Struggling With a Big Money Decision? Use This Science-Backed Strategy

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Some money decisions are no-brainers. The answer to “If I’m able to, should I contribute the max to my 401(k) that my employer will match up to 6%?” is always “Yes.” The answer to “Should I open a retail credit card to be able to make this impulse buy?” is always “No.” But there are a lot of money decisions that are really hard. And there’s no magic 8-ball around to give us the 100% correct answer (though if there were such a thing in human form, Warren Buffett would be it).

We asked ChatGPT, “What are the top three money decisions Americans struggle with?” The AI chatbot reported that decisions around managing (especially student loan debt), retirement planning and controlling spending lead the pack. But is there a way to simplify these and other money decisions so that you can do what’s best for you and your finances?

Cheryl Strauss Einhorn, the founder and CEO of Decisive, a decision sciences company that trains people and teams in complex problem solving and decision-making skills, recently published a piece in Harvard Business Review where she discussed the four questions you should ask yourself to work through ambiguity. 

Question 1: What Decision Will Still Make Sense a Year From Now? 

First, you should ask yourself what decision will still make sense a year from now. This helps take the edge off your in-the-moment feelings by steering your focus onto the long term. It also helps you make a decision that will help you down the road, and not just today. 

“It’s easy to make decisions that solve immediate problems but create downstream consequences,” Einhorn wrote. “Asking this question forces leaders to pause and consider the durability of their choices, injecting long-term thinking into short-term chaos.”

This question can prompt other helpful questions, such as: What direction are we truly committed to? What values do we want this decision to reflect? What kind of risk are we willing to carry forward?

Question 2: If a Year From Now This Decision Was Used as an Example of Our Leadership, What Would It Teach?

You don’t need to be the CEO of a company or in any formal leadership position to think of yourself as a leader. You’re the leader of your financial life. As such, you want to make exemplary decisions. You want the moves you make to have a positive impact on your children, if you have any. Ask yourself, what lesson can be learned by others from this money decision?

“Unlike a question that focuses on whether a decision will stand the test of time, this question is about what your decisions say about you – your priorities, courage and clarity,” Einhorn wrote. “It’s strategic because it prompts leaders to widen the lens and consider how their choices reflect the culture they’re building and the example they’re setting.”

Question 3: What If This Isn’t the Storm — What If It’s the Climate?

Let’s say you’re living with a volatile money situation and you need to make a decision in order to deal with it. The mantra “This too shall pass” may help soothe your nerves, but it’s not a solution. A helpful way to approach a difficult decision is to think that maybe the storm won’t pass. Maybe this is the way life is now.

Einhorn argued that this approach “challenges the instinct to delay, defer or design for an imagined return to stability, and it invites you to stop optimizing for recovery and start preparing for persistence and building for endurance.”  

Question 4: What’s the Cost of Waiting?

You can’t put decisions off forever — or can you? A lot of us procrastinate and not necessarily because we’re resistant. Perhaps we think it’s better to wait so that we can collect more information or let some chaos settle. Ask yourself, “What’s the cost of waiting?” 

“In a crisis, the instinct to pause – to wait for more data, for more certainty, for the fog to clear – can feel responsible and prudent. Leaders are taught to avoid rushing, to reduce risk and to base decisions on evidence,” Einhorn wrote. “But in volatile environments, the pursuit of perfect clarity often conceals a hidden cost: the cost of inaction. That’s what makes this question so strategic. It forces leaders to confront not just the risk of moving too soon, but the equally dangerous risk of moving too late.”

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