Dwight Eisenhower is a towering figure in American history, though he had some quirks that are less well-known.

He’s renowned as the soldier who led the invasion of Normandy (D-Day) during World War Two and then went on to become President from 1953 to 1961. However, in between his stints as soldier and US President, he was President of Columbia University. And it was here that things didn’t go according to plan.

Academics at the university came to regard Eisenhower as a simpleton. A popular story among university faculty was that they should never send a memorandum to the general of more than one page, lest he get too tired.

There were also question marks over Eisenhower’s decision making as he regarded most university tasks as not urgent, whereas the university’s academics thought their issues needed to be dealt with as soon as possible.

Ironically, Eisenhower’s decision-making and task management tools are now taught in many university courses around the world (the ‘Eisenhower matrix’).

The tools build upon other approaches toward simplifying priorities such as the 80/20 rule, or Pareto principle, that suggests 80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event.

The art of simplification and 80/20 can be applied to many areas of life. For instance, there are only a handful of key decisions that will determine whether you are financially successful or not. Other decisions are likely to be less important and not worth focusing on.

Here is my list of five key decisions that will likely shape your financial success:

1. What you do for work

An obvious one: work equals income. What you do for work will determine how much you make.

How do you choose what work to pursue? Apple founder, Steve Jobs, believed that you should follow your passions. In 1997, Jobs returned to Apple after a 12-year hiatus, and the company he co-founded was on the brink of collapse. He held a staff meeting to explain how Apple could revitalize itself:

“Apple is not about making boxes for people to get their jobs done, although we do that well. Apple is about something more. Its core value is that we believe that people with passion can change the world for the better.”

Jobs returned to the theme in his commencement address to Stanford University in 2005. “You’ve got to find what you love,” Jobs said. “The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”

Others think Jobs was wrong. Cal Newport, a professor and best-selling author, suggests you should pursue what you’re good at, not what your passions are. He thinks ‘follow your passion’ is bad advice because most people, especially younger ones, don’t have clear pre-defined passions to follow. There’s also little science to support the idea that matching your job to a pre-existing interest makes you more likely to find the work satisfying. According to Newport, what works better is putting in “hard work to master something rare and valuable, then deploy that leverage to steer your working life in directions that resonate”.

The truth probably lies somewhere between the views of Jobs and Newport. The Bhagavad Gita, the famous Hindu scripture, may have been onto something, by urging followers to find their unique gifts and pursue them with a singular focus.

Cartoonist Scott Adams has a different take on the topic. He believes that to be successful at work, you have two paths:

  1. Become the best at one specific thing
  2. Become very good (top 25%) at two or more things.

The first strategy is difficult. There aren’t many people who become best-selling musicians or world-class soccer players. The probabilities of being the best at one thing are extremely low.

The second strategy is much easier. Say, you want to study law at university. Wanting to become a lawyer means competing against thousands of people. However, if you combine law with a technology degree, you potentially become rare and valuable to an employer. And if you can add other skills such as public speaking or writing or something else, then you may become even more valuable. And that will be reflected in the income you earn.

2. Where you live

Location matters. Where you live will have a large say in what type of job you get and the salary that you receive.

Numerous studies suggest that larger cities attract higher salaries. In Australia, Sydney has the highest median weekly earnings of $1,300 per week, followed by Perth at $1,211, Melbourne’s $1,200 and Brisbane’s $1,199.

Job availability is also an issue in smaller cities or states. As of October, Tasmania and South Australia have the highest jobless rates in Australia at 4.2% and 4% respectively, while New South Wales has the lowest rate at 3.2%.

Of course, job availability and salary aren’t the only factors to consider when it comes to location. Cost is another. Larger cities such as Sydney and Melbourne have much higher costs, especially for housing and education. You need a higher salary to cover these costs.

3. Who you marry

Yes, who you marry is critical to your finances. I’m not talking about marrying someone rich, although if you’re that way inclined, don’t let me stop you.

I’m talking more about when marriages fall apart. Divorce is an expensive exercise and one best avoided.

The application process to divorce is inexpensive. It’s when things get messy that the costs tend to rise. I’m told (never experienced) that arbitration for divorce can set you back $4,000-8,000 a day and going to court will cost $75,000+, though often a lot more.

Marry well and your finances will thank you.

4. Whether you have a family

Whether you decide to have a family or not will have a huge bearing on your wealth. I have a daughter in primary school who does six after-school activities. Recently, I added up the costs of these activities - and I wish I hadn’t. Needless to say, there are plans for significant cutbacks on her activities next year.

The University of Canberra did a comprehensive study on the costs of raising kids until they left home. It found the cost for a middle-income family of raising two children until they left home was $812,000 and for high-income families it was $1.09 million. Keep in mind that this study was done in 2013, and costs have risen since then. However, an average of $400,000-500,000 for each child seems about right in my eyes.

If you decide to have kids, plan and budget accordingly.

5. How you invest your savings

First, you need to have savings. That means your income must be more than your costs. If achieving this is a struggle, or even if it isn’t, making a budget is essential.

If you need inspiration for budgeting, it’s worth reading Thomas Stanley’s The Millionaire Next Door. The book details the common traits of everyday millionaires in America. One of the key traits is frugality – keeping costs down even when your wealth increases.

I also like the idea of zero-based budgeting. This is a concept where you plan each year’s budget by starting at ‘zero’. That means, justifying all spending each year based on needs rather than on what you’ve done in the past. Private equity firm, 3G Capital, pioneered the idea and successfully applied it at companies such as Anheuser-Busch InBev, Burger King, and Heinz.

Once you have savings, you need to decide how to invest it. Do you take the money and buy a house? Do you invest it in a business which you own and/or manage and operate? Or do you invest in stocks?

Whichever route you take, it’s best to start early in life to allow the magic of compound interest to work.