How Much is an Answer Worth to You?
You find yourself at a crossroads.
- Option 1: Start a new social media marketing agency as a side hustle.
- Option 2: Enroll in an accelerated master’s program to bolster your credentials and get a raise at work.
- Option 3: Do nothing.
Now, these three options are just for the sake of this example. They could be anything in reality: whether to move cities, get married, quit your job, etc. The point is that you are faced with a variety of options and aren't sure how to identify the best option.
I started using this question as a “lifehack” a few years ago and it has become one of my favorite (and most effective) decision-making tools. The question itself pushes you to quantify all of the variables influencing your decision. Quantify simply means to make something measurable or attach a number to it.
Numbers Make You Objective
Let's illustrate this idea a bit more before we move forward. Let's say you wanted to start getting better sleep. One way you could evaluate your sleep is to wake up each morning and reflect on how you feel (e.g., I feel rested, that was a good night's rest OR I feel terrible, that was some bad sleep). However, after a week of this practice how much do you really know?
The better option is to quantify your sleep. You can do this by wearing a sleep tracker, like a watch or a ring, every night. Then, every morning you will have numeric data detailing how many hours you slept and the approximate quality of your sleep. Now that you have some data, you can start to experiment. Maybe great sleep to you is 7 hours, not 8. Or perhaps you can expand the experiment to record how food and caffeine affect your rest.
The numbers give you an objective way to evaluate something important to you. Better yet, it gives you enough information that you can start changing things for the better.
In the same way, when you quantify the variables of your decisions, you reclaim the power in the situation.
How Most People Answer Their Questions
Let's continue with the example. For option 1, you're excited by the idea of starting your own SMMA, but you also don't really know all that is involved in this option. At this point, you could jump all in: get incorporated, start a logo, set up a website, outline your offerings, and start advertising your services.
But it's likely that you could do all of this, spend thousands of dollars setting everything up, only to realize that the day to day activities are not what you want to spend your time doing. So you take the loss, promise yourself to do better in the future, and take time to lick your wounds.
There’s a better option.
For the SMMA business, let’s estimate it would take $3,000 to set up correctly. Is there a way we can find out as much as possible without spending $3,000? Is there is a way we could spend half and gather the information we need? Or even a tenth?
3 Steps to Find an Answer's Worth
For the question, “how much is an answer worth to you?” the steps work as follows:
Step 1: Quantify the initial investment (of time, money, resources, etc.) it would take to commit to a decision.
Step 2: Multiply that number(s) by 10%. This is your new answer budget.
Step 3: Creatively seek out options that fit your new answer budget.
For our imaginary SMMA business, our goal would be to find out as much information as we could about the realities of this business model for $300 or less. That means finding a course, hiring an expert for a 1-hour 1-on-1 consultation, or paying a current SMMA owner to allow you to shadow them for a full day.
The goal of this question is to be strategic about how we spend our time and money. Think of this question as a real-life Cost-Benefit Analysis. Whereas rushing in may seem romantic and worthy of an Entrepreneur magazine article, in reality, it's an immature way to approach an important decision.
"It is reason, and not passion, which must guide our deliberations, guide our debate, and guide our decision."
- Barbara Jordan
These Steps Will Save You Time, Money, and Headaches
Let’s briefly examine Option 2: should you go back to school in order to get a raise at work.
This is one I see people struggle with quite often. Yet, this should be one of the most straightforward decisions because the numbers are incredibly transparent.
For example, your proposed master’s program will cost $10,000, because the company you work for will pay the other $10,000, and it will require a 1-year commitment of you giving up your nights and weekends in order to complete the degree. At the end of the program, you have a guaranteed raise of $5,000 per year.
- If you plan to stay at the company of at least 3 years, you will break even (1 year to do school work + 2 years working at the new rate ($5,000 x 2).
- If you plan to stay at the company for 20 more years, you will come out ahead financially by at least $85,000.
- Staying at the company for 3 years or less would likely result in a financial loss.
With all that said, how can we see if we even want to pursue the degree and make a multi-year commitment for less cost?
Revisiting the steps listed above, step 2 tells us that we should try to spend less than $1,000 ($10,000 x 10%) and less than 30ish days (1-year x 10%) to find our answer.
A few creative options might be to attend a weekend seminar that closely resembles the information we would learn in the master's program. Or maybe we could travel to our company's headquarters and meet with staff members who have successfully completed the program in the past so they could tell us about their experiences.
The options we want to pursue have to be substantial enough that once engaged, they provide us with a high level of confidence going forward – whether we choose to say “yes” or “no” to the option in front of us.
That is why I tend to recommend more drastic steps then merely reading a book or making a phone call. Sometimes, these cheap and simple exercises are enough to move us forward. But as I've found in my own life, and in the lives of those I've helped counsel, big decisions usually require big gestures.
Stop Settling for Decision-Regret
I know all too well what it feels like to regret a decision I’ve made. To find myself neck-deep in a cost that, now that I’m paying it, seems far too high.
Ever since implementing this question and practice, regret is a thing of the past. I approach my decisions confidently because I know I’ve invested the time and money necessary to tell me whether or not it’s worthwhile.
Will every decision you make after asking this question be perfect? Of course not.
But I guarantee, the confidence with which you make important decisions will skyrocket. Because you’re no longer relying on emotions and outside advice to guide you.
Instead, you’re taking back control. You’re measuring your costs. You’re investigating your options. And you’re only committing to the things that are truly worth it to you.
What if my decision isn’t quantifiable?
Everything is quantifiable. I know, it sounds robotic. But I promise, if you look hard enough, you will find something that you can measure that is important to you. Then, you can use that measure to tell you whether or not YOU feel that x decision is worth it.
If you're having a hard time quantifying something, one tip I recommend is to "codify." This means that instead of counting actual numbers, you count words or themes that appear in writing.
For example, let’s say you are having a hard time choosing whether or not to get married. Love is probably the least quantifiable thing there is. So, you keep a daily journal where you record your thoughts, reflections, concerns, and questions related to your relationship. To codify your journal, choose words or phrases that are positively significant and negatively significant to you and then go through and count how many times they appear.
Let’s say that you counted 46 instances of the word “joy” and 37 happy phrases, but only 8 instances of “frustrated” or “sad.” You could say, using numbers (or quantitatively), that this relationship is a very positive influence in your life.
This might be a silly example, but it can be powerful when used correctly. Often times, we know the decision we want to make but have trouble finding evidence for why we should make it. Using numbers, finding evidence in our journals, and just generally being more scientific about our approach can give us the push we need to make the decision we know will be best.
What about Option 3 in your example?
Doing nothing is rarely the best answer, especially when numbers are involved. But kudos to you for paying attention 😉.
Why is the answer budget 10%?
I found 10% to be a comfortable middle-ground.
On the one hand, it's usually small enough in relation to the decision that losing it (or finding out that the answer is "no") won't hurt too much, especially when I remember that a "no" answer is actually saving me 10x as much.
On the other hand, 10% is significant enough that it requires me to actually spend some time, money, and energy seeking out a good answer instead of just settling for whatever the quickest, cheapest, and easiest option might be.