By Brittany N. Cox, Associate Advisor at Nestlerode & Loy, Inc.
Have you ever been watching a football game and noticed that the quarterback started to throw interceptions and made some bad decisions in the fourth quarter? Quarterbacks are at high risk of decision fatigue along with judges, CEOs, and other figures of constant decision making.
Decision fatigue is the notion that the mental work of constant decision making will wear a person down and distort their judgment. It can take a toll on everyone from executives to athletes, yet few people are aware it exists.
So, how does decision fatigue affect the average person? It affects some of us at the grocery store. You know that trip to the store when you go for just two or three things and walk out with an entire cart full? Or that junk food at the checkout counter that you throw in at the last moment? It explains why sometimes we splurge during online shopping or can’t tell the salesman at the car dealership that we don’t need that new rust-proof clear coat on the new car. The more choices you make throughout the day, the harder each one becomes for your brain, and eventually it starts to look for shortcuts.
There are two common “shortcuts” your brain typically takes. One is to become reckless and act impulsively instead of using the energy to consider all of the consequences and weigh the good and bad. I experience this when I stop at the grocery store after work. I always buy way more than I went for and they aren’t usually healthy items that I end up with. While sometimes an impulsive decision can turn out well, that’s not always the case.
The second shortcut your brain defaults to is to do nothing. Instead of using the energy to make the decision it will just avoid it all together. It’s that moment when your spouse asks you what you want for dinner and you reply with “I don’t care.” Then they offer an idea and you don’t like it. The “I don’t care” is a shortcut to not have to think about dinner. You do care, but your brain doesn’t want to use the energy to think about all of the options which seem endless.
With all of that being said, how many financial decisions do you make in a healthy state of mind? It’s hard when we are constantly bombarded with commercials and advertisements requiring an opinion or decision all day long. Be aware of your own decision fatigue. Ask yourself before making any decision concerning your finances if you are in a good state of mind to be making that decision. It’s probably not a good idea to stop in at the car dealership on the way home from an exhausting day at work.
Second, consider blocking out time to evaluate your finances or mull over large purchases. Set this time aside on a day and time where you aren’t inundated with other things, perhaps Saturday morning after good night’s sleep, with the newspaper in hand and a good cup of coffee. Plan out your finances on paper and come up with a strategy.
Need guidance with choosing a strategy? Consult a financial professional. They can help you to formulate and stick to a financial plan. I find it easier to stick to a plan or budget if I have it in writing and somewhere that I see it frequently. Tracking your daily and or weekly spending may also be a good tool. Avoiding impulse purchases can be beneficial but it’s a trap that we all fall into. Try to rationalize with yourself before making a purchase you are unsure of and review your plan.
Another way to reduce decision fatigue is to eliminate some of the choices you have to make. This could mean getting rid of clothes you don’t wear, simplifying your wardrobe and having a plan for the week. Maybe eating the same breakfast each day would take away the decision of what to grab on your way out the door. Of course it is easier to eliminate decisions that are not so important to your day. I happen to like the idea of planning ahead to lessen my decision making during the work week.
Even though you may find it easier to flip a coin when faced with a miniscule decision, it’s imperative to weigh your financial decisions more carefully. I, of course, would like for you to make the best financial decisions for your needs. Be sure to consult with your financial advisor when you are faced with financial decisions you do not feel you are able to make on your own.
At the end of the day, it is a matter of personal preference on what changes you choose, but being aware of decision fatigue can help you make better decisions.
