Cost Impact Analysis

Kennon-Green & Co. Fiduciary Financial Advisor, Wealth Management, Global Value Investing

There are a lot of things you can take from corporate America and apply to your personal life.  One of my favorites is a cost/impact analysis.  If you are having difficult sorting all of the work and projects you need to finish, one way to make the decision easier is to draw a box and divide it into four quadrants.

Cost Impact Analysis

You begin by doing the items that are in the upper left quadrant – the high impact/low cost.  In this case, “cost” can be financial, it can be a time commitment, it can be emotional … basically, anything that will require a toll to be paid from you to achieve.  An example of a high impact, low cost item would be a published author signing a lucrative contract to release all of his or her content onto Amazon’s Kindle and Apple iBooks so that additional revenue flows into the bank account with no additional work or expense.

[mainbodyad]Where you go from there is a matter of personal choice.  Personally, I try to live my life so as to avoid all low impact / low cost projects.  Of course, you still have to do tasks that are “administrative” that prevent wipeout risk, such as filing the proper business paperwork with the government, or maintaining insurance coverage.

You do not have to do things sequentially, you can do them concurrently.  That is, you can be doing “high impact/low cost” projects as you study for a Ph.D in aerospace engineering (a high impact / high cost project) in order to accelerate your career at a firm such as Boeing.