Decision model in our finances, or how do we make our finances smart?

When it comes to finance, when we want to buy something, we have to make a decision basically. The decision can be over-hasty-rational-logical-economical-economical-desperate. Imagine that there is a decision model that can help us make the right decision for us. In this article, I present my own decision model through a specific example.

Suppose we have been using a Nespresso coffee machine for months, because the exclusivity of its grocery stores, the quality of the coffee, or a sense of life. Then one day the store will see us with a “never returning” action, where we can buy the machine with a 50% discount. How do we decide?


1. Find a benchmark – the starting point for the decision model

1. Find a benchmark - the starting point for the decision model

We feel that 50% is something of an extraordinary opportunity for action (shopping). But what is it actually about 50%? Can we believe in the “original price” of the price line? Do we get the same thing at all with this purchase we wanted?

It is very important that we look for a point of reference that is completely independent of the situation, ie the mobile phone and look for the product on the net. If we haven’t done so, it’s time to

  • read reviews
  • we’ll look at how much this product actually costs on the price machine
  • place this nespresso coffee machine in the quality search of the Nespresso range.

We need to know exactly that this coffee machine is really at a good price, we can achieve it with the right quality, or we just ran into a “-50% cetlib”!

2. Reduce your choice.

2. Reduce your choice.

The election paradox means that we think the greater the choice, the better our decision will be. In fact, the abundant supply shares our attention and in the end we will not be able to make the right decision for ourselves. It is not accidental to say that it is easier to decide on a smaller range.

We stand in front of the coffee maker and think about buying this product or not. Our concern is hampered by our decision, because we are not at all sure that we make a good decision. In order to make our own chances easier, it is worth relying on the first point and looking at the offer through another glasses.

At this moment, Nespresso offers 13 kinds of machines in different sizes, equipment and looks. From the entry product to the premium catagory. The cheapest and most expensive price difference is 6x, which justifies us doubts about quality. Does each picture represent the same quality?

It is very important that we make three categories from our selection:

  • Incoming product
  • Quality middle
  • Premium

Approximately 4-4 machines will be included in the three categories. The goal is to clearly select one of the three groups, thus reducing our election offer by 66%. The decision is obviously influenced by price, appearance, functionalism, etc. 

3. We accept that our decision will not have a fatal outcome

3. We accept that our decision will not have a fatal outcome

Our rational decision is strongly influenced by fear of consequences. In this case, we keep the alarm bell constantly:

  • What if I miss this opportunity?
  • What if I live with the opportunity and make the wrong decision?

This kind of grief, according to Daniel Gilbert, an American psychologist, can be easily resolved if we accept that the effect of our decisions based on infinity will never be as long as we could judge at that moment. In our opinion, our fears in this situation are totally unfounded, especially harmful to our decision.

4. Work with us on the price

There we found ourselves in a decision-making state that we didn’t prepare for. Now we want to buy a Nespresso coffee machine at half price and decide. Of course, every decision has a material impact, so we have to count on this. There are two kinds of people:

  1. not interested in money
  2. money is important to him

In this decision model, however, the role of money is appreciated and even more specifically identified by our own quality of life and our conception of life. It’s not just that we can afford it or not. It is almost a secondary circumstance, because in the long run we can get much more serious benefit with a smart decision.

5. Listen to our inner voice, but ask for an external opinion

Everyone should learn to hear their own inner voice, pay attention to the first impression. If we can correctly interpret these signs, then we will instinctively make much better decisions. Practically, this would be the first filter for our decision, because what we want, if we don’t even have the feeling of buying it for ourselves?

Of course, the inner voice often enlarges not the feeling but the desire. So it hinders the right decision. That’s why, when you’re in the store, call someone you trust. Ask him to listen and begin to list the arguments that seem to you to be objective. Advantages and disadvantages!

So, loudly, he speaks to a friend about the objections that may arise in the matter. Explain why you shouldn’t buy it. Before or after you argue with the coffee machine. As soon as you have finished, listen to your friend’s thoughts and begin to bargain about it. You didn’t call me asking for permission. You talk to him to listen to the views and questions of an independent person.

The conversation will have a result, a negative or a positive one. Usually, during such a conversation, we have an instinctive decision, and we are still tearing it up for a while to understand the reasons.

The choice is yours. The responsibility is yours. If you decide to follow your friend’s advice without making the same decision, he will not be responsible, but you. Because you chose…!



6. The right decision takes three days

6. The right decision takes three days

There are situations like the Nespresso coffee machine, which was such an extraordinary action that there were just a few pieces of it. So we had to jump in without a parachute and make a decision locally. However, fortunately, 90% of our decision-making situations have enough time and space to make the right decision.

Let’s do it for three days as if we had chosen one option. But at the same time, we record all our feelings and thoughts on the matter. Let’s turn the situation and live as if we had made the other decision. Record everything. When the time has elapsed, let’s compare the two experiences and see the right decision.