The decision stack: how to make the right financial choices(Read article summary)
The simple choice to go out to coffee with a friend actually reveals a series of financial decisions. How do you know if you're making the right choice?
Ann Hermes/The Christian Science Monitor/File
Let’s say I’m sitting at a coffee shop waiting on a friend to arrive. I have a warm cup of something delicious on the table in front of me and I’m reading a website on my phone.
It’s a simple story, right? However, it’s one built upon a stack of decisions with financial implications.
Why did we choose to go out at all?
Why did we choose this particular coffee shop?
How did I travel to this shop, and how will I travel home?
Why did I choose to get the beverage sitting in front of me?
Why did I choose (or not choose) to get a food item as well?
Why did I choose to have a cell phone at all?
Why did I choose to have this specific phone?
Why did I choose to have this cell phone provider?
Why did I choose to have the data plan that I’m using?
That simple little scene rests upon these nine financial decisions – and likely upon many more, as these just happened to be the more obvious ones. All of those decisions are adding – or subtracting – dollars from that simple moment.
Most of the questions were answered at a time and a place far away from that coffee shop scene. I decided on my cell phone, the provider, and the data plan when I was shopping for such things. We chose to go out days in advance when we got ahold of each other and concocted our plan.
In fact, the only decision I actually made inside the coffee shop was what to eat and what to drink.
Yet, in order to be at that shop dawdling on my phone, I’ve invested money in the trip to the shop and I’ll have to invest more to get home. I had to buy the cell phone and the cell phone plan.
When I start looking at situations through this kind of “decision stack” lens, the first thing I like to do is deconstruct. Which elements can I take away from this picture and still leave the large part of what I enjoy about this situation?
If I didn’t have that cell phone with the data plan, I’d probably be reading a newspaper that the coffee shop provided or a book that I brought with me. Would this really reduce my enjoyment of that moment?
If I didn’t order a coffee, I might be sitting there with a cup of water in front of me. Would that have reduced my enjoyment of the moment?
What if I had simply invited my friend over for coffee at my kitchen table? I would have saved on the cost of going to the coffee shop and home from the shop. Would that have reduced the enjoyment? This might have made my friend somewhat less likely to come due to the change in location, though.
In the end, I recognized that the real core of what I enjoy about this moment is the time spent with the friend. The cell phone with the data plan? Not necessary. The coffee? Not necessary. The trip to the coffee shop? Not necessary unless it makes the meeting with the friend possible.
All of those elements are things I choose to add into the core experience. I don’t need coffee or a car or a cell phone to enjoy my time with a friend. Those are just extra expenses I’m choosing to add into the equation.
One of the biggest reasons that people end up getting trapped under a huge pile of expenses – and I’m certainly guilty of this as well – is that we start to overlook that big stack of decisions. We compress many of them together and tell ourselves that this is the baseline “normal.”
Is it? Does it have to be that way? Why?
I certainly enjoy the convenience of having a cell phone with a data plan, but I also recognize that it’s a comfort. There are many situations where it’s convenient and useful, but there are no situations where it’s required.
I certainly enjoy having a coffee once in a while, but I recognize that a coffee at a coffee shop is purely a comfort. I would enjoy life if there was a cup of water on the table in front of me instead.
Whenever I make the decision to have these comforts, I’m choosing to put aside other comforts in life. I cannot “have it all.”
Because of that, every once in a while, it’s worthwhile to just stand back and look at the decision stack of the everyday moments in my life and question all of those decision. I just take apart an ordinary moment like this and look at all of the decisions I’ve made that make up that moment.
Are each of those decisions the right one? Would the money I’ve invested in that decision be better used somewhere else?
Most of the time, I’ll end up deciding that I was making the right call – and you probably will, too.
Sometimes, though, I’ll begin to see that I’m throwing money into a creature comfort that isn’t really doing a whole lot for me and I’ll realize that money could be used better somewhere else. Even if those discoveries are rare, the time spent figuring it out and correcting that decision is almost always worth it.
It’s also worth it to recognize that I really could live without many of the comforts I enjoy. When it comes down to it, most of the core things I truly enjoy and value in my life are free or are highly inexpensive. I enjoy conversations with friends. I enjoy reading books from the library or playing a board game that’s already in my home with a friend. I enjoy spending time with my children. I enjoy listening to the radio, particularly NPR. I enjoy writing and solving puzzles and exercising a little.
The comforts I choose to take on add to my life, but they’re not irreplaceable. My life doesn’t fall apart without them. The core things I value still remain.
In the end, I turn the question to you. Take a moment and tear apart the decision stack for a moment in your own life. What decisions have you made that make up the details of that moment? How many of those decisions were good ones that you still stand by? (Most of them, likely.) Which ones do you regret? (One or two, possibly.) How can you fix them the next time around?