Following a personal finance budget does not need a financial planning degree, or even behaving as the very model of a financial planning definition. It does not need financial planning certification, or even goal setting motivation theory. It need the down to earth, good old fashioned skill of judgement – yet few people know how to perfect it.
Judgement: Wearing the Shoes of Others
‘Prejudice’ means the formation of an opinion in advance of enough information or knowledge, and many people are unconsciously prejudiced when it comes to managing money and the home budget.
Since most people judge on first impressions, looks are a very important factor- hence when choosing clothes to buy, people avoid any which might be slightly marked. When buying food, people avoid the bruises, marks, dents, and blemishes. People buy products primarily based on looks, and the same is true when people buy people – you are judged as readily by others – by your looks, your voice, and your dress.
This puts a significant amount of pressure on spending behaviour since all people want to be judged well, and spend money for that purpose.
Yet how often have your first impressions about people been wrong? When you take more time, get better information, we form better judgements. A most powerful technique in gaining a balanced judgement and growing this skill is to imagine wearing the other persons shoes and ‘see’ how they might be judging you.
Judgement: The Steps to See your Own Future
When making decisions about your spending, it in nearly impossible to be accurate in balanced judgement without ‘seeing’ a bigger picture. Successful businesses hold regular internal meetings where they discuss the cashflow of the business, and make adjustments to their activities accordingly. People can do this at home by using personal finance budget software, or looking at applications for personal finance online.
By understanding where your money goes, and considering your lifestyle spending patterns, it is possible to step back with a complete picture of your possible financial future, and make the adjustments necessary to change what you now understand.
People who do not pay attention to their personal finance budget, home budget worksheet, or family budget spreadsheet are at risk of being financially prejudiced.
Judgement: Why We Are Obsessed With The Weather Channels
There is a conundrum which is hard to explain. Most people when asked, agree that money management a necessary boredom. It doesn’t give pleasure as an activity in the same way as leisure activities, and that is because it can be hard to relate to decisions about the future which to many is just something that cannot be related to out side of planning a holiday perhaps.
People don’t enjoy looking into the financial future much, as if it can’t be controlled. Yet the opposite is true when it comes to the weather forecast and the weather channels. Weather cannot be controlled either, yet there are 24 hour weather channels feeding the appetite for knowing when and where the sun, wind, and rain might affect our personal lives.
Personal finance budget software is like a financial planning weather forecast. Hence the conundrum – One is obsessively followed, while the other routinely avoided – yet which has the most critical impact on peoples lives?
Judgement: When Making Them Happy Can be Damaging
People judge others on the basis of how friendly and well intentioned they are, and their actual ability to deliver on those intentions. They form stereotypes to reinforce these judgements.
Wealthy people are often perceived as cold yet competent producing envy, and in extreme circumstances a desire to harm – just look at the way in which tabloids build a person up and then tear them back down again in the culture of celebrity. Warm people are equally often judged to be less competent, like mums, or elderly people and this produces a sort of tolerance, that these people are ‘harmless’
Of course, these prejudices are often wrong, and it is the ability to make judgements – to consider all the facts, be objective about the information, stand back and be impartial, which matters most when forming human relationships.
The same is true of the relationship with money. Making informed judgements avoids emotional spending which is done in a state of prejudice. Indulging the children, overspending in a relationship, or spending to impress other people is when making them happy can damage wealth badly.
Judgement: Financial Skill
A solution is to engage with a personal finance budget software which can be found online. By collating all the money coming in, all the money going out, financial planning decisions can be easily made as a projected cashflow forecast is a standard service. Balances, budgets and goals can be created and considered. Here’s what to do once that information is available
Define your financial situation
Review the causes of your financial history
Make judgements about your values, actions, and reality
Refine your lifestyle decisions
Set goals within a goal setting template
Track and monitor the decisions you have now made for the outcome you have set