Almost everyone has this fear of losing money. And honestly, I am no different than the others.
However, I found that my fear of losing money kept me from prospering in a number of ways. That was a time when I would make this radical decision: live my whole life in fear of losing money or taking some calculated risks and getting richer.
The temptation to put money in heavily covered savings plans was too strong for me. Unfortunately, the profits they would provide would have made me lose money instead of earning it. Therefore, I decided that it is better to take some risks and try to prosper rather than play it safe and lose prosperity.
If you are among those millions of people who fear losing money, read on. Because I will explain in-depth how to overcome the fear of losing money. It’s working great for me and I’m completely sure it will work for you too.
Let’s start by understanding why humans have this innate fear of losing money.
Reasons why we fear losing money
There is a strong psychological factor that explains the reasons why we fear losing money. In fact, humans are afraid of losing almost everything, from relatives and friends to health, reputation, or prestige.
Three main reasons dictate these fears.
The fear of losing anything, material or immaterial, causes a deep sense of insecurity among humans. Basically, we fear facing the future after losing something. That is why most of the people in the world hold on tightly to everything from money to old and outdated ideas.
Money is something that gives us a sense of security, regardless of whether the amount is small or large. Therefore, losing money translates into a loss of security. Because money can help cover basic needs such as food, clothing and housing while paying for some necessities such as communications and transportation, among others.
We are all attached to various things in our daily life. Human beings are attached to their material and non-material possessions in one way or another. The things we are attached to eventually become an integral part of our lifestyle and influence the way we behave and live.
Losing something that we have attached leaves a feeling of emptiness in our lives. And this void prevents normal lifestyle and behavior. Most people who lose something often experience a lack of clear thinking and proper direction for some time, which can range from a few hours to several years.
Anyone who has lost a pen, a pack of cigarettes or keys, or even a coin bill, will bear witness to this fact.
- Survival instinct
Regardless of whether you believe in the Theory of Evolution expounded by the legendary scientist Charles Darwin or the religious scriptures that propagate that humans were created through divine intervention, one thing stands out clearly.
That humans are the dominant species on Earth due to their strong survival instinct. While every living creature has a survival instinct, it is not as advanced as humans.
This primordial survival instinct causes us to avoid everything and anything that may cause us a certain fear of losing. As a result, we subconsciously or even consciously view the fear of loss as a threat to our own survival or even our existence.
And this lurking survival instinct prevents us from taking risks that could bring us some pain and make us tread carefully in every sphere of our fragile human life.
What does this mean?
The above three reasons simply point to one thing. That humans live in constant fear of losing something or the other. And one of the things we fear losing is our money. Obviously, who would like to lose some of what they earn from daily work and extra effort? Nobody for sure.
At the same time, the above facts also demonstrate that many of our fears, including those related to losing money, arise from our attachments, unfounded beliefs, and unfounded concerns. If this were not true, there would be no explorers, astronauts and investors, because no one would risk it.
Conquering the fear of losing money
Ultimately, this brings us to the billion dollar question: how do you overcome the fear of losing money?
I will explain this with personal examples and some steps I have been taking to overcome the fear of losing money.
- Change your mindset
American businessman and author Robert Kiyosaki says, “Before you can transform your wallet from poor to rich, you have to transform your spirit of poverty.
Our mindset is defined by several factors. Among them, the main ones are our beliefs and lifestyle. Changing these can be a bit difficult, but it is definitely not impossible. If we firmly believe that we are condemned to live in poverty and adapt to our lifestyle without making any effort to update ourselves, surely you will never conquer the fear of losing money.
But when you think otherwise, it will be easy for you to overcome these fears, take some risks, and change your lifestyle for the better. In fact, Robert Kiyosaki himself, as well as many other millionaires around the world, came out of faltering poverty because they were able to change their mindset and get rid of fears of losing money.
- Consider the value of money as a function of time
Considering the time value of money or TVM is another way to overcome the fear of losing money. Most people remain blissfully unaware of this vital fact: ignoring TVM makes you lose money whether you like it or not. And over a span of several years or a lifetime, such losses can be considerable and serious.
Therefore, I will explain TVM in simple words. Consider you have $ 200 at the moment. You keep $ 100 in one jar and invest the other in a savings plan that pays 4.5 percent interest per year. After a year, you will find that the things you could buy today for $ 100 now cost $ 104.50, for example.
This means that the $ 100 you have saved in a jar is worth only $ 95.50 after one year. Whereas, the one who invested sold him $ 104.50. This means that you have succeeded in matching the TVM. Nor has he made any more money due to inflation. But you are not afraid of losing yourself because you have earned interest.
If you fear losing money, think about how much you can really lose if you keep your money at home or if you invest in plans that get lower returns. The amount would be staggering. You will be afraid of losing money without really taking any risks or simply doing nothing.
