You will make 10,000 decisions a day… How do you get the big ones right?
Believe it or not you will make 10,000 decisions before you close your eyes for the day. That number comes to us from Noreena Hertz, an economist and author of Eyes Wide Open: How to Make Smart Decisions in a Confusing World. Ms. Hertz explains that the choices we make in our daily lives range in importance from what to eat (227 decisions about food alone), to potentially life altering decisions.
Most of these choices are fairly easy and require no (or little) conscious thought.
But then we know that there are plenty of tough choices we have to make too, and the quality of those decisions dictates your course in life. Emotions, biases and distractions can easily cloud decision-making and cause you to make choices that may not be in your best overall interest.
And there is one thing that most of us will agree on: no matter what your own interests are in life, having money will help you achieve them.
To make sure that your financial decisions are as good as they can be, here is a decision-making framework you might find useful:
- Define the big decisions. Know which ones need to be made carefully
- Identify the biases that may influence your decision-making
- Quantify the costs of doing something, and doing nothing
- Quantify the benefits
- Determine whether you have the ability (resources, time, knowledge) to make the decision comfortably
- Understand what compromises or tradeoffs you might need to make
- Determine whether or not it’s logical & sensible to go ahead
- Create an action plan (a list of things to be done to make the decision work out the way you want)
- Do it…take action!
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