Navigating the world of finance can be a daunting task, especially when it comes to making important decisions. With so many different options and factors to consider, it can be difficult to know where to start. But understanding the core areas that drive our financial choices can help us make informed decisions that align with our goals and values. In this article, we’ll explore the key areas that influence most of the financial decisions made today, and provide insights on how to navigate these areas with confidence. Whether you’re a seasoned investor or just starting out, this article will provide valuable insights to help you make the most of your financial journey.
The Importance of Informed Financial Decisions
Why financial literacy matters
Financial literacy is a crucial aspect of making informed financial decisions. It refers to the knowledge, skills, and understanding of financial concepts and practices that enable individuals to make effective and informed choices regarding their finances. Financial literacy is important because it empowers individuals to take control of their financial lives, make sound decisions, and achieve their financial goals.
One of the key reasons why financial literacy matters is that it helps individuals understand the concept of money and how it works. This includes understanding basic financial concepts such as budgeting, saving, investing, and managing debt. Financial literacy also involves understanding the different types of financial products and services available in the market, such as bank accounts, credit cards, loans, and insurance policies.
Another reason why financial literacy is important is that it helps individuals develop good money habits. Good money habits include creating and sticking to a budget, saving regularly, investing wisely, and avoiding debt traps. Financial literacy provides individuals with the knowledge and skills to develop these habits and make informed decisions that can help them achieve their financial goals.
Furthermore, financial literacy is essential for individuals to navigate the complex financial landscape. The financial industry is constantly evolving, and new products and services are emerging all the time. Financial literacy enables individuals to stay informed about these developments and make informed decisions that are best suited to their financial needs and goals.
In conclusion, financial literacy is critical for making informed financial decisions. It provides individuals with the knowledge, skills, and understanding of financial concepts and practices that enable them to take control of their financial lives, make sound decisions, and achieve their financial goals. Therefore, it is essential to invest time and effort in developing financial literacy skills to navigate the complex financial landscape and make informed financial decisions.
The impact of financial decisions on personal finance
Making informed financial decisions is crucial to achieving long-term financial stability and success. Financial decisions can have a significant impact on an individual‘s personal finance, and it is important to understand the potential consequences of each decision.
Effects on Short-term Finances
Short-term financial decisions, such as choosing between paying bills or making an unexpected purchase, can have a direct impact on an individual’s cash flow. These decisions can affect the individual’s ability to meet immediate financial obligations and can result in financial strain if not managed properly.
Effects on Long-term Finances
Long-term financial decisions, such as choosing a career path or investing in a retirement plan, can have a significant impact on an individual‘s long-term financial stability. These decisions can affect an individual’s earning potential, savings, and overall financial security in retirement.
Importance of Financial Literacy
Financial literacy is critical in making informed financial decisions. It involves understanding basic financial concepts, such as budgeting, saving, and investing, and having the skills to apply this knowledge to make informed decisions. Financial literacy can help individuals make better decisions, reduce financial stress, and achieve long-term financial stability.
In conclusion, financial decisions can have a significant impact on an individual‘s personal finance. It is important to understand the potential consequences of each decision and to make informed decisions based on a thorough understanding of basic financial concepts and principles.
Identifying the Core Areas of Financial Decision-Making
Budgeting and expense management
Effective budgeting and expense management are critical components of financial decision-making. A budget is a financial plan that outlines projected income and expenses over a specific period. Expense management involves controlling and monitoring the costs incurred to ensure they align with the budget. Both processes are essential for effective financial decision-making.
In order to establish a budget, it is necessary to assess one’s income and expenses. This includes identifying sources of income, such as salary, investments, or other revenue streams, and determining fixed and variable expenses. Fixed expenses are those that remain constant each month, such as rent or mortgage payments, while variable expenses vary from month to month, such as groceries or entertainment.
Once income and expenses have been assessed, it is possible to create a budget that prioritizes spending in a way that aligns with personal financial goals. This may involve reducing discretionary spending, such as dining out or entertainment, in order to increase savings or pay off debt.
Expense management involves monitoring and controlling costs to ensure they remain within the budget. This may involve using tools such as cash or debit cards to limit spending, creating a budget spreadsheet to track expenses, or using mobile apps that track spending in real-time.
