Microsoft Office Tutorials and References
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ProSkills Exercise: Decision Making
Decision Making
Creating a Budget Worksheet to Make
Financial Decisions
Decision making is the process of choosing between alternative courses of action,
usually in response to a problem that needs to be solved. Having an understanding of
decision-making processes will lead to better decisions and greater confi dence in carrying
out those decisions. This is especially important when making fi nancial decisions.
Gather Relevant Information
Begin by collecting data and information related to the decision you need to make. This
information can include data expressed as currency or numbers, as well as data that
cannot be measured numerically. For example, when creating a budget, numerical data
includes your income and expenses, current savings, future savings and purchases, and
so on. Other data might include the amount of savings you need to feel comfortable
before making a large purchase, such as buying a car or paying tuition.
Evaluate the Gathered Information and Develop
Evaluate the data you collected and determine potential alternatives. Excel workbooks
are well suited to evaluating numerical data. You can also use workbooks to evaluate
potential outcomes based on other data by assigning numerical weights to them. For
example, you can enter your monthly income and fi xed expenses into a worksheet along
with variable expenses to determine your cash fl ow. You can then consider this
information along with your current savings to determine how much money to contribute to
savings or earmark for a purchase. Based on these results, you can develop alternatives
for how to distribute your available money among variable expenses (such as
entertainment), savings, and a large purchase.
Select the Best Alternative
Carefully evaluate the alternatives you developed based on your analysis. Before making
a decision, be sure to take into account all factors. Consider such questions as:
• Does this alternative make sense for the long term? For example, does this budget
allow you to achieve all your fi nancial goals?
• Can you realistically carry out this alternative? For example, does this budget
provide enough for necessities such as food and housing as well as for luxuries such as
• Will this alternative be acceptable even if its outcome is not perfect or some
unconsidered factors emerge? For example, will this budget cover unforeseen expenses
such as car repair or an unexpected trip?
• How comfortable are you with this decision? For example, does this budget relieve
or add stress about managing your fi nances?
After analyzing all the factors, one alternative should begin to emerge as the best
alternative. If it doesn’t, you might need to develop additional alternatives.
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