Have you heard of loss aversion? It’s a theory developed in the 1970s which demonstrates that by and large, given the choice, people would rather not lose something than gain something.
Loss aversion is often talked about in relation to economics. But you see it play out in all kinds of different scenarios. Some people stay in relationships that are destructive, rather than walk away. Others gamble themselves into a deeper and deeper hole, trying to win back their losses. Many, many people remain in a career that stifles and depresses them instead of making the leap to something different.
The pain of losing is more acute than the pleasure of gaining.
What about you?
Are there any areas of your life in which you’re having a hard time cutting your losses? Is there a job, a relationship, or a project that you keep investing time and effort into — in spite of the fact that your investment is no longer paying you any sort of return and is, in fact, costing you – because the alternative feels even scarier?
Yes, it can be a frightening proposition to walk away from the known – even when it’s a bad known — for the unknown.
Yes, it’s a RISK.
But think about this: The choice to remain in the “losing” situation ALSO involves risk. Potentially much greater risk than the alternative!
You are taking untold risks by continuing down a negative path. Material financial risks, as well as emotional ones. The situation which feels safer is very likely not safe at all. Think of the gambler who could have lost just $50 or $100, but instead finds himself owing thousands, all because he was trying to save himself from the comparatively minor pain of that initial loss.
You may not be gambling with money. But what are you gambling with… and why? How might your losses on that front be further compounded one, five, 10 years down?
Are you really willing to live with that?
Because no matter how strong the urge may be, you DON’T have to.
“The best time to plant a tree was 20 years ago. The second best time is now.” That simple bit of ancient wisdom is so, so powerful, isn’t it?
Risk is unavoidable. The key is to take the right risks.
Forget about what’s happened up until this point. Cut your losses. STOP them from continuing. Sure, things might be different and better now if you’d done so earlier. Don’t brood over that fact. Accept it — then move on from it.
Start now. Make a move in a positive direction. Take a risk that’s going to move you forward, not backwards.
In far less time than you think, you’ll be so glad you did.