The Regret Minimization Framework: How to Make Tough Life Decisions


5 min read

Deciding to quit my day job as a data scientist for a large corporation to work on my online businesses full-time was one of the biggest decisions I’ve made in my life.

Ultimately, there were two reasons that I decided to take the leap:

1. The numbers made sense financially. Over the past six months I’ve been able to cover about 70-80% of my monthly expenses purely through income streams outside of my day job.

By quitting my day job, I gained back 40-50 hours each week that I could use to work on these income streams and grow them much larger. Although these streams don’t cover all of my living expenses, I have enough money saved up that I can afford to take my time in growing these income streams while using my savings to make up the difference.

So, although I lost a steady paycheck by quitting my job, my income trajectory outside of my day job along with my savings gave me enough confidence to quit.

2. I wanted to minimize my regret looking back on this time in my life. I currently have no family to support, no debt whatsoever, and very few responsibilities in general. At no point in my life am I likely to have this much freedom and flexibility to take the leap to pursue my dream of being my own boss.

When I’m 80 years old and I look back at this time in my life, I think I would regret sticking it out at a 9-5 job during a time when I had so much freedom and flexibility to take the leap to work for myself.

In that regard, I am following The Regret Minimization Framework made popular by Amazon CEO Jeff Bezos.

The Regret Minimization Framework

In the book Algorithms to Live By: The Computer Science of Human Decisions, authors Brian Christian and Tom Griffiths share the story behind why Jeff Bezos decided to leave D.E. Shaw, a well-known hedge fund at the time, to start his own online bookstore:

Regret can also be highly motivating. Before he decided to start Amazon.com, Jeff Bezos had a secure and well-paid position at the investment company D. E. Shaw & Co. in New York. Starting an online bookstore in Seattle was going to be a big leap — something that his boss (that’s D. E. Shaw) advised him to think about carefully. Says Bezos:

 

“The framework I found, which made the decision incredibly easy, was what I called — which only a nerd would call — a “regret minimization framework.” So I wanted to project myself forward to age 80 and say, “Okay, now I’m looking back on my life. I want to have minimized the number of regrets I have.” I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day, and so, when I thought about it that way it was an incredibly easy decision.”

The bit that sticks out to me is when Bezos says, “I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried.”

This resonates with me. It’s certainly possible that striking out on my own and working for myself could end poorly. It’s possible that I won’t make as much money as I thought I could online. It’s possible that I may have to return to Corporate America at some point in the future. 

However, even if I fail I won’t regret this decision. The only thing I would regret is if I never gave myself a shot in the first place. I know that if I never took this leap that I would look back on my 20s and always think “what if I had tried?”

That thought terrifies me.

Being Realistic with The Regret Minimization Framework

While The Regret Minimization Framework is a useful way of thinking to avoid future regret, it’s easy to get carried away with this line of thinking.

For example, suppose you hate your job and your dream is to start your own business. According to The Regret Minimization Framework, you should quit immediately and take the leap so that you don’t regret staying in a job you hate when you’re older and you look back on this period in your life.

However, if you don’t have your finances in order and a plan in place, you’ll probably regret quitting your job too soon.

Before actually making a decision to quit a job you hate in an effort to minimize future regret, you should ask yourself the following questions:

1. Is there a way for me to minimize future regret without making a drastic life change? For example, instead of quitting a job you hate and pursuing full-time entrepreneurship, you may want to instead consider the following options:

  • Switch to a new job with a new company.
  • Switch to a new team within the same company.
  • Switch to part-time work with the same company or a new company.
  • Take an extended sabbatical.
  • Negotiate a situation where you can work remotely some days each week. 

There are many ways to improve your work situation without quitting your current job entirely and working for yourself.

While I personally considered all of the options above, I decided that pursuing full-time entrepreneurship was the right decision for me at this point in my life.

2. If you do decide to pursue full-time entrepreneurship, do you have experience earning income outside of your day job?

For example, if you want to be a full-time blogger, have you actually earned money from blogging before? 

Making the decision to quit your job to become an entrepreneur in a field in which you’ve never earned money is a horrible idea in most cases. You have no idea how long it takes to build up an income stream in that particular field, how hard it is to retain clients, to diversify your income streams, to put systems in place to ensure that the business runs smooth without your constant attention, etc. 

For most people, it’s a good idea to figure out ways to earn income in the field you’re interested in while still holding a full-time job. This way, you don’t need to earn income immediately and you won’t be in a position where you fall flat on your face financially. 

Personally I have been able to build up my monthly income from my online businesses to $1,000 – $1,500 consistently while still holding a full-time job. I know how to make money online, I just need more free time so I can grow my income even more. That’s why quitting my day job made sense for me. I wasn’t diving headfirst into a field I had no experience with.

3. Do you have money in the bank to support yourself for an extended period of time if things don’t work out?

One of the worst decisions you can make financially is to quit your day job with little to no savings in the bank. This puts tremendous pressure on you to start earning income immediately from a new source. 

A better, more realistic plan, is to save up a chunk of cash that can support you for at least 8-12 months while you figure out how to earn income from a new source. 

Personally I have almost $100k sitting in liquid assets that I can access immediately if I need to. With annual expenses of around $25k, that means I could survive for four years without earning a single dime of money online. My savings gave me a huge confidence boost to take the leap to work for myself without being fearful of running out of money anytime soon.

It’s much easier to run a business when you don’t have to stress out about how you’ll pay the rent from month to month.

So, while The Regret Minimization Framework can be a nice way to avoid future regret, it’s important to also be realistic. Money matters. You still have to pay rent and eat food. Be courageous and be willing to take the leap when the time is right, but make sure the time is actually right.

You Are Going to Die One Day

Life is truly a gift, but it’s a limited gift. You only get one shot to do all of the things you want to do, to build all of the cool things you want to build, to travel to the places you want to travel, and to have the experiences you want to have.

You are going to die one day. Life does not last forever.

So, be realistic. Don’t quit your shitty job without a plan in place. But at the same time, be courageous enough to take the leap when the time is right. To live with regret is one of the worst ways to spend your one life on this planet.


My favorite free financial tool I’ve been using since 2015 to manage my net worth is Personal Capital. Each month I use their free Investment Checkup tool and Retirement Planner to track my investments and ensure that I’m on the fast track to financial freedom.

My favorite place to find new personal finance articles to read is Collecting Wisdom, a site I created that collects the best personal finance articles floating around the web on a daily basis.


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