Eat, Save, and Be Healthy

“Habit is a cable; we weave a thread each day, and at last we cannot break it.” ~ Horace Mann

Have you ever taken time to really think about how you make decisions? Many of our choices seem to be made on automatic pilot. From food to finances to family dynamics, we tend to react with habitual behavior developed over a lifetime that may not serve us well.  There is no time like the present to discard destructive old habits for healthy new ones.  Listed below are eight different decision-making strategies from practicalmoneyskills.com that highlight the varied ways we make choices, and how using those strategies may be affecting you financially.

Spontaneity. People who make decisions spontaneously choose the first option that comes to mind; giving little or no consideration to the consequences of the choice. This method takes little-to-no deliberation or forethought.  A prime example is the grocery store; we usually shop for food when we are in a hurry and grab the first item that catches our eye. Other examples might include an auction, garage, or estate sale.  You don’t have the luxury of going back a few days later to purchase something the way you would with a store purchase.  But many times, making choices this quickly results in spending too much money or buyer’s remorse.

Compliance. Compliant people go along with family, friend, or peer expectations.  This strategy is usually conflict-free, but not necessarily the most effective way to choose. If you purchase a certain refrigerator because your best friend bought that brand, or invest in certain stocks because your father does, it may or may not be what is best for you.  It’s fine to consider what others are doing in the whole scheme of things, but you need to look at all of your options to make sure you aren’t missing out on a feature or plan that might have worked better for your personal needs.

Procrastination. Procrastinators postpone thought and action until their options are limited. Obviously, this doesn’t always give them the outcome that would have been the most satisfying.  With some decisions, this is no big deal.  If you didn’t get to the store in time to buy Christmas presents when the pickings were lush, you might not be able to get everything on your list.  However, the upside is that sometimes you get things cheaper the longer you wait. On a personal side, this strategy can drive other family members nuts if they are organized and thoughtful about their purchases.

Agonizing. Agonizers spend so much time accumulating information that analyzing all the options becomes overwhelming. With the myriad ways we have to investigate our purchases, from the internet to libraries to personal interviews with store sales associates, we can get inundated with information.  This is, after all, the information era.  Then it becomes so difficult to wade through the stacks of information that some people just throw in the towel and do nothing. At some point, you have to stop, narrow down what you have, and make the best decision from those choices.

Intention. I love the word intent.  It is defined as an anticipated outcome that is intended or that guides your planned actions. It speaks volumes about your thought process. It shows that you deliberately made a choice that is intellectually and emotionally satisfying. You took the time to analyze, dissect, and weigh what is best for you, but you didn’t agonize about it.

Desire. I have made many financial decisions that started from desire, and I’m going to assume most of you have as well.  When we desire something, we are totally focused on how best to achieve or acquire “that which is calling our name.” This is good because we’re concentrating on achieving our heart’s desire, regardless of the risk involved. However, not every desire can or should be fulfilled, so starting from this point may bring the highest level of disappointment if the end result isn’t successful.

Security. This is the safe strategy. You choose the option that will bring some success, offend the fewest people, and pose the least risk. The good thing about a secure financial strategy is that even though you may never hit the big time, money-wise, you will never be down in the pits, either.

Synthesis. This strategy comes from the standpoint of compromise. You choose an option that has a good chance to succeed and that you like, even if it is not your favorite choice. An example might be when you purchase a good, used vehicle.  You aren’t purchasing new, so you can’t custom order exactly what you want.  You have to look at what is currently available, do your due diligence on the make and models as far as what has the best track record, and then make the pick that gives you the best bang for your buck.  Is it the car of your dreams?  Probably not.  But that doesn’t negate the fact that you made a good choice that will give you good value.

Now is the perfect time to look at your spending habits and financial decision strategies because it is the beginning of tax season.  We all use more than one strategy at any given point in time.  But if you persistently find yourself in a strategy that undermines your ability to achieve financial success, think about how you can break the habit.  Mark Twain said “habit is habit, and not to be flung out the window, but coaxed downstairs a step at a time.” Slow down, review, and reflect on your habits. Look at the upcoming tax season as an opportunity to see exactly how much you made last year, where that money went, and how you can improve on keeping more of it in 2011.