Managing the fear of loss

Scientific studies have shown that psychologically, loss is twice as powerful as gain.

This is a crazy thing, and IMHO, causes poor decisions as well as a poor mindset in general.

Why is this?

The expectation of gain is hope. Hope does wonderful things for humanity and society. Is it only with hope that we can create a vision of the future, plot out a course towards the vision, and the put in the blood, sweat, and tears that are necessary to get things done. Hope drives progress. Hope drives innovation. As an entrepreneur, I am fueled by hope. Without it, I wouldn’t get anywhere. As a society, we all need hope to exist; the more cumulative hope we have in the world, the better off we are for it.

When we give in to our natural fear of loss, we give our fear twice the power it should have to squash our hopes and dreams. It is irrational, and it causes people be motivated by fear instead of hope.

The only way to manage this fear is to be aware of it.

The first thing you can do is to work to mentally treat loss and gain equally. That is already a huge step because it removes the 2x multiplier that loss usually gets. Realize that the $1 lost as the same value as the $1 gained.

However, in many cases (I would argue that in most cases), you can do much better than this: you can zero out the loss.

The trick is to manage your expectations. Ask yourself a few simple questions. What matters to you in life? Are you still alive? Do you have the basic necessities? Do you still have your friends and family? Can you pay rent/mortgage and find a way to eat? If so, what else do you need? How important is the actual loss?

Obviously, there are larger forms of loss. And there are important losses; especially the loss of loved ones. However, most of the loss we deal with in life are not these important losses. They are little (potential) losses that become large within our minds, and then cause us to make bad decisions and squash our hopes. Don’t give the little (potential) losses this power.

P.S. This is post number #60 in a 100 day blogging challenge. See you tomorrow!

Follow me on Twitter @alexshye.

Or, check out my current project Soulmix.

2 thoughts on “Managing the fear of loss

  1. Retirement and the fear of future loss | Alex Shye

  2. The fear of immediate loss | Alex Shye

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