In regards to decision making, I believe it’s important to know where the dangers and the pitfalls lie, so you can avoid going there. Why? Because if you can keep away from the dangers, you automatically increase the odds of making a better decision, the one that works in your favor.

Isn’t that what we want with all decisions? Increasing our probability of success? Here are three cautions I promised.

3 cautions of decision making.

Basis

We must understand the basis of our decision. Are we coming in from the point of fear, greed, or a place of comfort?

Fear and greed are dangers, and are also opposite ends of the same spectrum. Therefore, we must be at neither ends. A good place to be is somewhere in the middle. That’s where we are most rational in our thoughts and actions.

We act from the basis of fear when we’re trying to avoid a personal negative outcome. The word “personal” is the key here. If the loss wasn’t personal, we wouldn’t be making this decision out of fear. We’d be rational in our thinking.

Greed is also a form of fear, but it’s the fear of losing out on something that is seemingly amazing. Bitcoin is a good example of it.

Timing

Avoid waiting to make big decisions till you’re distressed and desperate.

Understand this, we pay a price for every decision we make. The price is not always monetary so it may not always be easy to see it, but there is cost associated with every decision. Making a decision when we’re distressed or in a mode of desperation, our decisions become irrational, and more than likely the price we pay for it either immediately or in the long-run is also irrational.

Results

If the long-term effects of a decision are going to affect you negatively, then don’t do it even if the short-term effect will be positive. While it may solve today’s problems, it’s going to make tomorrow difficult. It’s not worth putting your long-term happiness in jeopardy for temporary pleasure.