The 10/10/10 test is this. Ask yourself how you will feel about your decision:
10 minutes from now.
10 months from now.
10 years from now.
Funnily, my friend first told me about this type of thinking framework when I was going through my first breakup! It’s really magical for thinking about our decisions, dilemmas, and current circumstances. It applies to all areas of life!
But I think it’s also been hugely helpful for making big and small financial decisions in the here and now. Not only does it solidify our subtle beliefs into words we vaguely think but don’t say out loud, it also reframes everything into a long term perspective, which is great when it comes to our finances!
I’ve wanted a car really badly for a year or so now. But having just exited my fruitful period of unemployment, I’m rebuilding my net worth and making up for lost time. I’m trying to set the foundation for my 401k, IRA, brokerage accounts, emergency savings, and pay my parents back for the program I attended before I buy a used car in full. I could afford a cheaper, older car with more mileage today, but I know:
10 minutes from now: I’m gonna feel elated!
10 months from now: I’m likely to feel annoyed/regretful from biting the bullet on a high mileage car that might have other issues I’ve had to sink my money into already…
10 years from now: I probably won’t even have this car anymore because I already doubt today it will last me beyond 5 years.
Evaluating just these 3 timeframes launches my thought process into how Present Me and Future Me will feel. These same assessments can be made when shopping, deciding how much to save, eating out, prioritizing paying down debt, taking an expensive trip…etc
Give it a try next time!
Do you have any questions you always ask yourself before a financial decision?
Do you have any cool financial psychology hacks?