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#9: Weighted Average Decision Matrix

4 min read

Ever have a big decision? For some days you favor option A and the next days option C and the other day option B. To make your decision easier, the Weighted Average Decision Matrix (WADM) exists. I first encountered it in the book The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime!

For using WADM, you need at least two choices. Let’s say you live in Los Angeles and you are considering moving to Tokyo. Follow now these steps:

  1. Get pen and paper and make three columns, one is called Factors, and the others for each option Los Angeles and Tokyo
Factors | Los Angeles | Tokyo
  1. Which factors are important for your decision? These factors could be the weather, cost of living, being near family, safety, transportation, taxes, … . Write down all relevant factors for your decision.
Factors Los Angeles | Tokyo
Weather
Cost of living
Near Family
Safety
Taxes
  1. Weigh the importance for each decision factor from 1 to 10, with 10 being the most important one. In our example family could be really important for you, so you give it a 10 and you don’t care about the weather so you give it a 1.
Factors Los Angeles | Tokyo
Weather (1)
Cost of living (7)
Near Family (10)
Safety (1)
Taxes (5)
  1. Now grade each option 1 through 10 for each decision factor. The weather in Los Angeles might be a 7 in your opinion and the weather in Tokyo slightly worse, so you give it a 6. You are a family person, so Los Angeles gets a 10 and Tokyo a 3. Continue this for each decision factor.
Factors Los Angeles | Tokyo
Weather (1) 7 6
Cost of living (7) 4 3
Near Family (10) 10 3
Safety (1) 6 9
Taxes (5) 5 6
  1. Multiply now the weight times the grade and put that number next to the grade in parentheses. For example: Family in LA (10 x 10 = 100) and for Tokyo (10 x 3 = 30)
Factors Los Angeles | Tokyo
Weather (1) 7 [7] 6 [7]
Cost of living (7) 4 [28] 3 [21]
Near Family (10) 10 [100] 3 [30]
Safety (1) 6 [6] 9 [9]
Taxes (5) 5 [25] 6 [30]
  1. Sum up the graded weight columns. The highest number will be the choice of your favor.
Factors Los Angeles | Tokyo
Weather (1) 7 [7] 6 [7]
Cost of living (7) 4 [28] 3 [21]
Near Family (10) 10 [100] 3 [30]
Safety (1) 6 [6] 9 [9]
Taxes (5) 5 [25] 6 [30]
[166] [97]

In this example you would stay in Los Angeles because it received a score of 166 over 97.