We recommend a simple decision making process to aid consumers when making important financial choices. This process consists of the following:
- Define the problem
- Set goals
- Gather Information
- Develop a strategy
- Develop decision making criteria
- Assess and decide
We recommend writing down and documenting each of these steps and measuring your progress. Like you would if you were applying for a student loan, grant or scholarship. To aid this process, two tools can be utilized to plan for and measure your success: Critical Success Factors (CSF) and Key Performance Indicators (KPI).
A CSF is a vital activity needed to achieve a desired goal. For example, if your goal is to reduce your credit card debt. A critical success factor is to lower the interest rate you’re paying on your credit card debt.
KPI are quantifiable measurements that are used to measure success towards meeting critical success factors. KPI should include the following: 1. reflect your goals, 2. key to your financial success, 3. quantifiable, 4. focused, 5. long-term, 6. include targets.
For example, assuming a CSF is to lower the rate on your credit card debt, your KPI would be the actual rate. If your current rate is 18%, your KPI should include obtaining a card with a target rate of 12% within the next 3 months