Effective budgeting and expense management require discipline and commitment. It is important to regularly review and adjust the budget as necessary to ensure that it remains realistic and achievable. By taking control of expenses and staying within a budget, individuals can make informed financial decisions that align with their goals and priorities.
Debt management and reduction
Debt management and reduction is a crucial aspect of financial decision-making, as it can significantly impact an individual’s financial health and well-being. Here are some key points to consider when it comes to managing and reducing debt:
- Understanding the different types of debt: It is essential to understand the different types of debt, such as credit card debt, student loan debt, mortgage debt, and auto loan debt. Each type of debt has its own unique characteristics and repayment terms, which can affect how you manage and reduce them.
- Creating a budget: One of the most effective ways to manage and reduce debt is to create a budget. This involves tracking your income and expenses to determine where you can cut back on non-essential expenses and allocate more money towards debt repayment.
- Prioritizing debt repayment: When it comes to repaying debt, it is important to prioritize the debts with the highest interest rates or balances. This can help you reduce the overall amount of interest you pay over time and get out of debt faster.
- Negotiating with creditors: If you are struggling to make minimum payments on your debts, it may be possible to negotiate with your creditors to reduce your interest rates or payments. This can help you alleviate some of the financial pressure and give you more breathing room to pay off your debts.
- Seeking professional help: If you are overwhelmed by your debt, it may be helpful to seek professional help from a credit counselor or financial advisor. They can provide personalized advice and guidance on how to manage and reduce your debt, based on your unique financial situation.
By understanding the core areas of financial decision-making, such as debt management and reduction, individuals can take control of their financial lives and make informed choices that will help them achieve their financial goals.
Savings and investment strategies
Savings and investment strategies play a crucial role in an individual’s financial journey. They involve decisions related to how much to save, where to invest, and when to make these investments. In order to navigate these financial decisions effectively, it is important to understand the key factors that drive our choices today.
One of the most significant factors is risk tolerance. This refers to an individual’s willingness to take on risk in pursuit of higher returns. For instance, some individuals may prefer to invest in low-risk savings accounts, while others may be willing to take on more risk by investing in stocks or real estate. Understanding one’s risk tolerance is essential in determining the appropriate savings and investment strategy.
Another important factor is time horizon. This refers to the length of time an individual plans to invest their money. For example, someone who is planning for retirement in 20 years may have a longer time horizon than someone who is saving for a short-term goal, such as a down payment on a house. Time horizon affects the types of investments that are appropriate, as well as the expected returns.
In addition to risk tolerance and time horizon, other factors that can influence savings and investment strategies include income, expenses, and financial goals. It is important to consider these factors when making financial decisions, as they can impact the likelihood of achieving financial success.
Moreover, the choice between active and passive investment strategies is another key factor to consider. Active investing involves buying and selling stocks or other investments based on market analysis and predictions, while passive investing involves investing in index funds or exchange-traded funds (ETFs) that track a market index. Both strategies have their own advantages and disadvantages, and the choice between them depends on an individual’s investment goals, risk tolerance, and market knowledge.
Ultimately, understanding the core areas of financial decision-making, including savings and investment strategies, is crucial in navigating the complex world of personal finance. By considering the factors that drive our choices today, we can make informed decisions that are aligned with our financial goals and risk tolerance, ultimately leading to greater financial success in the long run.
Understanding Personal Financial Goals
Defining short-term and long-term financial goals
Defining short-term and long-term financial goals is a crucial aspect of personal financial planning. Short-term financial goals refer to those that are expected to be achieved within a year or less, while long-term financial goals are those that are expected to be achieved in more than a year.
Examples of short-term financial goals include saving for a vacation, paying off credit card debt, or buying a new car. Long-term financial goals, on the other hand, may include saving for retirement, buying a home, or paying for a child’s education.
It is important to define these goals because they help individuals prioritize their spending and saving habits. By setting specific financial goals, individuals can develop a roadmap for achieving their financial objectives and can track their progress over time.
Additionally, defining short-term and long-term financial goals can help individuals make informed decisions about how to allocate their resources. For example, if an individual has defined a long-term goal of saving for retirement, they may be more likely to prioritize investing in a retirement account over other short-term expenses.
It is also important to note that defining financial goals can help individuals avoid common financial pitfalls, such as overspending or failing to save for unexpected expenses. By setting clear financial goals, individuals can make more informed decisions about how to manage their money and can avoid falling into debt or other financial hardships.
