Every decision you make comes with a cost. And I don’t just mean a financial cost. I’m talking about costs in the form of time, health, stress, energy and relationships. In other words, every decision you make comes with trade-offs. Our goal should be to make decisions that maximise return for as little cost as possible (whatever the costs may be).
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Let’s look at these costs in a little more detail:
Monetary costs are probably the most obvious “costs” we think about.
For example, buying a new computer, car or house is going to have a big impact on your finances and the financial cost is usually the biggest consideration when making a purchase decision.
How we choose to earn a living comes with financial opportunity costs. By accepting a job at one company, you're saying no to a potentially higher paying job somewhere else.
In my business, we have to choose the right projects and clients to work with in order to maximise revenue within the time we have. It’s always painful when you have to turn down a lucrative project because we’re at capacity.
So when thinking about financial costs, it’s not just the cost of doing something but the opportunity cost of choosing one thing over another that needs to be considered.
Money is important. But there are other costs to consider when making decisions that we often don’t think about.
I’ve said before that how we choose to spend our time on this planet is probably the most important decision we each need to make.
As mentioned above, if you accept a job that doesn’t pay as much as a position at another company, this may look like a bad decision. But what if the other company requires a 2-hour commute each day? For some people, the lower-paying job that you can do from home is going to be the better option. It all depends on how you view each of these costs.
When I get approached with a new opportunity, I always consider the time required and what activities I’m going to have to take the time away from. By saying yes to something, I have to say no to other things. In my business, client projects are usually the #1 priority so it can be challenging to convince me to work on other things.
By saying yes to an opportunity or idea, is there any potential stress that comes with it?
For example, if you’ve been invited to speak at an event, or you’re being paid to give a presentation but you hate public speaking, maybe the stress will mean it’s not worth it to you.
When I’m talking to a prospective client, one of the things I’m trying to determine is whether the person is going to be nice to work with. I’ve dealt with enough difficult people to realise that the stress that comes with it isn’t worth it, regardless of what I’m being paid.
You don’t have to look far to find influencers on YouTube or Instagram talking about the haters and criticism they have to deal with on a daily basis. For some of them, it becomes too much and despite earning good money, have decided that a quieter life without the public scrutiny is better.
When making a decision, as well as looking at the time and money, it’s important to think about how much you’ll enjoy doing the work.
Health & Energy
Some people work crazy long hours and never make time for exercise or to look after themselves. Some people view a lack of sleep as something to be proud of, so they’ll work long hours and try to “hustle” their way to the top.
I’ve always viewed my business as a “lifestyle” business. One where there’s a balance between my work and my personal life. I could work longer hours to try and grow my business and handle more capacity but the cost of doing so would be too high.
For my physical and mental wellbeing, I make sure to get plenty of exercises and sleep each and every week. Not only does this improve your focus and productivity but if you skimp on these areas when you’re younger, it’s going to come back and bite you later.
I remember reading a newsletter from the author, Ryan Holiday, where he talks about how he’s said no to some great opportunities and speaking events as they would take too much time away from his family.
His article: Work, Family, Scene: You can Only Pick Two, discussed the importance of deciding which areas of your life to prioritise.
There’s no formula to help you make the right decisions in life. When faced with a new opportunity or idea, we need to weigh all the pros and cons to decide if it’s worth it.