Good Enough is Optimal
Chasing the "best" financial decision is often worse than choosing one that's good enough. Here's the Nobel Prize-winning research that proves it.
What if the most financially sophisticated thing you could do is stop trying to optimize everything?
Not because you’re settling or giving up, but because chasing “best” is often worse than landing on “good enough.” This isn’t laziness dressed up in fancy language. It’s a Nobel Prize-winning insight that could change how you relate to every money decision you make.
The Satisficing Revolution
In the 1950s, economist Herbert Simon noticed something strange about classical economics. The prevailing theory assumed that rational people always maximize, always seek the best possible outcome. But actual humans don’t work that way, because we don’t have unlimited time, information, or mental energy to pour into every choice.
So Simon proposed “satisficing,” a combination of satisfy and suffice.
Instead of endlessly searching for the best option, satisficers define what “good enough” means, search until they find something that meets that threshold, and then stop. Simon argued this wasn’t irrational. It was smarter, because the cost of endlessly searching for “best” usually exceeds whatever benefit you’d get from finding it.
He won the Nobel Prize for this work, and decades later, the research continues to prove him right.
When Good Enough Beats Best
Decision quality improves with effort, but only up to a point. After that, more research and more optimization don’t meaningfully improve outcomes. It just delays action and increases anxiety.
Think about choosing a retirement fund. The difference between the “perfect” low-cost index fund and a merely “good” one might be a few basis points over decades, a difference dwarfed by normal market fluctuation in a single afternoon.
But the difference between starting now with a good fund versus starting two years later with the perfect fund? That gap could mean tens of thousands of dollars in lost growth. The math almost always favors action over optimization.
The Perfectionism Tax
Financial perfectionism has real costs, and most of them are invisible.
There’s the opportunity cost, where every hour spent optimizing is an hour not spent on something that might matter more.
There’s the decision fatigue cost, because optimization burns through cognitive resources you need for harder decisions later.
There’s the stress cost, where maximizers report more anxiety and less satisfaction with their choices, even when those choices are objectively better.
And there’s the delay cost, which is the biggest of all: the best decision made too late is worse than a good decision made on time.
Perfectionism is procrastination with better marketing.
Permission Slips
Where is “good enough” genuinely good enough? More places than you’d think.
Your savings account: Any high-yield account at a reputable bank will serve you well, and the difference between 4.3% and 4.5% on $10,000 works out to about $20 per year.
Your index funds: a broad-market fund with low fees is a broad-market fund with low fees, whether it’s at Vanguard, Fidelity, or Schwab.
Your budget categories: rough percentages work, and ballpark accuracy gets you 90% of the benefit.
Your insurance deductibles: pick something manageable if you had to pay it tomorrow, and move on.
The common thread is that these decisions matter. Still, the difference between “good” and “best” is almost always smaller than the cost of figuring out which is which.
Don’t forget, these decisions are not set in stone. You can come back to them whenever you recognize they aren’t working out.
The Exception
Are there times when optimization pays off? Yes, but only a few. Mortgage rates deserve attention because small differences compound over decades. Salary negotiation is worth the effort since gains ripple through your career. Major one-time decisions involving large sums warrant extra research.
But most financial decisions aren’t mortgages. They’re subscriptions, savings accounts, and Tuesday afternoon purchases. For those, good enough isn’t just acceptable; it’s the standard. It’s optimal.
One Thing to Try This Week
Pick one financial decision you’ve been postponing because you haven’t found the best option yet.
Ask yourself what “good enough” would actually look like here. Define it clearly, identify an option that meets your criteria, and choose it intentionally and without apology.
Notice how it feels to be done, to have that decision behind you instead of hovering over you. That’s what freedom from the optimization trap feels like, and it’s available anytime you’re ready to claim it.
Next up, the final post in this series: how to stop making decisions entirely by building systems that decide for you.
This content is for educational purposes only and should not be construed as financial or therapeutic advice. Consider speaking with qualified professionals for personalized guidance.