Overall, defining short-term and long-term financial goals is a critical step in personal financial planning. By setting specific financial objectives, individuals can develop a roadmap for achieving their financial goals and can make more informed decisions about how to allocate their resources.
Aligning financial decisions with personal values and priorities
In order to make effective financial decisions, it is important to align these decisions with one’s personal values and priorities. This means understanding what is truly important to you and how your financial choices can support those values. Here are some key steps to help you align your financial decisions with your personal values and priorities:
- Define your values: Take some time to reflect on what is truly important to you. Consider what you value most in life and what gives your life meaning. These values can provide a foundation for your financial decisions.
- Identify your priorities: Consider what you need to achieve your goals and live the life you want. Identify your top priorities and determine how your financial decisions can support these priorities.
- Set financial goals: Develop specific, measurable, achievable, relevant, and time-bound (SMART) financial goals that align with your values and priorities. This will help you focus your financial efforts and make decisions that support your long-term goals.
- Assess your current financial situation: Take a comprehensive look at your current financial situation, including your income, expenses, debts, and assets. This will help you understand where you stand and identify areas where you can make changes to better align your financial decisions with your values and priorities.
- Make a plan: Develop a plan for achieving your financial goals that takes into account your values and priorities. This plan should include strategies for saving, investing, and managing your finances in a way that supports your goals.
By aligning your financial decisions with your personal values and priorities, you can ensure that your financial choices are in line with what truly matters to you. This can help you make more informed and effective financial decisions that support your long-term goals and lead to greater financial security and peace of mind.
Making Informed Decisions: Tools and Resources
Financial planning and budgeting tools
In today’s fast-paced world, it’s more important than ever to have a solid financial plan in place. This includes budgeting tools that can help you keep track of your expenses and make informed decisions about your money. There are many different financial planning and budgeting tools available, each with its own unique features and benefits. Here are some of the most popular options:
Online Budgeting Tools
Online budgeting tools are web-based applications that allow you to create and manage your budget from anywhere with an internet connection. These tools are often free or low-cost and can be accessed from your computer, tablet, or smartphone. Some popular online budgeting tools include Mint, Personal Capital, and YNAB (You Need a Budget).
Mobile Budgeting Apps
Mobile budgeting apps are similar to online budgeting tools, but they are designed specifically for smartphones and tablets. These apps often have a more user-friendly interface and can be accessed on the go. Some popular mobile budgeting apps include EveryDollar, PocketGuard, and Wally.
Spreadsheets
Spreadsheets are a more traditional budgeting tool that can be used to track expenses and income. They offer a high level of customization and can be accessed from any device with a spreadsheet application. However, they can be more time-consuming to set up and maintain than online or mobile budgeting tools.
Physical Planners
Physical planners are a more old-school approach to budgeting. They offer a tangible way to track expenses and can be used to set financial goals and track progress. Some popular physical planners include the Passion Planner and the Happy Planner.
Financial Advisors
Financial advisors are professionals who can help you create a financial plan and make informed decisions about your money. They can offer personalized advice and support based on your unique financial situation. However, they can be expensive and may not be an option for everyone.
When choosing a financial planning and budgeting tool, it’s important to consider your individual needs and preferences. Some tools may be better suited for certain people than others, so it’s important to do your research and find the tool that works best for you.
Credit scores and reports
Credit scores and reports play a crucial role in helping individuals make informed financial decisions. These scores and reports provide valuable information about an individual’s creditworthiness, which is a critical factor that lenders consider when evaluating loan applications. In this section, we will discuss the importance of credit scores and reports, how they are calculated, and how to obtain them.
Importance of Credit Scores and Reports
Credit scores and reports are essential because they provide a snapshot of an individual’s credit history, which is a key indicator of their ability to repay debts. Credit scores are typically between 300 and 850, with higher scores indicating better creditworthiness. Lenders use credit scores to determine the interest rates and terms of loans that they offer to borrowers. Therefore, having a good credit score can lead to lower interest rates and better loan terms, which can save borrowers thousands of dollars over the life of a loan.
