Financial Decision Making

Can you help us figure how to spend a large, unexpected inheritance? At first we were excited, but now we're seeing how quickly wealth can become a source of confusion and anxiety. My daughter thinks we should use the money to finance her education. My wife wants to remodel the kitchen. I'd like to make some solid investments. How do we resolve this?

This isn’t really a question about the best way to use your inheritance money. That’s a highly subjective issue that we can’t possibly resolve for you. In actuality, any one of the three options you’ve mentioned could turn out to be the best choice for your family. That’s something that you, your wife and your daughter have to decide among yourselves.

But before you can do that you’re going to have to have some training in the area of financial decision making. What you really want is a set of principles that will not only guide you through this current situation but provide you with the tools you need to sort out similarly money-related challenges in the future. This is an area in which we may be able to help.

In order to make important financial decisions of this nature you need to learn how to sift relevant information from large quantities of raw data. Many people have problems with this because they look at decision making simply as a matter of comparing alternatives. They note the pros and cons of each without noticing that in the process they’re actually locking themselves into a limited number of options. You can avoid this by making use of the following criteria-based model:

Pray. Ask God to show you as a family what He wants you to do with the money.
Define your decision. What’s the question? Many times your decision statement will include such words as choose, select, and best.
Clarify your objectives. What are you trying to achieve? What are the decision criteria?
Prioritize your objectives. What are the non-negotiables? What are the trade-offs?
Identify your alternatives.
Evaluate your alternatives. What are the facts?
Make a preliminary decision.
Assess the risk. What could go wrong here?
Make the final decision.
Test the decision.

This multi-step matrix has a number of benefits, among which perhaps the most important is its capacity for maximizing objectivity, minimizing bias, and thus defusing emotion-based disagreements. If you apply it carefully within the context of a family round-table discussion, it will enable you to separate the relevant data from the trivial, provide direction for your thinking, and encourage the constructive participation of every member of your family.

For additional help and information on this topic, we’d encourage you to consult the resources and referrals highlighted below. Or if you have relationship concerns and challenges associated with this situation, please don’t hesitate to give our Counseling department a call.

Resources
If a title is currently unavailable through Focus on the Family, we encourage you to use another retailer.

Complete Guide to Faith-Based Family Finances

Your Money Map: A Proven 7-Step Guide to True Financial Freedom

The Total Money Makeover: A Proven Plan for Financial Fitness

How to Manage Your Money: An In-Depth Bible Study on Personal Finances

The Treasure Principle

Family and Personal Finances (resource list)

Referrals
Crown Financial Ministries

Articles

Money and Finances