My friend works with billionaires. He says their net worth can usually be traced down to a few decisions they made over their lifetime. It’s never about hard work and long hours. It’s about making good strategic decisions.

Intrigued by my friend’s conclusion, my husband and I discussed our own net worth. Even though we are multitudes away from being considered billionaires, our net worth follows the same rule:

Hard work will dictate your monthly income.

The right decisions made at the right time will dictate your net worth.

In our case, all of our net worth can be attributed to 5 decisions we’ve made. Five! I’m not kidding. And only one of them was slightly connected to a full-time job.

If you want to improve the quality of your life, improving your decision-making process is key.

If improving your life is not motivating, how about dropping the unnecessary suffering?

A lot of unnecessary suffering is caused by poor decisions.

I’ve developed this framework that helps me make decisions from how to approach my family meal planning, making big financial purchases to immigrating to another country.

The best place to start is to practice making good daily decisions. Once we become good at those, we can be more strategic about bigger long-term decisions.

This post was largely inspired by a question I got during my office hours within the Monthly Method School. A student was navigating making a difficult decision and asked for my advice on how to make good decisions she won’t regret later on.

The step-by-step decision-making guide

Do you even need to make this decision?

Oftentimes, our confusion and indecisiveness are caused by a lack of clarity on the purpose of our actions.

As I mentioned before, we recently bought a house in a new subdivision. The houses here are built with unfinished basements. When I talk to my neighbors, they always ask when (not if) we are going to finish our basement.

Being peer-pressured, we could’ve embarked on the journey of finishing our basement. But then every single decision would’ve been incredibly painful.

Why?

Because we don’t have a good why for finishing the basement. It’s just the two of us for now, we have more than enough space without the finished basement. How are we going it to use? What is it for?

As a result, making decisions on how many rooms to build, what floors to install, what colours to paint the walls – all of these decisions would’ve been hard to make. Every trip to Home Depot would’ve ended up in some sort of emotional meltdown.

Ask yourself – do you even need to make this decision? Or were you peer-pressured into thinking that you need to make this decision?

What is it for? Determine the core selection criterion.

Why do you need this thing/result? What is it for? What fundamental purpose is this fulfilling?

Having the ultimate end-goal for making this decision will help you determine your core selection criterion.

Sometimes it’s the price.
Sometimes it’s the aesthetics.
Sometimes it’s the comfort.
Sometimes it’s the ease of use.
Sometimes it’s a status symbol.

It depends on why you are buying this item in the first place. Or why you are going after this result.

You can’t chase all of them. Pick one core criterion for your decision-making. It will make it easier to eliminate most of the options right off the bat.

Set a deadline for making a decision

There is no better feeling than finally making a decision. A load off your shoulders.

Why prolong the agony of indecisiveness?

I often set Friday as a deadline for making final decisions. I don’t want my weekends to be affected by the analysis paralysis. I want to enter my weekends with an unburdened mind.

Don’t give yourself too much time. There is not much additional benefit in having extra time.

Facts vs. Fiction

Grab a piece of paper and divide it into two columns:

Facts
Fiction

What are the facts of the situation? The facts are something that can be proved with unbiased data. If you were asked to prove it in court, you would be able to prove it.

What is the fiction of the situation? This is the story that you tell yourself. This is highly subjective and “not provable in court”.

(Reminds you of the definition of done?)

Let’s say you are deciding whether you need to move to a new place or not.

Facts:

I can’t afford this place at my current income without drastically sacrificing my other financial goals.
It takes 1 hour to commute to work. I will benefit from living closer to work.

Fiction:

I’m such a failure for not being able to afford this place.
I should be making more money at this point in my life.
It is so hard to move.
I hate packing.

You get the idea. Focus on the facts and ignore the fiction when making decisions.

Fiction changes depending on the weather, your mood, and the news you watched this morning. The facts stay the same.

Plus, once you start practicing Agile framework on your goals, it’s much easier to deal with the negative fiction. The decision based on facts becomes just another sprint goal that needs to be moved to ‘done’. There is no drama. You just create a goal, a clear definition of done, and focus on moving it to done one day at a time.

Consider the cost per use

When making a purchasing decision, consider how often you will use it.

My personal spending philosophy:

Spend more money on items you use every day.

Spend less on items that you will use once or twice. Or better borrow/rent.

