Decision-Making: Define Your Hierarchy of Needs
Chip Brackley | June 03 2021
“In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.” – Theodore Roosevelt
I love this quote. It’s a good one for me because when it comes to big decisions, I can sometimes overanalyze. I get stuck in “analysis paralysis” sorting through every detail of the decision.
I recently bought a car. I’m not a big car guy. There is nothing that I really love or need to have. After looking for cars for a couple of weeks and annoying a few friends with what they thought I should do, I was still at ground zero. Now a few weeks later, I was frustrated and had wasted a lot of time… both mine and other people’s.
Have you ever found yourself in one of these situations? Where you think you know what you should do but you just can’t pull the trigger. There are too many “what if’s” running through your mind, especially when it comes to big financial transactions.
How about when it comes to investing? You finally sell your business or come into some cash and you aren’t sure exactly what to do? You feel the market is too expensive and don’t want to commit capital now. You aren’t exactly sure what mix of stocks and bonds you should buy. So, you do nothing and two years later bonds are up, stocks are up, everything is up and your still in cash waiting for the perfect opportunity. Looking backwards we know that sitting in cash over long periods of time is never a good idea but getting invested and remaining invested is. For most of us, having an established hierarchy of needs would provide a mechanism to push us because doing nothing rarely works.
How about when it comes to giving money away? You and your family want to give but you tend to hold off on it because you aren’t 100% sure the money is going to be used perfectly by the organization you are giving to. Or maybe the people you are giving the money to might use it for something other than what they really should be using it for. So, what’s the result? In reality, no one wins. The money never went to the family you wanted to support, you missed out on the joy that comes from giving and you possibly missed out on a tax break.
Get To 80% Confidence
What I have learned over the years is that when it comes to decision-making there is rarely ever a “perfect” choice. There is no perfect car. No perfect investment. No perfect charity. But only the perception of perfect. If you can get to 80% confidence level on something the other 20% really isn’t going to make a whole lot of difference. It’s just details at that point. The details matter, and if you focus on the key points or have a decision tree in place then you can get to 80% pretty quickly. It’s the other 20% that is going to take time, cause pain, create that paralysis by analysis and ultimately could lead you to do nothing.
Don’t let the 20% keep you from taking action because as mentioned in the quote, some action is better than no action, regardless of the outcome.
So, what happened with the car? The answer was under my nose the whole time… I just had to communicate with my family, or my wife to be more specific. It turns out she wasn’t all that happy with her “new” car which I like and since she was tired of me dragging my feet, she found a car she likes better. So, she got the new car and I inherited her “gently” used car. For me that was a win. I wasn’t going to waste any more time and my wife was happy. Communication is important but family communication is most important!
Here’s the bottom line…
Big decisions are always coming your way so do your homework but be decisive. You’ll make mistakes along the way, but you’ll never learn anything from sitting on the sidelines and watching life pass you by. Get in the game!
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