I’m Ready to Make a Decision, I Think

It’s human nature to second guess our decisions, but somehow this must go double when it comes to financial decisions.  No matter how much we research, contemplate, and then ultimately decide on a financial decision, almost immediately we question it.  (Obviously I’m not talking about impulsive financial decisions, as the problem with those probably speak for themselves.)  There are a couple of things you have to remember when it comes to making a financial decision:

#1 – Start by gathering all of the information that you know at the time.

Now I’m choosing my words carefully, so let’s break this down.

  1. You have to do at least some research.  Very few good financial decisions are made without doing a little homework.
  2. You must base your decisions based on what you know at the TIME you are making the decisions.  We’d all love to have a crystal ball that would tell us what’s going to happen in the future, and if we did we’d all make perfect decisions, but we don’t.

#2 – Trust your judgment and have confidence in the research you did in step one.

The whole purpose of doing your homework and researching the question is so that you can actually do something with it.  Don’t over analyze the question, and don’t paralyze yourself in “what ifs.”  When you have enough information to draw a conclusion, pull the trigger.

Remember, the more expensive the financial decision, the more time you want to contemplate it.  It shouldn’t take three days to decide on which pair of jeans to buy (Susan, are you listening?).  That said, choosing a college, or a home, or a moment to retire will require a commensurate amount of time.

#3 – It is possible to make good financial decisions and still end up with a bad result!

This may be the toughest pill to swallow, but it should provide the most relief.  As I said a moment ago, the only perfect decision is the one we make when we already know the outcome.  (This works really well in Vegas.)  Very few, if any, financial decisions will be that fortuitous.  As long as you follow Step 1 and Step 2, then let Step 3 be your absolution.

If you suffer the unfortunate fate pronounced in Step 3, then Step 4 is the most important.

#4 – Learn from your results

Whether it’s success or failure, history is the best teacher.  Use the information you learn in Step 4 to repeat the process.  Bring this information into Step 1, apply this information in Step 2, and hopefully avoid Step 3.

It’s just like what the shampoo bottle always says: wash, rinse, repeat—always repeat.

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