Financial Decision Making Checklist

Financial Decision Making

Credit: Adeolu Eletu


Making financial decisions can be difficult. There are so many things to consider, and it’s easy to get overwhelmed. That’s why it’s important to have a financial decision making checklist. This will help you organize your thoughts and make the best decisions for your finances. In this blog post, we will discuss what should be on your financial decision making checklist and why it is important to have one!


Why You Should Have a Financial Decision Making Checklist

A financial decision making checklist is a list of items that you should consider when making any financial decisions. It includes everything from short-term goals to long-term plans and even how much money you’re willing to risk in order to achieve your goal(s). If there are multiple people involved, like with a partnership, LLC, or corporation, each person involved in the financial decision making process should have their own checklist. This will ensure that everyone is on the same page and has considered all of the relevant factors. This is all especially true if you do not have a full-time CFO or access to fractional CFO.

There are many reasons why you should have a financial decision making checklist. Some of these reasons include:

  • To help organize your thoughts
  • To ensure you’re considering all relevant factors
  • To help make better decisions for your finances
  • To avoid making a financial decision that you might regret later
  • To get buy in from stakeholders, like investors, board members, co-founders, or your other executive team members

If you’re searching everywhere for sound financial advice every time you need to make a business decision, your bottom line will reflect your haphazard approach. A methodical financial decision making process will help you to organize your thoughts and your resources to make sound financial decisions. This is why a financial decision making checklist is important.


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What Should Be On Your Financial Decision Making Checklist?

A financial decision making checklist cannot be a specific rundown of every concern and scenario that could ever happen. Certainly, it must be broad enough to encompass any decision you could be making as a business owner. And of course it needs to be specific enough to be useful as a guide. But it should also be somewhat short. The longer the checklist, the less likely you’ll want to use it (and the more likely it won’t work for every scenario).

Let’s look at what should be included on your checklist:

  • Short term goals vs long term plans – This is one of the most important distinctions to make when it comes to financial decision making. What are your short term goals? What are your long term plans? How do they intersect or conflict with each other?
  • Your current financial situation – What is your net worth? How much debt do you have? What’s your credit score? You need to know where you stand before making any financial decisions.
  • The risk tolerance of those involved – If there are multiple people in the financial decision making process, it’s important to understand their risk tolerance level so that everyone is on the same page about investment decisions and financing decisions.
  • The worst case scenario – What happens if things don’t go as planned? How much do you stand to lose financially? What about the working relationships you have with clients and vendors?
  • The best case scenario – What happens when things do go according to plan? What cash flows will you realize? How will it benefit your partners?
  • A pro-forma is a financial tool or spreadsheet that can show numbers around each of these scenarios, providing the data necessary to make a well-informed decision

You can add more items to your checklist, or refine these, but this is what every financial decision making process entails. Remember, the more you add and refine, the more difficult it may be to fit certain financial decisions into the checklist. We recommend starting with this and tweaking it as necessary to suit your particular decision making needs.


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Make Better Financial Decisions

Having a financial decision making checklist can help you make better business decisions. It will ensure that you are considering all of the relevant factors and organizing your thoughts. If there are multiple people involved, make sure each person has their own checklist. This will help avoid any conflict and ensure that everyone is on the same page.

Sometimes you need more than just a checklist. Sometimes you need a financial expert who can approach your financial decisions from all angles. indinero provides CFO, accounting, and tax preparation services to businesses of all sizes. Trust us for bookkeeping, taxes, financial strategy, and audit preparation. To get started with our suite of financial services, contact us for a consultation today.