One can argue that financial planning is, at its core, about navigating different choices and trade-offs. Some decisions can have outsized practical, financial, and emotional impacts, such as when to retire, quit a job, or start a business. Succeeding and failing will each bring high consequences, and many people opt to “keep their options open”… but does that, too, have a cost?
In this 201st episode of Kitces & Carl, Michael Kitces and Carl Richards discuss the comparative advantages to making a decision vs. keeping one’s options open – and when it may make sense to commit.
A lot has been said about “sampling” different lifestyles – as a low-stakes example, it is helpful to rent a paddleboard a few times before buying one. Similarly, it can be helpful to spend a prolonged amount of time in the country or city a person wants to live in. But sometimes, trying to keep “all options open” means that no progress is actually made; in other words, a person stays stagnant. Sometimes, while an ‘irrevocable’ decision can be daunting, it can also lead to greater happiness than a safer, reversible choice. The reality is that while we all need to hedge decisions at times, there is a case to be made for committing and ‘burning’ the proverbial bridge that needs to be crossed. In committing to something, we also give ourselves permission to dedicate our energy to it – which can yield greater results than the less committed decision to “leave doors open”.
Alternatively, it may be worth evaluating the energy spent analyzing (and over-analyzing!) different decisions, compared to the energy of commitment. For example, if someone has ten units of energy, how much of that energy should be spent analyzing the pros and cons of a decision? How much that of energy should be spent ‘making’ the decision the right one? For some decisions, it can genuinely be worth spending a prolonged amount of time deliberating, but often, it may be worth it to ‘simply’ make a decision and keep moving.
