Don’t you just hate making complex decisions?
Recently, my sister called to ask my advice. She needs a new computer. (And when I say she needs a new computer, that means the Smithsonian is on the phone with her daily begging her to donate her current one to the museum. Tracie gets her full use out of computers.)
When she told me she needed advice about buying a computer, my first impulse to was squeak out a small animal noise of fear, because I know nothing about computers. Asking for my advice when looking to buy a new computer would be similar to asking my advice for buying a horse. I could take stab at helping, but you’d probably be better off asking the horse. (In either case.)
Then she told me she wanted to know what I would tell someone who was having trouble making a decision.
Oh. Well, that’s something I do know about. It’s called analysis paralysis, and boy howdy is it annoying.
We humans have a tendency to shut down in the face of a too-complex decision. According to economist David Laibson, before auto-enrollment in employee retirement programs became the norm (about 7 or 8 years ago), “it [would take] a new employee a median time of two to three years to enroll.”
Those foot-dragging employees were not being lazy or stupid. They were simply overwhelmed with the pressure to make the “right” decision in the face of so many options. Without the time or ability to maximize their decision, they made none, which is objectively the worst possible outcome.
Which brings me back to Tracie. She told me that she badly needs a new computer, since hers is in danger of being flung through a window due to its slowness (or not, because not everyone is like me in their inability to handle minor frustrations). But she is not sure if she needs a certain brand/style/color* of computer to be able to handle Photoshop and other programs her budding art career may need in the future.
First, I told her to limit her research to one hour. Whatever information she needs to know to get to a “good enough” decision can be uncovered in an hour. Yes, there may be a platonic ideal of computers out there, but it’s not worth the time it would take to find it.
Similarly, if you are paralyzed trying to make some sort of investment decision, give yourself a set and limited time period to learn more about it. I generally think an hour is sufficient for most purposes. It’s long enough that you can be satisfied that you have done something approximating your due diligence, but short enough that you don’t put it off. In most cases, any information that takes more than one hour of research to unearth is going to be more complex than you need to make a decision.
Tracie then told me she had already spent a little more than an hour researching her new computer options, and explained that she kept running up against the Photoshop issue. She wants to continue using an Apple computer, and the model she was thinking about seems to be compatible with Photoshop, but the conventional wisdom is that Macs are not good for Photoshop.
I stopped her there. “Do you have any immediate need for Photoshop?” I asked.
“No. I just might need to use it in the future depending on where I go with my art.”
I told her to let future-Tracie worry about the Photoshop problem. She might need it in a year, she might not need it at all within the lifetime of the new computer. So there’s no need to include it in the current equation. Even if she does need Photoshop within a year, the money she might have to spend then to upgrade and/or improve her computer will not be wasted because she will much better understand her specific needs and can make an intelligent decision based upon those real needs, rather than assumptions.
We are all very loss averse when we think about the possiblity of wasting our money or our time if we find we need something in the future that we either neglected to get or actively got rid of in the present. But worrying about the possiblity of needing something in a future that is uncertain is the way madness lies.
If you are having trouble making an investment decision because you don’t know if it will fit with a hypothetical situation in the future, simply take the hypothetical off the table. Unless you know for a fact that you will need something in the future, make your best decisions based on current needs, one of which is the need to make a durn decision already.
Any movement forward, no matter how slow or ridiculous, is almost always better than standing still.
*I told you, I don’t know from computers
Retire Like a Mensch is a regular feature of the TheDollarStretcher.com. Don’t miss these 3 ways to guarantee a smart buy.
This article by Emily Guy Birken first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.
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