How Credit Scores and Reports are Calculated
Credit scores and reports are calculated based on a variety of factors, including payment history, credit utilization, length of credit history, types of credit used, and recent inquiries. Payment history is the most important factor, accounting for 35% of the credit score calculation. Credit utilization, or the amount of credit being used compared to the credit limit, accounts for 30% of the calculation. Length of credit history accounts for 15%, types of credit used account for 10%, and recent inquiries account for 5%.
Obtaining Credit Scores and Reports
Individuals can obtain their credit scores and reports from a variety of sources. Credit reports are free and can be obtained once a year from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. Credit scores are typically provided by the credit reporting agencies or by the lender when applying for credit. It is important to review credit reports regularly to ensure that they are accurate and to identify any errors that may be negatively impacting the credit score.
In conclusion, credit scores and reports are essential tools for making informed financial decisions. They provide valuable information about an individual’s creditworthiness, which is a critical factor that lenders consider when evaluating loan applications. By understanding how credit scores and reports are calculated and how to obtain them, individuals can take steps to improve their credit scores and make informed financial decisions.
Professional financial advice and support
Professional financial advice and support play a crucial role in helping individuals make informed decisions about their finances. With the complexity of the financial landscape and the myriad of options available, seeking expert guidance can provide a sense of direction and alleviate the stress associated with financial decision-making. Here are some key points to consider when seeking professional financial advice and support:
- Identifying financial goals: A financial advisor can help individuals identify their financial goals and create a roadmap to achieve them. This includes assessing risk tolerance, determining investment objectives, and creating a plan to meet short-term and long-term financial needs.
- Building a diversified portfolio: A professional financial advisor can provide guidance on building a diversified portfolio that aligns with an individual’s financial goals and risk tolerance. This may include investing in stocks, bonds, mutual funds, and other financial instruments.
- Staying informed about market trends: Financial advisors stay informed about market trends and can provide insights into the latest investment opportunities and potential risks. They can also help individuals navigate market volatility and adjust their investment strategies as needed.
- Providing tax planning advice: Tax planning is an essential aspect of financial planning, and a financial advisor can provide guidance on strategies to minimize tax liabilities and maximize after-tax returns.
- Reviewing and monitoring progress: A financial advisor can provide ongoing support by reviewing and monitoring an individual’s financial progress and making adjustments to their investment strategy as needed.
When seeking professional financial advice and support, it is essential to find a financial advisor who is qualified, experienced, and trustworthy. This may involve conducting research, seeking referrals from trusted sources, and interviewing potential advisors to determine their qualifications and compatibility with individual financial goals and objectives.
Overall, seeking professional financial advice and support can provide individuals with the guidance and expertise needed to make informed financial decisions and achieve their long-term financial goals.
The Role of Emotions in Financial Decision-Making
Identifying and managing financial fears and anxieties
Managing financial fears and anxieties is a crucial aspect of making informed financial decisions. Our emotions can greatly influence our financial choices, and understanding how to identify and manage these feelings can help us make better decisions.
One way to identify financial fears and anxieties is to examine our past experiences. For example, if we have experienced financial loss in the past, we may have a tendency to avoid taking risks in the future. This can lead to missed opportunities for growth and financial stability.
Another way to identify financial fears and anxieties is to pay attention to our physical reactions. For instance, if we feel a sense of dread or panic when thinking about our finances, it may indicate that we are experiencing financial anxiety.
Once we have identified our financial fears and anxieties, we can take steps to manage them. This may include seeking professional advice, such as working with a financial advisor or therapist, to develop strategies for addressing our fears and anxieties.
It is also important to remember that financial fears and anxieties are common and normal. Many people experience financial stress and uncertainty, and it is important to be kind to ourselves and avoid self-blame.
In addition, developing healthy financial habits, such as creating a budget and saving regularly, can help to alleviate financial fears and anxieties. By taking control of our financial situation, we can reduce feelings of uncertainty and gain a sense of empowerment over our financial choices.
Overall, identifying and managing financial fears and anxieties is a critical step in making informed financial decisions. By understanding our emotions and taking steps to address them, we can make better choices that lead to financial stability and security.
Recognizing cognitive biases and their impact on financial choices
Cognitive biases are systematic errors in thinking and decision-making that can have a significant impact on our financial choices. By understanding these biases, we can better navigate our financial decisions and make more informed choices. Here are some common cognitive biases that can influence our financial decisions:
- Anchoring bias: This occurs when we rely too heavily on the first piece of information we receive when making a decision. For example, if we’re told that a stock is worth $100, we may be more likely to perceive it as a good investment, even if it’s actually overpriced.
