Before you complete your day, you will make 10,000 decisions. 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.
It’s no secret that tough choices are part of life, and the quality of your decisions dictates your course. Unfortunately, however, biases and distractions can easily cloud decision-making, causing you to make choices that may not be in your best overall interest.
In order to ensure that your financial decisions best reflect your values, you must institute a decision-making framework. Here are nine easy steps that will help you make the most informed and objective decisions:
1. Define the decisions, when it needs to be made, and whom it affects
2. Identify the biases that may impact your decision-making
3. Quantify the costs, both real and intangible, of your decision
4. Quantify the benefits, both real and intangible, of your decision
5. Determine whether you have the assets and the current resources to make the decision
6. Make appropriate adjustments to your decision or determine the tradeoffs you’d need to make in order to move forward
7. Determine whether or not it’s prudent to go ahead
8. Create bullet-point list of steps to take
9. Confirm that you’ve made an informed and objective decision
Keep this checklist handy as you face the 10,000 decisions awaiting you today. It can help you make decisions serve as an extension of your personal values.
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