Welcome to this page about how to improve your decision-making. We all want to make the best decision. But that doesn’t always happen.
Sometimes, we make bad decisions. And ironically, those decisions never seem to be bad at the moment. As veteran investor Charlie Munger says:
“Smart people do dumb things.”
You can never avoid making a mistake. However, you can do your best to avoid making dumb decisions. In this guide, I provide my best articles on decision-making.
On This Page
- How to make better decisions
- How to be more decisive
- Best books on decision-making
- Read all articles on better decision-making
How to make better decisions
Smart people are way too preoccupied with doing the right things. They want to have a perfect life, career, house, business, car, holiday, etc. When you put too much pressure on yourself to make the right decisions, you get analysis paralysis. The solution? Do these two things:
- Avoid overthinking — When you overanalyze every single decision, you become paralyzed. Result? Nothing. Also, overthinking leads to mental fatigue. And when you’re brain is tired, it tends to make poorer decisions.
- Make small decisions. And decide often — When I had trouble with my newsletter provider years ago, I didn’t change to a different one immediately. That’s because I had a smaller list. Then my list grew and the problem of changing providers became even harder. So don’t put off decisions.
Remember that not making a decision is also a decision. If that’s a conscious move, to have more time to think, that’s okay. But don’t fall into the trap of putting off decisions for too long that the stakes get higher.
Focus on the process, not the outcome
When we make decisions, we often ask, “What will happen if we make this decision?” But that’s not necessarily the best method. Because it focuses too much on the outcome. And outcomes aren’t fully in our control. Peter Bevelin, the author of Seeking Wisdom, puts it well:
“Good decisions can lead to bad outcomes and vice versa.”
You can’t predict the future. Sometimes even bad decisions can lead to good outcomes. So instead, try using mental models to improve your decision-making process. If you can trust that your process leads to your goals, then you won’t have to worry about things you can’t control.
Ask yourself these 6 questions
I found a list of six thought-provoking questions in Annie Duke’s book, Thinking In Bets. Notice what the theme is.
- Why might my belief not be true?
- What other evidence might be out there bearing on my belief?
- Are there similar areas I can look toward to gauge whether similar beliefs to mine are true?
- What sources of information could I have missed or minimized on the way to reaching my belief?
- What are the reasons someone else could have a different belief, what’s their support, and why might they be right instead of me?
- What other perspectives are there as to why things turned out the way they did?
The reason I like these questions from Annie Duke is that they force you to think about what you can’t know. In my experience, that’s what drastically improves your decisions.
Apply the 20/80 rule of effective thinking
Decision-making involves a lot of thinking. But purely thinking and not doing won’t lead anywhere. So it’s important to have a balance.
I live by a 20/80 ratio. 20% thinking, 80% doing. Not everyone has to use this ratio. It all depends on what you do, and who you are. For example, Warren Buffet is famous for spending around 5 hours each day, reading. That’s his “thinking time.” And the rest of the day, he executes.
Some people love to read and talk about ideas. Others prefer to get right down into action. The important thing is to have a balance of thinking and doing that suits your personality and goals.
How to be more decisive
How decisive are you? If you’re like most of us when faced with a decision, you soak in your anxiety, weigh the outcomes, push the whole thing away, get confused, come back to it, and just pull the trigger at the very last moment.
Indecision is something almost everyone can relate to. I remember the first day of high school as if it was yesterday. My teacher playfully told us that “your life is the result of the choices you make.” At the time, it didn’t resonate with my fellow students and me at all.
One part of decision-making is to get comfortable with your decisions. By forcing yourself to focus on the process, you can let go of outcomes. That alone will make you more decisive.
Best books on decision-making
Seeking Wisdom by Peter Bevelin — This is probably the best summary I’ve read on practical and scientific thinking. Bevelin is an excellent writer and he captures the wisdom from Charlie Munger in a perfect way. Just like the title of Bevelin’s book, to me, life is about seeking wisdom. It’s the only pursuit that we can perform as long as our brain works. You can get physically impaired, lose your money, friends, and status, but you can never lose your thirst for knowledge.
Incerto by Nassim Nicholas Taleb — Technically, this is a series that consists of five books. In this book, he writes about how most decision-makers have nothing to lose when things go wrong. Having skin in the game will change everything. After all, it’s easy to make a decision or give advice when you have nothing to lose.
The Most Important Thing by Howard Marks — This is actually a book on investing. But you can apply Marks’ investing strategy to any type of decision. His investment strategy is largely based on the fact that humans are emotional beings. If we all made rational and unemotional decisions, we would always have a perfect economy. We’re emotional and it’s not in our nature to make rational decisions.
Thinking In Bets by Annie Duke — A good introduction to decision-making processes. Duke is a former poker champion who has a practical view on making decisions. In this book, she shares examples, science, and methods for improving your decision-making.
Read all articles on better decision-making
Over the years, I’ve tried and tested various ways to improve my decision-making. Here are all the articles I’ve written about making better decisions!
- How to Prioritize Long-Term Thinking
- Why Short-Term Solitude Makes You a Better Thinker
- Opportunity Cost: Master Your Options—Master Your Career
- These Six Questions Will Improve Your Decisions
- Six Spokes Theory: Strategy For An Optimal Life
- Why ‘Science-Backed-Advice’ Is Not Always Better
- The Munger Technique: The Best Way to Improve Yourself
- Don’t Change Your Tool—Change Your Purpose
- The Law Of Momentum: How To Become Unstoppable
- The Science Of Developing Self-Control In Life
- It’s Okay To Change Your Mind
- On The Cyclical Nature Of Life
- How To Be More Decisive In 3 Steps
- How To Deal With Contradicting Advice and Theories
- Life Is A Series Of Games: Only Play To Win
- How To Keep Going If You Don’t Know What’s Next
- You Can Achieve Anything If You Focus On ONE Thing
- The 20/80 Rule Of Effective Thinking
- 5 Common Mistakes Smart People Make
- How To Create A Career
- Always Protect The Downside
- Mental Models and Making Decisions You Don’t Regret
- How I’m Getting Richer Every Day
- Price’s Law: What It Is And Why You Should Care
- Want To Make Better Decisions? Do This