- Confirmation bias: This happens when we seek out information that confirms our existing beliefs and ignore information that contradicts them. For example, if we’re convinced that a particular investment is a good choice, we may be more likely to seek out information that supports that belief, while ignoring information that suggests otherwise.
- Loss aversion: This is the tendency to avoid losses at all costs, even if it means missing out on potential gains. For example, we may be more likely to sell a stock when it’s lost value, even if it still has potential for growth, because we’re afraid of losing more money.
- Overconfidence bias: This occurs when we overestimate our knowledge and abilities, which can lead to poor financial decisions. For example, we may believe that we can time the market or pick winning stocks, even if we lack the necessary knowledge and experience.
By recognizing these cognitive biases and their impact on our financial choices, we can take steps to mitigate their effects. This may include seeking out diverse sources of information, challenging our existing beliefs, and taking a more measured approach to decision-making. By doing so, we can make more informed and effective financial decisions that are based on a clear understanding of the risks and opportunities involved.
Cultivating mindfulness and rational decision-making
In the realm of financial decision-making, our emotions often hold a significant influence on our choices. In order to make sound financial decisions, it is essential to cultivate mindfulness and engage in rational decision-making processes. This section will explore the importance of mindfulness and rationality in financial decision-making and provide practical tips for achieving these goals.
The Power of Mindfulness
Mindfulness is the practice of being present and fully engaged in the current moment. In the context of financial decision-making, mindfulness can help individuals avoid impulsive decisions driven by emotions such as fear or greed. By cultivating mindfulness, individuals can develop a greater awareness of their thoughts, feelings, and behaviors, allowing them to make more intentional and rational financial choices.
Rational Decision-Making
Rational decision-making involves the careful evaluation of available information and the consideration of potential outcomes before making a choice. In the context of financial decision-making, rationality is essential for making informed choices that align with an individual’s financial goals and values. To cultivate rational decision-making, individuals should:
- Seek out diverse sources of information and perspectives
- Consider the potential risks and benefits of each option
- Analyze the costs and benefits of each choice over time
- Reflect on past financial decisions and learn from successes and failures
Combining Mindfulness and Rationality
While mindfulness and rationality are distinct practices, they can be complementary when it comes to financial decision-making. By combining these two approaches, individuals can develop a more holistic and balanced approach to managing their finances.
- Mindfulness can help individuals stay grounded and focused, reducing the influence of emotions on financial decisions.
- Rationality can help individuals make informed choices that align with their financial goals and values.
Incorporating both mindfulness and rationality into financial decision-making can lead to greater financial well-being and more successful outcomes. By practicing these skills, individuals can make more intentional and informed financial decisions that align with their values and goals.
Adapting to Change: The Evolution of Financial Decision-Making
The impact of life events on financial choices
Life events can significantly influence an individual’s financial decision-making process. These events can range from positive changes such as marriage, the birth of a child, or a significant raise in income, to negative events such as divorce, job loss, or a medical emergency.
Some of the ways in which life events can impact financial decision-making include:
- Increased expenses: Life events can lead to increased expenses, such as the cost of raising a child, paying for a wedding, or relocating to a new city. These additional expenses can impact an individual’s budget and force them to reevaluate their financial priorities.
- Changes in income: Life events can also result in changes in income, such as a raise, a promotion, or a job loss. These changes can impact an individual’s ability to save, invest, and meet their financial goals.
- Risk tolerance: Life events can also affect an individual’s risk tolerance. For example, a person who has experienced a major financial setback may become more risk-averse and less willing to invest in high-risk assets.
- Financial planning: Life events can also serve as a catalyst for individuals to revisit their financial plans and goals. For example, a person who is approaching retirement may need to reevaluate their retirement savings and investment strategy in light of changing market conditions and their own financial needs.
Overall, life events can have a significant impact on an individual‘s financial decision-making process. It is important for individuals to be aware of these potential impacts and to adapt their financial plans and strategies as needed to ensure that they are on track to meet their financial goals.
The role of technology and innovation in financial decision-making
Technology and innovation have significantly impacted the way we make financial decisions today. From mobile banking apps to robo-advisors, technology has transformed the financial landscape and has made financial information more accessible than ever before.
