Boundary rules for better decisions - Deepstash

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Simple Rules: How to Thrive in a Complex World

Boundary rules for better decisions

They guide the choice of what to do (and not do) without requiring a lot of time, analysis, or information. 

They work well for categorical choices, like a judge’s yes-or-no decision on a defendant’s bail, and decisions requiring many potential opportunities to be screened quickly. 

These rules also come in handy when time, convenience, and cost matter.

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IDEA EXTRACTED FROM:

Simple Rules: How to Thrive in a Complex World

Simple Rules: How to Thrive in a Complex World

https://fs.blog/2015/07/simple-rules/#

fs.blog

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Key Ideas

Simple rules

They are shortcut strategies that save time and effort by focusing our attention and simplifying the way we process information. The rules aren’t universal- they’re tailored to the particular situation and the person using them.

We use simple rules to guide decision making every day.

Prioritizing rules for better decisions

They rank options to help decide which of multiple paths to pursue.

They are especially powerful when applied to bottleneck activities - pinch-points in companies, where the number of opportunities swamps available resources, and prioritizing rules can ensure that these resources are deployed where they can have the greatest impact.

Stopping rules for better decisions

They help you learn when to reverse a decision.

Stopping rules are particularly critical in situations when people tend to double down on a losing hand.

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Make all important & difficult decisions on paper

It relieves pressure from the situation and allows your mind to focus on the task at hand, rather than spiraling into self-doubt and second-guessing.

When making decisions, get clear about your reasons

You’ve got to get absolutely crystal clear about your outcome and your purpose. If you forget the reasons behind your decision, you won’t follow through. 

Don't let fear motivate your decision making

And don’t wait for absolute certainty because you’ll almost never get it. One of the ways to overcome this is to have a consistent process for making decisions. 

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Try making a budget
  • Create a full inventory of expenses in front of you: Categorize them into fixed and variable; urgent and non-urgent; necessities and luxury; avoidable and unavoidable.
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 ...is the process which provides you a framework for achieving your life goals in a systematic and planned way by avoiding shocks and surprises.

Maintain a personal balance sheet

It’s a statement wherein you can jot down your assets and liabilities.

  • Pull together your bank statements and other proofs of the liabilities
  • List down your assets like the bank balance, all investments, home value, and value of other assets.
  • Take a sum of all the assets to arrive at the total value of your assets.
  • List down your liabilities the (car loan, home loan, credit card balances etc.)
  • The sum of all the liabilities will show the value of the money you owe.
  • When you subtract the value of liabilities from assets, you get your Net Worth.

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