Overthinking your money decisions? Here's how to change that

When it comes to your finances, there are a couple of ways to sabotage yourself. One is not putting enough thought into it. The other is putting too much thought into it.

Overthinking — becoming obsessed with minor details, twisting yourself into a pretzel, getting overwhelmed with choices and doing nothing — can be just as damaging to your financial future as the opposite.

"It's the paradox of choice: The more information we have, the less we can process it all, and the brain kind of short-circuits," says Melody Wilding, an executive coach and author of "Trust Yourself: Stop Overthinking and Channel Your Emotions for Success at Work."

Seven of 10 people ages 25-35 struggle with overthinking, according to a University of Michigan study.

Advisers see this all the time. Dana Anspach, an advisor in Scottsdale, Ariz., has one client, a Fortune 500 executive, who has too much money concentrated in company stock.

"He constantly overthinks what the share price may do," says Anspach. When forced to exercise options and sell, her client sits on the cash, "overcomplicating the decision of when and how to invest it." In the past seven years, so-called "analysis paralysis" has cost him nearly $500,000.

A Columbia Business School study found that the more investment choices people had in their 401(k) plans, the lower percentage of participation — even if there was the free money of a company match.

How can you overcome this tendency to overthink, and actually make a solid money decision — even if it's not perfect? A few pointers:

Go autopilot. If you have to actively decide to save something at the end of every month, that is 12 different times a year when that decision (or lack of decision) could go wrong. But if you schedule those paycheck deductions, you are removing your own worst tendencies from the equation.

"Don't decide. Automate," says Kerry Taylor, a Toronto-based money expert and founder of the site Squawkfox.com. "Reducing friction and the need to make financial decisions is the magic of behavioral economics. I'm so into it."

Set a deadline. The brain's natural tendency is to go around and around, ad infinitum. So counteract that by limiting yourself to a defined period to make a money decision.

"Limit the number of resources you will consult, rather than going down an endless rabbit hole," says Wilding. "Pick a date, put it in the calendar, and even commit to it publicly."

Consider opportunity costs. If you are obsessing over investing in the perfect stock at the perfect price, that is one decision. But the larger and more important decision, viewed over the long-term, is being in the market or not being in the market.

Good can be good enough. Sure, we would all love to make a brilliant investment decision, like buying Apple stock for a few bucks in the early 2000s. But even if your decisions are not perfect, you can still make good ones. It may not always be a home run, but singles and doubles will still get you around the bases.

"We tend to fall into trying to find the most perfect possible option, because we're so afraid of choosing wrong," says Wilding — one of whose clients made an elaborate spreadsheet comparing various kitchen blenders, and still couldn't pull the trigger. "But the cost of inaction can be huge. By not making a decision — that's a decision, too."