- Money begets money
There is an old saying: “Money begets money.” This axiom is valid to date. It simply implies that without investment there can be no profit. Or, in other words, you need to spend money to earn money.
A few years ago, I read about blogging and digital marketing. The topic interested me a lot because I discovered that you can make a lot of money from blogging.
A little googling and I found some online courses to learn the basics of blogging and digital marketing. But as I was actively considering taking the course, several doubts and fears about losing money came to mind.
One of my main fears: There were about 500 million blogs on the Internet and some of them were miserable failures. There were no guarantees that he would not fall into that vast quagmire of failed bloggers. At the same time, there were no guarantees that it would fail. Therefore, I decided to take the risk.
I spent over $ 600 on basic courses and a couple of advanced ones online. And around $ 300 to set up a website with a domain name, hosting, and other necessary paraphernalia. I had spent over $ 1200 when I wrote my first blog and posted it online. I am not calculating or considering the man-hours spent on crucial research or writing.
Months of writing and doing digital marketing processes, I was about to give up and cancel the money and effort I had spent. However, these investments finally started paying some dividends, when I received my first $ 65 check from Google AdSense. Little by little, my blog became popular and my income began to increase by leaps and bounds.
Here I learned a vital lesson: money begets money. If I hadn’t risked investing the $ 1,200, time, effort, and other resources, I would never have earned tens of thousands of dollars in additional income each year during my spare time.
The same adage also applies to investments. We fear losing investment in stocks, exchange-traded funds, mutual funds, commodities, currencies, and cryptocurrencies.
This is mainly due to the extreme volatility of these money markets. But the stock markets have a proven track record of bouncing back after every crash and paying big rewards to investors who are patient.
- Start small with calculated risks
Legendary American billionaire Warren Buffett started his investment journey small. He invested in 11, invested in only three Cities Service stocks. As of early 2021, Warren Buffett’s estimated net worth stands at a whopping $ 85.60 billion, making him the fourth richest person in the world.
Understandably, we are not Warren Buffett and the year is not 1941. But what the CEO of Berkshire Hathaway did some 80 years ago has vital lessons for all of us. He starts small and takes calculated risks if he is afraid of losing money. That is a more excellent way to beat the fear of losing money too.
Thanks to advances in internet and mobile communication technologies, there are more than two dozen applications that are available for free or for a small monthly subscription. These apps provide valuable information on stocks, commodities, and money markets.
And at least a half dozen of these apps allow you to embark on your investment journey with as little as $ 5. And this is a $ 5 amount that you really wouldn’t lose much of and that you can easily afford.
You might be wondering what a $ 5 investment can do. Really a lot. You can invest in premium stocks, exchange-traded funds, mutual funds, commodities, currencies, and cryptocurrencies.
These applications work on the principle of “fractional shares”. This means that you will get a fraction of stocks, ETFs or mutual fund units, among others, for the value of what you invest.
You can choose the stock or other instrument to invest. Over a period of time, these fractions are added to an entire stock or currency, ETF, mutual fund, or unit of cryptocurrency. As you keep investing, the value keeps increasing over a period of time and it pays off handsomely.
Starting with small investments helps us take calculated risks and overcome the fear of losing money. It is a tried and tested method of gradually building wealth, even when we don’t have a lot of money to spend.
- Find a parallel concert
Let’s get one thing clear. The fear of losing money does not necessarily mean losing our savings or investments. It also involves fear of the loss of a regular or constant source of income and the uncertainties that arise.
Losing regular income from wages or salaries means that we have to dig deeper and deeper into our savings, causing them to decline rapidly. Although we may be paying for only basic necessities with these savings, money can often prove irreplaceable.
It is quite easy to overcome those fears about losing money. And that’s finding a great side job that adds to your income. One in three Americans currently has a parallel job, according to various news reports. And there is no reason why you shouldn’t have one too.
Contrary to popular belief, a side job does not necessarily need to have connections to your education or profession. Instead, you could use a hobby to launch a side job, such as online training, selling handmade products, or writing books and poems.
You can make a lot of money in side jobs only if you have the inclination and are willing to put in a couple of hours a day or sometime in the week to earn more money.
Freelance work and parallel jobs are progressive in nature. That is, once you start to be self-employed or in a parallel job, your income gradually begins to increase. Very often, this income exceeds that of a regular job. And all this adds up to deny the fear of losing money for fear of losing the job or the regular source of income.
The year 2020 has wreaked havoc on the personal finances of almost everyone in the world, due to the economic aftermath of the Covid-19 pandemic. This could perhaps lead to heightening your fears about losing money. However, there is no need to panic. By following these six easy adjustments, which I write above, can help you easily overcome that fear as you find prosperity in 2021 and beyond.