Sound Financial Decisions – Being Prepared
Below are some answers you might have entered in the previous activity on risks and benefits of taking a credit card.
| Benefits | Risks |
|---|---|
| More Credit Options | Increased Debt Potential |
| Emergency Backup | Higher Interest Costs |
| Diverse Rewards | More Complicated Finances |
| Improved Credit Score (if managed well) | Credit Score Risk (from hard inquiry) |
| Financial Flexibility | Temptation to Overspend |
خذ وقتك وتأكد من فهمك لجميع المخاطر والنتائج المحتملة. من الجيد دائمًا أن تقول لا أو تفكر في خيارات أخرى.
Questions to ask yourself
Before making any financial decision, follow the rule of always taking your time and consider these questions. Remember there is no guaranteed right or wrong decision, but there is always an informed decision.
Will the decision immediately impact financial stability.
Example: “If I take this training course, will it strain my monthly budget?”
Consider the long-term impact of the decision.
Example: “Investing in this pension plan might reduce my disposable income now, but how will I benefit later when I retire?”
Plan for the unexpected and its potential impact.
Example: “What if I have an unexpected emergency, such as a medical crisis. Will the money spent on a new laptop affect my ability to cover those costs?”
Example: “If I use savings to invest in a new business, might I also need a loan if the business needs more funding?”
Evaluate if there are better alternatives that could meet needs.
Example: “Instead of buying a brand new smartphone, I can save money by keeping my current one for 2 more years”
Example: “Instead of going on a vacation to Europe for Eid Break, what would be the benefits of taking a regional trip instead.”
Identify if external pressures are influencing decisions rather than genuine needs or desires.
Example: “The salesperson persuaded me to take this gym membership but will it really fit my lifestyle needs?”
Notes
Can you relate to these questions? Consider how they can help you with future decisions and take notes below.