Mobile Banking Apps
Mobile banking apps have revolutionized the way we manage our finances. These apps provide us with real-time access to our account balances, transaction history, and other financial information. With the convenience of mobile banking, we can now make payments, transfer funds, and check our account balances from anywhere at any time.
Robo-Advisors
Robo-advisors are another innovation that has changed the way we make financial decisions. These digital platforms use algorithms to provide investment advice and portfolio management services. They offer low-cost investment options and are accessible to anyone with an internet connection.
Artificial Intelligence (AI)
Artificial intelligence (AI) is also playing a significant role in financial decision-making. AI algorithms can analyze vast amounts of data and provide personalized financial advice based on an individual’s financial goals and risk tolerance. This technology has the potential to improve financial literacy and help individuals make better financial decisions.
Blockchain Technology
Blockchain technology is another innovation that has the potential to transform financial decision-making. It provides a secure and transparent way to record financial transactions, which can help reduce fraud and improve the efficiency of financial systems.
In conclusion, technology and innovation have greatly impacted the way we make financial decisions today. These advancements have made financial information more accessible, and have provided us with new tools and resources to help us make better financial decisions. As technology continues to evolve, it is likely that financial decision-making will continue to change and improve in the future.
Embracing a flexible and dynamic approach to personal finance
In today’s rapidly changing financial landscape, it is crucial to adopt a flexible and dynamic approach to personal finance. This means being open to new ideas, strategies, and technologies that can help us make better financial decisions. Here are some ways to embrace a flexible and dynamic approach to personal finance:
- Continuous Learning: Stay informed about the latest trends, news, and research in personal finance. Read books, blogs, and articles, and attend workshops and seminars to expand your knowledge.
- Networking: Connect with other people who share your financial goals and interests. Join online forums, social media groups, and local meetups to share ideas and experiences.
- Experimentation: Don’t be afraid to try new financial products, services, and strategies. Conduct experiments to determine what works best for you and your financial situation.
- Technology: Utilize technology to automate and streamline your financial processes. Use mobile apps, online tools, and robo-advisors to manage your investments, track your spending, and monitor your credit score.
- Flexibility: Be open to adjusting your financial plans and strategies as your circumstances change. Review and update your financial goals regularly to ensure they align with your current situation.
By embracing a flexible and dynamic approach to personal finance, you can stay ahead of the curve and make informed financial decisions that will help you achieve your goals.
FAQs
1. What are the core areas that influence financial decisions?
The core areas that influence financial decisions include personal values, financial goals, risk tolerance, and available resources. These factors shape the financial choices individuals make, including decisions about investments, savings, and spending.
2. How do personal values impact financial decisions?
Personal values play a significant role in shaping financial decisions. For example, individuals who prioritize financial security may be more likely to save money and invest in low-risk products, while those who value luxury may be more inclined to spend money on high-end goods and services. Personal values also influence the types of financial products and services individuals choose, such as ethical investments or environmentally friendly banking.
3. What are financial goals and how do they impact financial decisions?
Financial goals are the objectives individuals set for their financial future, such as saving for retirement, buying a home, or funding a child’s education. Financial goals can impact financial decisions by providing a roadmap for investment and savings strategies. For example, someone with a goal of retiring in 10 years may prioritize investing in low-risk products that offer stable returns, while someone with a long-term goal of growing their wealth may be more willing to take on higher risk investments.
4. How does risk tolerance impact financial decisions?
Risk tolerance refers to an individual’s willingness to take on risk in pursuit of financial gains. Individuals with a high risk tolerance may be more comfortable investing in risky assets such as stocks, while those with a low risk tolerance may prefer more conservative investments such as bonds or savings accounts. Risk tolerance can impact financial decisions by influencing the types of investments individuals choose and the level of diversification in their portfolios.
5. What are available resources and how do they impact financial decisions?
Available resources refer to the financial resources individuals have at their disposal, including income, savings, and investments. These resources can impact financial decisions by determining the range of options available to individuals. For example, someone with a high income and savings may have more options for investing in high-end products or services, while someone with limited resources may need to prioritize more affordable options. Available resources can also impact financial decisions by influencing the time horizon for achieving financial goals, as individuals with limited resources may need to work harder and save more to achieve their objectives.