Hi everyone,
At Gro, UK’s Profit First Accountants, we are dedicated to helping you streamline your business finances and make better financial decisions. Today, I want to introduce you to a powerful tool that can transform how you think about expenditures in your business: the 10-10-10 method.
You can watch my video walking through the tool below or skip through to the summary. Either way I recommend you download it and try it for yourself.
Understanding the 10-10-10 Method
The 10-10-10 method is a simple yet effective decision-making framework that encourages you to consider the consequences of your decisions in three distinct time frames: 10 minutes, 10 months, and 10 years. This approach helps you move beyond the immediate emotional impact of a decision and consider its long-term implications.
Why Managing Expenses is Crucial
Staying on top of your expenses is a good habit for any business owner. Unmonitored expenses can quickly get out of hand, leading to financial strain. The 10-10-10 method helps you maintain control and make informed decisions by providing a clear perspective on both short-term and long-term effects.
The Dopamine Hit and Its Effects
When we make a purchase, we often experience a dopamine hit—a surge of excitement. However, this excitement can fade over time, sometimes leading to buyer’s remorse. The 10-10-10 method helps you understand these psychological effects and make more rational decisions.
Using the 10-10-10 Method to Evaluate Decisions
Here’s how you can apply the 10-10-10 method to your financial decisions:
- Immediate Impact (10 Minutes): Consider how you will feel about a purchase in the next 10 minutes. Will you feel excited or anxious? This step helps you acknowledge the immediate emotional response.
- Short-Term Impact (10 Months): Reflect on your feelings 10 months down the line. Will the purchase still hold value for you, or will it become just another item? This step helps you assess the medium-term consequences.
- Long-Term Impact (10 Years): Think about the impact in 10 years. Will this decision matter in the long run? Will the item or decision still be significant, or will it have faded into the background of your life?
A Practical Example
Let’s say you’re considering buying a new laptop. Here’s how the 10-10-10 method can guide you:
- 10 Minutes: You might feel excited about the new purchase, especially if it’s a high-end model like the latest MacBook. The thrill of new technology can be quite exhilarating.
- 10 Months: By this time, the excitement will likely have worn off, and the laptop will just be another tool you use daily. You might not even think about the purchase much anymore.
- 10 Years: In a decade, the laptop will probably be obsolete or replaced. The decision you made to purchase it will likely have little to no impact on your life.
Conclusion
By using the 10-10-10 method, you can gain valuable insights into the potential consequences of your financial decisions, helping you make more informed and rational choices.
This powerful tool, part of the Profit First ecosystem, was developed by Suzy Welch. Implementing it in your decision-making process can lead to better financial health and more thoughtful spending habits.
I hope this helps! If you have any questions or need further assistance, feel free to reach out.
Feel free to share this tool and integrate it into your financial decision-making processes. If you have any questions or need further guidance, don’t hesitate to contact us at Gro Profit First Accountants (Formerly Cheltenham Tax Accountants).
Access the 10-10-10 Tool Here: Access Tool
Credit: The 10-10-10 method was developed by Suzy Welch, a member of the Profit First community.