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Making Better Decisions Using the 10/10/10 Rule


December 15, 2020 / by Ben Cohen, FSA, MAAA

Making good decisions is not something that comes naturally, it's something we learn. First, we learn from simple experiences, then we learn from mistakes. Over time, we learn long-term thinking and start learning from the outcome of plans. Anyone with a goal to make better decisions need only start practicing new decision-making techniques to continue learning and improving. Once you start to practice careful forethought and prioritizing, better decision-making will come more naturally with everything you do.

One of the best methods to learn is the 10/10/10 rule - a way of comparing your decisions to their potential outcome in the near, middle, and distant future.

What is the 10/10/10 Rule?

The idea behind 10/10/10 is to compare your decision to how you will feel about it in the future - whether you decide for or against. Ask yourself how you will feel:

  • 10 minutes in the future
  • 10 months in the future
  • 10 years in the future

Your answer to each question can help to clarify the decision and what you can gain from it. You can more easily determine the importance of the decision, how much of your time it is worth, and even help you gain perspective on what you'd rather be deciding for your long-term goals.

When to Apply the 10/10/10 Rule

Almost every decision can be run through the 10/10/10 process, from breakfast choices to financial investments. The goal of the rule is to put the decision in perspective and help define the direction that decision should take you.

The best way to understand the 10/10/10 rule is to see it in action. Let's take another common example - buying a car - to show the thought process of the 10/10/10 rule.

10 Minutes, Months, and Years: Applied

10 Minutes in the Future

For each decision, start by considering how much you will care ten minutes in the future. Many decisions won't matter at all in ten minutes, but will matter more in ten months or years. However, those decisions that do matter in the finite span of ten minutes tend to fall into the categories of trivial or vitally important. Decisions that matter most within ten minutes are also usually best made quickly.

In terms of buying a car, you may not be in the car within 10 minutes of making your choice. Or you might be physically enjoying the new-car smell and the feel of the driver's seat.

10 Months in the Future

Next, consider your decision and how it will affect your life in ten months. Many decisions will have phased out of importance in that span of time. You, like most, probably can't remember what you ate ten months ago, what movies you watched, or even purchases you made. However, whether you paid the bills or acquired something significant can have changed your life in 10 months.

Buying a car has a big impact on your life within ten months. It could be the difference between carpooling or taking the bus vs driving yourself to work. Buying a car could upgrade your quality of life and mobility, but it also increases your costs and required spending. This is another side of the 10/10/10 reflection method.

10 Years in the Future

Lastly, consider how big a difference the decision will make in ten years. Small decisions and even medium ones fade into the background - but big decisions remain. Investments, habits, and life-changing impacts will have made their mark. Ten years after buying a car, your life will have been shaped by the decision. You may have moved away from home with that mobility, or gotten a better job, or overspent and caused a different chain of events. The choice in cars you buy and the decisions you make after that point can determine your life direction. Alternately, choices narrowed down to a red Camry vs a blue Carolla may make very little difference at all in ten years.

10/10/10 in Actuarial Business Decisions

In actuarial consulting, the 10/10/10 rule is an important method for making decisions both for the business and for your clients.

There is an interesting dichotomy between short and long term views in actuarial work. In some cases we prepare financial projections that evaluate cash flows as long as 50+ years into the future. However, the impact could be only applicable to the current year’s annual statement. In those cases, 10 months is about the max impact period, given that results are reevaluated for every financial statement.

Alternatively, if we are developing a new product, the impact appears to be more short term, but in reality is often long term as well. Companies are eager to roll out to market and start the sales process. But, in 10 years, there will be lasting impacts with respect to underwriting, claims adjudication, policyholder service, and the overall financial performance.

Using the 10/10/10 method allows an actuary to be sure the entire range of outcomes is considered. If you’re looking for an outside adviser to help you better understand how different decisions will affect your business, reach out to our team of actuarial experts and let us know how we can help you make those key decisions.


Topics: Insights

Ben Cohen, FSA, MAAA

Written by Ben Cohen, FSA, MAAA

Ben serves as Wakely Actuarial’s President & Consulting Actuary. He joined Wakely in 2002 and enjoys the variety in the day-to-day of his current role.

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