12/19/2012 05:57 pm ET Updated Feb 18, 2013

The Efficient Use of Money

This is not a political article, but it serves as an expansion of my mission to talk about the efficient use of money. I recently read an article about the use of money raised during the 2012 presidential campaign. As I read the article, it caused me, as a financial educator and advocate of financial literacy to reflect on what I tell individuals who attend my seminars and workshops around the country. I tell the attendees that one should never assume that spending large sums of money on anything will yield the results expected. But you should use the money you have available efficiently to maximum or optimize its capability to ensure the results intended.

It appears, based on the outcome of the election, President Barack Obama's campaign used the money raised for his campaign efficiently, especially money spent for television advertising spots. In fact based on published reports, President Obama spent less on television spots than Governor Mitt Romney's campaign. The article mentioned that President Obama's campaign strategists gathered specific information, data and performed door-knocking, and telephone canvassing to determine which television shows that gave them the best opportunity to reach their targeted potential voters at the lowest possible cost. The campaign strategists also chose second- and third-tier market areas and daytime programs and late-night entertainment shows. This enabled the campaign to efficiently use available campaign funds and achieved a positive result -- President Obama was reelected.

The Mitt Romney campaign chose not to gather similar audience data and information, but chose to spend large sums of money purchasing advertising spots on expensive primetime television shows. Yes, large audiences but not the necessary audience to yield the expected results. Campaign operatives and organizations continue to analyze the polls and campaign data trying to figure out why such a decision was made.

The two presidential campaigns can be used as a lesson in personal finance. You must be strategic in the use of your money. This includes the establishment of financial goals: develop a budget that will serve as your spending plan, review of your income and existing commitments prior to any purchase. After these steps have been taken, you should gather specific information about the item(s) you need, including the comparative price levels and quality prior to purchase. Once this is done you will be able to make the appropriate purchase at the right price; thus the efficient use your money. While most people would not enjoy the process of analyzing and budgeting expenditures it is something that must be done. The inefficient and useless expenditure of money can be major impediments to accomplishing your financial goals.

You should never make financial decisions based on emotions, chance or luck. Each financial decision must be made based on sound information, including a complete calculation of the cost of the item or service purchased. I often tell my audiences to remove their emotions and "run the numbers" which means to determine the true cost of items or business transaction before a purchase is made to ensure that your money is efficiently used or maximized.

Theodore R. Daniels is the Founder and President of the Society for Financial Education and Professional Development (SFEPD). Founded in 1998, SFEPD is a non-profit organization whose mission is to enhance the level of financial and economic literacy of individuals and households in the United States and to promote professional development at the early stages of career development through mid-level management.