The first decision many of us made at the beginning of the month was whether or not we truly want to stick with our New Years’ Resolutions. Like many decisions, sticking to those resolutions becomes harder over time and hopefully you have been able to keep some of the good ones in place so far. There has been a lot of recent research about the decision-making process everybody goes through on a daily basis, with direct implications for your financial goals. The following blog from Carl Richards, Director of Investor Education with the BAM Alliance, provides an interesting introduction to the study of how decisions are made, or not made.
Decisions, Decisions…
Life is full of decisions. There are ho-hum, everyday ones (bagel vs. oatmeal, what color shirt to wear). There are larger, wider-scope ones (how to spend our most precious resources — time and, of course, money).
When it comes to those financial decisions, Carl Richards, director of investor education for the BAM ALLIANCE, says, “The single most important thing you can do when it comes to making good decisions with money is to get clear why you are doing it. … Why are you doing the things you do with money? Take the time to have a discussion about your values so you can be clear about why you are doing the things you are doing.”
Why. Why? Why?!
The way we go about approaching and making decisions, financial and otherwise, is a common, foundational theme in the messages shared by Richards, through his writing and in episodes of his Behavior Gap Radio. We share some favorites below:
Getting Around Decision Fatigue
Every day, we’re expected to make many decisions. Over time, the cognitive cost of those decisions adds up. By the end of the day, most of us have burned through our ability to make good decisions. The researchers refer to this process as ego depletion or decision fatigue, and it’s a real thing that can get in the way of making better decisions.
Pull Out Your ‘No Shame, No Blame’ Hat for Better Money Decisions
Most of us are trying to prevent future mistakes without realizing that shame and blame won’t fix what needs fixing.
We Don’t Need to Force Our Decisions
What if we start to practice a different reaction to resistance? After all, resistance doesn’t imply that we can’t reach our desired goals. It simply means we haven’t found the best option — yet. Why not give ourselves time to identify and evaluate all our choices?
