How to Make Decisions

If you are going to make decisions, you must include all the relevant information.

It’s impossible to make a good decision on purpose if you are missing key information.  You may have luck and end up with a good result, but it’s not repeatable.  People are wary of politicians, sales people, and anyone who is trying to change other’s behavior.  This is smart to be wary – caveat emptor – buyer beware, don’t be deceived.

Buy what if you are the one deceiving yourself?

Today’s example in decision-making comes from my own household budgeting process.  While many people have a rough idea of where their money goes each month, I’ve prided myself for years on making a zero-based budget.  Every dollar is accounted for, planned for, before the month starts.

I would list my monthly household income at the top of the page, write out all my expenses and desires for the month, and go until I ran out of money “on paper”.  I paid off my credit cards every month in full, and my net worth looked like this in my budget app:

Net Worth - Before the Reckoning

I was so proud of myself.  The red bars are the debt, my credit cards, and the teal bars are my cash on hand.  I felt fantastic.

But I was lying to myself.

The information I was hiding from myself was my student loans.  I was paying the minimum payment on them every month, but I hadn’t factored them into my monthly decision making process on my budget.  I just paid them as if they were the light bill.

Here is “the reckoning” when I finally added the student loan balances to my budgeting app:

Net Worth - After the Reckoning

My real net worth was way below zero.  What looked so good before, my cash on hand, was puny in comparison.  When budgeting each month, we were making decisions to buy a house, go on vacation, splurge on shopping – never thinking about the real problem.

We’ve been making real progress on paying down the student loans since that time – it’s been a long journey.  Of course, there’s more to the story than just including the student loans in the net worth calculation.  Knowing the real picture of our finances, however, changed our decision making process.

It will for you, too.

The takeaway:

  1. Make sure the relevant information is included when making decisions, even routine ones
  2. If you feel information is hiding or underemphasized, make it visual, and in proportion to the other information
  3. Realize that it isn’t always other people that will try to deceive you – sometimes it is you deceiving yourself

If you ever had an “a-ha” moment like I did, please feel free to share it with others in the comments.

If you want to learn more about the budgeting tool I use and recommend, You Need A Budget, click here for a free trial.  We both get an extra free month of the service if you subscribe, but it’s cool if you don’t.

One thought on “How to Make Decisions”

  1. I like what you said. Truth is refreshing, sometimes scary, but always freeing. Once the truth is out where everyone can see it, know it, understand it, then it can be acted upon and actual change begins. The truth is still true even if it gets covered up or ignored. A leader named Pilot once said, ‘What is truth?’ A movie character once said, ‘You can’t handle the truth.’ Jesus said, ‘I AM the Way, the Truth, and the Life.’ The Bible says, ‘Keep on Asking, Keep on Seeking, Keep on Knocking.’ and ‘He who lacks Wisdom let him ask of God Who gives to all men liberally and upbraideth not.’ God knows we don’t have all the answers, but He says if we seek Him, He will give us the Wisdom we need for every situation and show us a Way out. Once revealed, we then have a choice to either reject His Way, or be Bold and fling ourselves into His answer believing He will come through for us. As the commercial says, Just Do It! Has your way or the world’s way been so great an answer? Give God’s way out for you a try. He will not fail you because He is Faithful. When you need clean clothes there is a process to go through. Sorting, adding water, soap, maybe bleach. Then putting a specific color of clothing in and closing the washer top and turning the machine on. Then you just walk away knowing that in a little while you’ll have clean clothes. It’s the same with baking a cake. Mix the right ingredients, put it in an oven at a specific temperature and walk away, knowing that in a little while you’re gonna have a delicious cake to enjoy. So why is seeking Wisdom any different? Praying is talking things over with God, believing that you’ll have your answer. A difference is the timing is not as clearly defined and so people give up and say things like ‘I tried God! That didn’t work!’ Just because your demand for the answer you want from God didn’t happen when you wanted it to, doesn’t mean He didn’t hear your prayer and that He didn’t have an answer. Parents tell their children Yes, we will do that in a little while, but often they demand their answer when they are unaware that the delay the parent is imposing is for their best good. God says in His Word, ‘My ways are not your ways, and My thoughts are not your thoughts. Unlike some people who say you’re mentally ill if you hear from the Spirit of God, I would recall that Jesus said, ‘My sheep hear my voice.’ I believe there is God Who created that beautiful new crescent moon I saw in the sky tonight. The Bible says the beginning of Wisdom is to believe that God Is and that He is a Rewarder of them that diligently seek Him. Yes, HIM! Jesus taught us to pray, ‘ Our FATHER which ART in heaven, hallowed be Thy Name! Thy kingdom come, Thy will be done, on earth as it is in heaven. Give us this day our daily bread, and forgive us our sins as we forgive those who sin against us. Lead us not into temptation, but Deliver us from evil, for Thine is the Kingdom, and the Power and the Glory Forever, Amen.

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