I’m ok to spend over $1000 on a Miele coffee machine that we use 5-7 times a day. But I’m yet to spend more than $100 on a dress that I will wear to someone’s wedding once. Most of the time I try to find something nice at a thrift store for about $20-30 and still end up getting compliments on my dress.

Are you making this choice out of fear or love?

A long time ago Mark Manson recommended using The Law of Fuck Yes or No in dating. But you can apply it to any decision you make. If it’s not a “Fuck Yes!”, it’s probably a no.

Are you making this decision out of fear or love?

Most of the time when we buy items on sale, it’s driven out of fear. The fear of missing a sale. The fear that a good deal will end. The fear that we’ll never be able to have this item if we don’t act on it now.

Have you noticed that the only time we are truly happy about an item we bought on sale is if we wanted to buy this item before we saw the sale? In this case, the purchasing decision is made out of love. You loved this item before it went on sale.

The fastest way to regret a decision is to make it out of fear.

The most important decision is the decision after a decision

Here is the truth. You can make a perfectly good decision and then decide to question your decision for the rest of your life.

Did we buy the right house?
Did I marry the right person?
Did I say the right thing?
Have I done enough editing on my blog post?

The most important decision is the decision after the decision.

You need to have your own back and decide that you’ve made the right decision given the information available to you at the moment. And move on!

Your marriage begins not when you give the wedding vows. You marriage begins the next day when you wake up and decide that you’ve made the right decision.

Maximize the half-life of your decision

The older I get, the more decisions I need to make on a daily basis. Unavoidably it leads to decision fatigue.

I’ve learned about half-life in a bio-chem class during my grad school:

Half-life (symbol $t ½$ ) is the time required for a quantity (of substance) to reduce to half of its initial value.

Source: Wikipedia

I think it’s a cool concept to apply to decision-making.

The best way to simplify your life is to prolong the effect of your decisions. Maximize the legth of time before you need to make this decision again.

The half-life of the decision to clean the bathroom yourself is short. Next week you need to make this decision again. The half-life of the decision to hire a house cleaner is long. You make this decision once and don’t have to make it for a long time after.
The half-life of the decision on what to eat for your next meal is short. Creating a meal plan for a month is long. Hiring a meal-prep service extends the half-life of this decision even further.
The half-life of the decision to buy an investment property is longer than bi-weekly decisions on which bitcoin to invest in 10% of your paycheque.
Having a committed relationship with a person is a decision with a long half-life. Choosing a one-night stand is a decision with a short half-life.

In my experience, a good strategic decision always has a long half-life.

Second-order consequences

Now we are getting into a more complex strategic thinking territory.

Most of the problems people encounter in their lives can be traced back to decisions that did not account for second-order consequences.

Let’s start with something easy.

Subscribing to Netflix gives you something fun to watch in the evenings. This is the first-degree consequence. However, it also imposes the risk of you choosing to watch Netflix over other meaningful but more difficult activities in the evening (e.g., going for a walk, cooking dinner, spending valuable time with loved ones).

Buying new pots for your household plants gives you an immediate dopamine hit (first-order consequence). But it also adds 3 hours of additional work to your to-do list. Now you need to replant all the plants, clean up, and do something with the old pots (second-order consequence). That’s why I am not a big fan of seasonal decorations because they carry an enormous second-order cost. You need to put them up, put them down, clean them, store them, etc.

Does this decision lead to more to-dos for me? This is an ultimate purchasing turn-off. The best money-saving hack! Ask this every time you have an impulse to buy something.

Being cheap and hustling for a lower price saves you a little bit of money now (first-order consequence). But it also ruins your reputation and impacts the service you will receive from this business (second-order consequence).

Signing up for a new social media platform can be fun and you can even make a friend or two. However, it can also ruin your concentration by adding constant distraction (second-order consequence) which can be much more damaging in the long term.

Every decision has second-order consequences. Take those into account before you make your final decision.

Creating a decision-making framework is a great thought exercise that has an outstanding half-life (you see what I did here?). Why not take the time to create your own?

The best place to start is to look back at your most impactful decisions. What unites them?

If you need an easy step-by-step process for achieving your goals the agile way, I got you covered.

Plan and run your first sprint.

Clarity. Calm. Consistent action.

Want more?

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Agile teaches you to be kind to yourself.

Instead of bending yourself to fit some rigid productivity advice,
you bend the productivity advice to fit you.

– What worked?
– What didn’t?
– How can it be improved to better fit YOUR life?

— Polina Bee (@Agile_for_One) March 30, 2023

My 9-step decision-making process