Business Thoughts: 7 Ways to Improve How You Make Decisions in Life
Your life is the result of your decisions.
Most of us should learn how to make better decisions.
If that’s the case then wouldn’t it make sense to improve your ability to make better choices in life? It’s surprising that most people don’t even think about how they make decisions.
And things can become worse because people will avoid making a choice because they’re scared of making a mistake.
I’m here to make you aware that you can become better at making decisions. It’s a skill just like everything else in life.
Lets talk about how you can make better decisions everyday.
1. The Human Brain is Bugged (Fix it by Understanding Cognitive Biases)
The human brain is flawed. You’re going to have such an edge in life if you can understand some of the ways your brain sucks. One way is to study and understand cognitive biases.
A cognitive bias is a type of error in thinking that occurs when people are processing and interpreting information in the world around them. Cognitive biases are our brains way of simplifying information processing – they are shortcuts that help us make quicker decisions. Unfortunately, these biases sometimes can lead to bad judgments.
Confirmation Bias – We seek out information that agrees with our pre-existing beliefs.
Example 1: Rachel is anti-marijuana. She might ignore any articles about the pros of marijuana and only focus on information that supports her viewpoints.
This is why it’s great to have a diverse set of friends and network – you can avoid “groupthink.”
Survivorship Bias – Overweighing the people or things who “made it”.
Example: It’s like me trying to become an actor in Hollywood. I might be optimistic and point out Ken Jeong and John Cho did it! (while ignoring the thousands of Asian male actors who tried and couldn’t make it). You have to look at the odds in total rather than look at a select few.
Sunk Cost Fallacy – A sunk cost is a cost that you’ve already paid, and can’t recover. A bias occurs where we let the sunk cost, affect the best decision for now.
- Example 1: 3 months ago John bought a cheap ticket to Brazil for $500 (Non-refundable or changeable). Now the Brazil trip is coming up, but he has a huge project due. John feels he has to go or else he’d “waste” the $500 on the ticket. The $500 is gone! It’s in the past. What’s the best decision now? He needs to do the project.
- Example 2: I’m 1/3 through reading the book and it sucks. I should quit this book, BUT I might keep reading because I paid $10 for the book and already spent a few hours reading. You can’t recover the $10 or the few hours, so quit reading.
Availability Heuristic – We tend to overvalue information that we easily remember.
2. You Need to Sleep on It
I’m not a patient guy, and I like to rush into my decisions. The decision process can be mentally draining, and you might make a quick choice so you can move on.
Don’t do that! You don’t make the best decisions when you’re impulsive. Giving yourself some distance will stop emotions from clouding your judgment.
Think about a time when you were angry at someone. Your mind’s probably racing on what to do, or ways to get revenge. What happens when you go to sleep and wake up the next day? You probably get back to normal and move on.
The more important the decision, the more time you should spend on it. You learn how to make better decisions by focusing on them in your best mindset.
3. Create a Council of Trust
You gotta realize that you don’t have to do everything by yourself. Someone else has gone through the exact same issues you’re facing right now. Wouldn’t it be easier to see what they would do, instead of going through the pain points yourself?
I wouldn’t be where I am today if it wasn’t for my masterminds or my network. Whenever I have a problem, one of the first things I do is call people up asking for advice.
Here’s what I look for in a council of trust
1. They know their shit. You wouldn’t take fitness advice from a fat guy. You wouldn’t take financial advice from someone who’s broke.
2. I can trust them. If I’m talking about a sensitive topic, I don’t want it leaked.
3. They’ll challenge me and give it to me straight. I’m not looking to get my feelings comfort. I want my problems solved. If I’m the one messing up in the situation, I need them to have the balls to call me out on it.
4. They have your best interest at heart. This is important. You don’t want to take advice from someone who has ulterior motives. Remember what happened in the movies “Inception” or “Slumdog Millionaire?” The main characters received advice that was harmful.
I want to challenge you all to start building better and better networks. I didn’t wake up one day and have a network built for me.
Networking and socializing should be an everyday event.
4. What Would X Do?
Everyone wore a “What Would Jesus Do” bracelet back in the 90’s. It was a way for Christians to remind themselves to choose the most morale path. If you’re facing temptation, what would Jesus do?
We can apply the same concept for decision making.
Think about someone who you respect, and ask yourself, what would they do in this situation?
The other week I didn’t feel like going to the gym because it was raining. I tried to rationalize myself as, argh I had a good workout this week…I can skip a day. “What would Arnold or Bruce Lee do?”
I called an Uber and was at the gym within 10 minutes.
Investing decision? What would Warren Buffet do?
Affiliate marketing problem? What would Ngo do?
If you want to be like someone then it makes sense to do more of their behaviors.
5. What’s the Long-Term Impact?
The brain is biased towards now, then the future. It’s why guys will drop thousands of dollars on bottle service for a weekend, but have no retirement savings. It’s why we’ll spend hours each day on social media, but don’t have time for the gym.
There are multiple consequences for each decision you make. Some are immediate, others won’t be seen for years to come.
We’re going to use Exercise as an example.
What happens in the short term? You spend an hour in the gym, and you up exhausted. You might be sore the next day.
What happens in the long term? You have better health. You can live longer. You’re happier.
One of my friends had a relationship problem last year. He wasn’t happy in the relationship, but he couldn’t break up. He didn’t want to hurt her.
He did break up with her. You know what happened? He moved on and is happy. She moved on and is happier.
I did an exercise once where I asked people what’s the first word that came to their mind when thinking of me. The #1 answer was discipline (the #2 was sexy beast in case you’re wondering)
A large part of my discipline comes from me focusing on the long term rewards, and pretty much ignoring my short term needs.
6. Go With Your Gut
Ahhh to go with your gut or not to go with your gut. Here’s what I’ve realized.
The older I get, the better my instincts are. Going with my gut in my college years lead to some dumbass decisions. But in the past year or two, going with my gut has been right in hindsight.
This is because I have more experience and wisdom. Your instincts are a 6th sense and can feel things your mind can’t. Don’t just go with your gut, but do weigh it as part of your process.
7. Do a Risk Vs. Reward Analysis
Everyone hates taking risks.
One of the hardest decisions of my life was to quit my job to become a full-time affiliate marketer.
What’s the risk? I could fail, be embarrassed, and have to find another job.
What’s the reward? I could become a millionaire, travel the world, and be happy.
Now I gotta assign the probability of each one happening. Me failing? 10%. Me winning? 90%. (I always believe in myself).
Could I fail? Absolutely. But I’m ok with failing – I’d hate myself if I became an old man filled with regrets.
There are no guarantees in life and that’s what makes it fun.
You’ll never get it 100% right. Even the smartest or richest guys in the world make bad decisions all the time.
Accept that you’re going to make mistakes, and that sometimes making no decision is worse than making a bad one!
One more tip I have is to be firm. Once you make a decision…don’t go back and forth on it. Take action and don’t pivot from your decision unless there’s new data.
What we’re aiming for is to improve the probability of you making good decisions. Understand yourself and develop better processes.
Which one is your favorite tip in this article?