Yesterday at work, I had a thought that is overwhelmingly common for me, "Are you STILL thinking about this?" I am constantly shocked when it takes someone more than 10-15 minutes to make a decision much less the 10-15 days that seems to be standard in my place of business.
You see, I have a heavy bias towards taking action- any action will do. I figure that I can fail about 30-45 times if I make an immediate decision, as opposed to thinking through all the scenarios for two weeks until finally arriving at a maybe optimal solution. You can call my method the spaghetti method (throwing spaghetti against a wall until it sticks), or you can call it the stoplight method (the fastest way across town is stoplight to stoplight). When I choose action first, even if a little blindly, I think that I'm more likely to develop a solution in a timely manner.
Clearly the bias towards action over analysis is better. Right?
Analysis has its place too!
Actually, the world is sometimes a minefield, and the analytical types are quick to bring risks out into the open and ultimately mitigate risks on the road to an optimal solution. An optimal solution is something that rarely crosses the mind of the action oriented person; solution, yes; optimal, unlikely. Analytical people may not get things done quickly, but they create quality work, which also tends to come with lower ongoing pains and cost (assuming said analytical people didn't get stuck in analysis paralysis).
My husband is an analytical person. I can't tell you how many times he's redesigned out kitchen in the IKEA kitchen planner since I showed him my initial design a month ago (we're waiting to order cabinets until the IKEA kitchen sale). He carefully plans out... everything. I think it's this very trait that allows him to make complex tasks look like child's play. Sometimes, when we are in Home Depot, I'll assume we made a decision an hour ago, only to find that as I'm steering towards the checkout, my husband is going back down the aisle since his analysis is leading him to a different decision.
Thankfully, he won't read this post unless I tell him to, so it's safe for me to tell you that he's almost always right. (To clarify right and wrong isn't a big deal in our relationship, but if I admit that I appreciate his analysis, I fear that I will have to spend even more time in Home Depot.)
Your bias might be costing you $$$
Whether you are analytically biased or action biased, your bias is costing you money. Analytical folks oftentimes spend time, money and energy mitigating irrelevant risks. Action oriented folks waste money on stupid non-solutions. Analytical folks are likely to dither, and thereby miss big opportunities for making money, whereas action oriented folks might lose big money chasing poor investments or business opportunities.
Understanding your bias is the first step towards utilizing your bias to help you make sound financial decisions, so here's a quick test:
What's your bias?
If you answered right away, you're action oriented. You might have answered incorrectly, because you didn't think about it, so revisit the question for ten seconds, and then give me your answer. Are you action oriented now? Good.
On the other hand, if you're sitting there questioning whether or not self-diagnosis is truly a valid way of understanding character traits, and you think you would rather consult psychological experts (StrengthsFinders 2.0, Myers-Briggs, etc.), then you're analytically minded. Tonight, when you're still thinking about this, I'm guessing that you'll come to agree that you are in fact analytically biased, even though you'll probably take then next 4 days coming up with data to prove it.
What you should do about your bias?
I honestly believe that's impossible to self-discipline your bias away. I don't believe that it's possible to outgrow your bias, and I certainly think that when you're in a stressful situation, your bias will be accentuated not mitigated. Therefore, the best thing that you can do, is to build systems that will act as guardrails to keep your bias in check.
For action oriented people, your systems will look like mechanism that will slow down and interrupt your decision making process. If you automatically sweep a lot of money out of your checking account and into a savings account or a money market account or some other account, then you have to think usually for a day or two before you spend it. This can come in very handy when you see your neighbor's junky house go up for sale, and you think to yourself, "That's a great price! I should buy it!"
It's also helpful if you express your ideas on spending/investing out loud to anyone who's not just going to positively affirm your every move. They might ask questions, like, "Do you have enough money to fix that house?" or "Do you have the energy to invest in that project?" Great questions, to which my hypothetical answer (okay, real answer) is no.
Zero balance budgets are also a system of choice for the action oriented. Budgets will allow you to make all your decisions at once, when all the priorities are clearly laid out. By adhering to your budget, you will make sure that your bias towards action is kept in check. It's fine to buy 48 cans of coconut milk since they are on sale, but you will do so at the detriment of your grocery budget... buy wisely.
For analytically minded individuals, systems will look like anything that reduces the number of decisions that you have to make. Automating your investing (including the funds you've chosen), automating your bill paying, creating action schedules and timelines that will require decisions being made at a certain time will keep you from digging too deeply in the minutia.
And as great as zero balance budgets are for action oriented folks, they are even better for analytical people. You make your spending decisions one time, at the beginning of the month, and then you never have to think of them again. You can spend as long as you (or your spouse) will let you optimizing the budget, and then you merely have to adhere to it because the decision has already been made.
In conclusion, budgets. And systems.
In case you're wondering, my neighbor's house really is for sale, and it really is a piece of junk and also a steal at the same time. The rental value for a fixed up house will be $1000+/mo, and the list price is $40K. It will probably require $30-$50K of work to be up to standard, but still a good deal for someone with cash and some handy skills.
I'm a wife, a mom, an employee, and a personal finance nerd who is devoted to spreadsheeting my way through life.