Globetrotters know how often and quickly we can get to the point of decision fatigue, uprooting ourselves year after year. As I prepare for my own move in two weeks, I notice how many decisions must be made in a short amount of time. I can no longer shove things in a drawer or in the back of my mind, hoping to deal with it at a later date. Everything demands my immediate attention; everything needs to be put in its appropriate place. It drains your brain faster than a day of work does, and keeps you on a short fuse.

I think this is a pretty good example of ego depletion. In short, ego depletion refers to the phenomenon where we have finite mental capacity that can be used up. When you reach the state of ego depletion, it is more difficult to exercise self-control or make decisions that involve change.

A now commonly cited experiment in Israel shows that judges are more likely to grant probation to prisoners at the beginning of the day, or after breaks and lunch. It is surmised that sequential hearings deplete the judges’ mental capacity. The lower the mental capacity, the less likely the judges were willing to make major decisions that counter the status quo, which is to release the prisoners.

Most of the major decisions we make or fail to make have financial ramifications. How do we make sure we make them effectively and efficiently? Here are some of my thoughts:

#1: Focus on important decisions first

Recognize that you have limited mental capacity and use the best part of it on the most important financial decisions. If you focus your attention first on getting discounts on everything, by the end of the day you may not have the will power to do real strategic planning on your finances.

What are the important financial decisions? In my opinion, the most important decision is not really even financial. It has to do with what you want to accomplish in life. Having well-defined goals helps you prioritize your financial decisions. If you know you just need to save 20% of your monthly income to fund a future you imagine, you can focus on implementing steps to help you achieve that rather than skimming on every single purchase.

#2: Space out the complex decisions 

Don’t try to make all the complex decisions at once. You may experience feeling confused and uncertain after scrambling to file your taxes, figure out how much to contribute to an IRA, decide where to open an IRA, and find the cash all in two days before the deadline. It’s a perfect example of where complex decisions are best made in stages.

Remember you have limited mental capacity, and the important decisions often are the most complex ones that require a fully dedicated and alert brain to process. This is also why I recommend engaging in a continuous financial planning process. You may be tempted to tackle all your issues at once, but taking it one step at a time allows you to focus on the decision at hand and not be overwhelmed. It also makes it more likely for you to go through with changes, as many decisions often require.

#3: Keep to a routine

Develop a routine that takes financial decisions off your hands so you are not overwhelmed by small tasks throughout the day. Routine sometimes carries the connotation of “boring” in a free society, but it actually frees us from the repetitive decisions, allowing us to devote energy on creative thinking and dealing with emergencies.

One of the main reasons for decision fatigue in modern times is that we are presented with so many value-cost trade offs. It takes tremendous brainpower to evaluate our options for every single purchase. Since we’ve established that there are more important financial decisions in our lives, the next step is to automate the more repetitive ones.

For example, instead of agonizing over all the options in a grocery store, decide on the brand, item and quantity you need each week / month and stick with it, no matter whether they are on sale or not. (Or you can have a system where you always purchase the item with the lowest price regardless of brand. That works, too.) Another good example is setting up an automatic deduction from your paycheck to your retirement account. Once a routine is developed, you don’t have to waste your mental capacity on it anymore.

Another good reason to keep to a routine, as we see in the judge example, is that we tend to revert back to the status quo when we are at the state of decision fatigue. Routine is your status quo. So if you have a routine that is financially sound, it serves as a good backstop when other things, such as work and family obligations, deplete your willpower.

#4: Build in some slack

Allow room for error or indulgence. Having a routine does not mean filling your life to the brim with strict rules and willing yourself to comply 100% of the time. In fact, that’s another cause of ego depletion because you choose to exercise your willpower all the time. Routine is best for the financial decisions involving “necessities”- the minimum you need to live a healthy and fulfilling life now and in the future (which requires saving.) Think about it as the core. Surrounding the core is all the “fun but optional” things we would like to do, and we need to acknowledge their existence.


How do you do this? If you like to shop, give yourself a budget to do so monthly without damaging your ability to save for your goals. If you tend to actively trade on stock tips, designate a “play money” account to do so with a small amount and don’t bet your entire retirement savings on it. Just like allowing yourself a treat once in a while even on strict diet, building in the capacity to indulge makes it more likely for you to make good decisions where it matters.

#5: Get objective advice 

Make plans by seeking advice. (Proverbs) Making decisions requires information, but most of the time we are overloaded with it, so much so that we can’t even clearly map out the trade offs. An objective third party can help you digest all the information and present it in a way that helps you make that decision.

Another person with objectivity may also be more likely to realize that you are suffering from ego depletion before you do. The danger of ego depletion is that we usually can’t tell that we are mentally overly exerted until our emotions get to us. Often we can’t even tell from our actions, because we simply give up trying to make a decision. Having a trusted adviser or coach can mitigate the effect of decision fatigue.

#6: Impose boundaries

Impose restrictions when all else fails. In a world with too many options, sometimes the best thing we can do to prevent decision fatigue is to frame the decisions in tight boundaries so we can make the decision simple and process them faster. It is much easier for us to pick one out of two options, rather than out of ten. If you realize you tend to overthink decisions because of so many options, make yourself stick to three possibilities, then choose one of them.

Do you have other tips to combat decision fatigue? Share with me.

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