushed. So, give yourself some time to consider your expenditure. By giving yourself a little time, you’ll be better able to process the emotions of your financial decision.  Sometimes we’re pressed into making decisions when a loved one dies or we receive an unexpected windfall.  But there’s usually no harm in giving yourself a bit of time to process your feelings and determine the best course of action.

Do your homework.

You can avoid a lot of heartache if you spend a little time doing research.  That means reading contracts before you sign, visiting the neighborhood at different times of day before you buy that house, or asking friends who they recommend for plumbers.   Do some research on the internet to find potential solutions and money-saving ideas, talk to the experts in the field, and bounce your ideas off trusted friends and family members.  The more information you know, the less opportunity there is for a money-sucking surprise.

Don’t be pressured.

If someone is pressuring you to make a quick decision, or is trying to sell you on one solution, stop and ask yourself what the motivation of that person is.  Do they benefit by making you act? Are you letting your emotions get involved?  (The tantruming toddler at the checkout lane demanding candy comes to mind).  Guilt only works if you let it.  Learn to say “no,” or at the very least, “not now.”

Consider your goals and values.

Think about your money and determine what is most important to you.  For example, if your goal is to pay off debt, every decision you make should take that goal into consideration.  For every book you buy or MP3 you download, you’re delaying your financial freedom.  Refuse to support organizations that don’t jive with your values.  Make sure that every purchase is made with the idea of obtaining quality and value.

Remember there’s no absolute right or wrong decision.

It is easy to get caught up in the idea that there is only “Option A” or “Option B,”  when there are actually far more options.  Sometimes you can find a compromise.  Last year we set a goal to completely fund my husband’s Roth IRA.  Unfortunately, we had a series of expensive bills that cut into our emergency fund.  While we could have used what was left in our savings to fund the Roth, we didn’t want to decimate our emergency fund entirely.  The compromise:  We funded half of his Roth IRA and kept the rest in savings.  We’re able to take advantage of good market prices now and keep that money invested longer, and we’re able to still have a little money to fall back on in an emergency.

No one cares about your money as you do, and since money doesn’t grow on trees, it is your job to take good care of it.

What steps do you take to make good money decisions?

Christina Brown is the creator of Northern Cheapskate, a blog dedicated to frugal living through coupons, freebies, and money-saving ideas.  She lives in the rural north woods of Minnesota where she clips coupons, pinches pennies, and chases her three boys (a 6-year-old and twin 4-year olds) as a stay-at-home mom.