Money Matters
The secret to getting what you want
By Efren Ll. CruzPhilippine Daily Inquirer
Question: It usually takes me a while to decide what computer, cell phone, car or furniture to buy because of the myriad of choices available. And because there is always a new model coming out, I sometimes don’t know if I’ve made the right buying decision. Is there a right system for buying these things?—Confused Consumer
Answer: Have you ever tried parking in a mall car park on a Sunday afternoon? If so, you would have waited a long while for an open slot. And when a slot does open up, you would have sent your companion running toward it to stake your claim. There are no second thoughts, even if the slot is not the nearest to the mall entrance.
But have you also experienced parking in a mall car park on an early Sunday morning? Wow, you would have seen slots galore. In fact, it would have taken you some time to pick the “right” spot because there are so many options to choose from. Would it be the one nearest the entrance or the one with the most space around it so that the door of the car beside yours won’t hit your car? You might have even taken some time deciding whether to park in reverse or not.
Options have this effect on us. The more choices there are, the longer it takes to make a final decision. Worse, having many choices may lead to analysis paralysis.
In situations wherein you have three versus 10 options, you can also end up being less happy after making a decision in the situation with 10 options. Why? Because at the back of your mind, there could have been nine other ways that things could have turned out for you versus two others in the situation with just three options.
The secret to getting what you want lies in getting what you need. And if you get what you need, you will narrow down your choices and have fewer temptations to look back.
Let’s take the case of buying a computer because I am in need of one now. If I were to look at all that is available in the market, then I would be submerged in choices. Even if I were to limit the choices to portable computers, the choices would still be staggering.
Do I go with the one with processor speeds of over 3 GHz? What about screen size? While a 10-inch screen is more portable, a 15-inch one is easier to read. Do I go after one that has at least 500 gigabytes of hard disk storage or should I content myself with one that has much less?
Should I go for the tablet type so that it becomes ultra-portable but is more difficult to use for heavy computing or should I go for one that can do the heavy computing but also heavier to carry? Or maybe I should go for the hybrid, which can transform into a regular laptop from a tablet by means of a keyboard docking station.
I haven’t even begun talking about battery life, dedicated video cards for gaming, great sounding audio and operating systems that may or may not support an apps store. And since the portable PC is the product of fast-paced technology, the fastest one I choose today may well be the turtle just a few months down the road.
If you are like me who uses the laptop for not-so-heavy computing, training presentations, reading e-books and doing light work on weekends, perhaps the best choice is one with a medium processor speed that will allow for longer battery life, less than 300 gigabytes of hard disk space, and a 12- to 14-inch screen. Such a laptop would also be more affordable and necessarily within budget. There is no need for the frills such as a dedicated video card, great sounding audio and access to an apps store.
With specific parameters, I could just show the mall PC salesman my laundry list of specs and he will easily come up with a narrowed down list of choices. More importantly, I would be happy with my choice and be less tempted to wonder about how much happier I would have been if I had chosen a different laptop model.
People are faced every day with a myriad of choices, from kids entering a toy store after being given the free reign to choose their birthday gift to adults pondering on their next move after retiring. It can range from a choice of which ringtone to use, which career to follow, to which person to marry.
The study of choices as they relate to money falls under behavioral finance, an interesting and sometimes controversial topic. If you want to know a bit more about behavioral finance as well as effective personal cash, debt, risk and wealth management, attend the EnRich training scheduled on May 16, 2012. Visit www.personalfinance.ph, e-mail info@personalfinance.ph or call (632) 216-1541 for more details.
(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, seasoned investment adviser and best-selling author. Questions about the article may be sent by SMS to 0917-505-0709 or e-mailed to efren@personalfinance.ph. To learn more about the RFP program, visit www.rfp.ph or e-mail info@rfp.ph.)
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Tags: behavioral finance , making a choice , Personal finance
