6 Mental Models That Will Help You Make The Best Decisions In Life
You Can Apply Them To Your Small And Big Goals!
If an individual helps you in the office, you may see him as kind.
If the same person helps your friend, she may look for the hidden motives behind the “kind” behaviour.
These are mental frameworks.
We have certain frameworks in mind to make sense of the people and the world. We use these frameworks to interact with others and interact with the world, in general.
These frameworks are called mental models.
We use mental models as shortcuts to navigate a complex world. They may not always represent reality but they help us make the better choice within a shorter time period.
You are not always conscious about what mental model you are using in a situation and if it is the right one.
The power of mental models lies in selectively choosing and applying them.
“We all have mental models: the lens through which we see the world that drive our responses to everything we experience.
Being aware of your mental models is key to being objective.”
Elizabeth Thornton, Writer.
If you are striving for a life of growth and happiness, there are a few mental models that you must apply in your life.
I have collected these mental models here:
1. Compounding
“Compound interest is the eighth wonder of the world.
He who understands it, earns it; he who doesn’t, pays it”.
May be Albert Einstein said it. May be he did not. In either case, it is hard to disagree with what it says.
Compounding is not just about money.
Everything compounds, either in a positive or negative way.
James Clear in his book Atomic Habits has put it in an easy way.
If you grow by 1% each day, you end up 37 times better in 365 days.
That is the power of positive compounding.
If you get worse by 1% each day, you decline to 0.03(nearly zero) in the same 365 days. That is the power of negative compounding.
This mental model is extremely important for repetitive activities that you are performing daily in life.
If you binge watch Netflix today, it will not affect your prospects. If you start binging on it daily, you are negatively compounding.
If you do 10 pushups today, it will not show any visible change. If you repeat it for a year, you are positively compounding.
Ask yourself,
“If I repeat this behaviour daily for the next one year, will it make a positive impact or a negative impact on my life.”
2. Friction
“A gem cannot be polished without friction, nor a man perfected without trials.” — Seneca
Friction is one of the forces that have existed since the inception of the universe. It would not be possible for the life to exist on Earth if it was not for Friction.
Everything that you do and don’t do is affected by the presence of Friction in the process.
You eat more snacks if it is sitting on your table compared to when it is hiding inside a cupboard.
You open FaceBook app more often if it is right on your home-screen compared to when it is hidden in the app gallery.
You take escalator to go up instead of the stairs next to it because it requires less effort standing on an escalator compared to walking up the stairs.
If there is any behaviour that you want to do more often, reduce the friction in the process.
Reduce the number of steps required between you and the desired behaviour. You will make it easier for your mind to follow through.
3. Incentive
“Show me the incentive and I will show you the outcome.” — Charlie Munger
An Incentive can be anything that makes a particular behaviour more likely.
For you, a higher salary may be an incentive to work harder at your job.
For an 8-year-old, a candy could be an incentive to finish his homework.
The behaviour of people can be easily explained through incentives. It is specially useful when you have to interact with a stranger(or corporation) and a transaction is involved, such as buying a car, house etc.
Is it in the best interest of an apparel brand to sell you clothes that last long?
Is it in the best interest of a company to sell you a cigarette that is more addictive?
It is in the best interest of YouTube if you only use it for 10 minutes per day?
If you can find out what is the main incentive of the other party in such situations, you will find it easier to make a better decision.
4. Loss vs Gain
This is a framework that I learned recently which has helped me make choices that are aligned with my best future-self.
What can you gain by over-speeding? May be 10 minutes.
What can you lose by over-speeding? Your life.
What can you lose by writing on medium? May be nobody will read it and you will feel embarrassed.
What can you gain by writing? Improve your writing. Gain clarity over your thoughts. Resonate with people. Making many friends. Get a lot of feedback. May be a huge following too.
These are called the asymmetric bets. Either the upside or the downside is much bigger than the other.
If the downside is bigger, you probably need to avoid such a choice.
If the upside is bigger, you need to act on it as soon as possible.
5. Friend Test
“Sometimes an outside perspective is the clearer perspective.”
― Shannon A. Thompson
A decision is sometimes hard not because you do not know which choice is better. It is hard because you are emotionally involved in it.
I am sure you have given great advice to your friends who have been in the middle of such situations. You just need to apply that advice to your own decisions.
You can use this advice if you want to switch career, break up with a person, move to a different city, etc.
Ask yourself, “What advice would I give to my best friend if she was in this situation?”
You already know what is best for you. You just need an outside perspective to make that choice.
It will help you if you see yourself from the perspective of your friend.
6. 80-Year-Old Test
“When you think about the things that you will regret when you’re 80, they’re almost always the things that you did not do. They’re acts of omission.
Very rarely are you going to regret something that you did that failed and didn’t work or whatever,.” — Jeff Bezos
This is the question Jeff Bezos asked to decide if he should leave his well paying job to start selling books on Amazon.
It is the regret minimisation framework.
If you are in your twenties or thirties, you need to make choices to minimise regret later on in life.
This mental model can help you get a perspective on your entire life.
Think of yourself as an 80-year-old looking back at his life. Would you regret if you did not make this choice?
If the answer is yes, make that choice.
If you closely see it, mental models are nothing but questions that you ask yourself before making a choice.
These mental models have helped me overcome my fears, make choices aligned with my future-self, and be happy in my relationship.
You will definitely benefit if you consciously select mental models to make decisions in life.
Let me know what questions you ask yourself before making a major decision in life.
Stay tuned for more.
