Almost everyone in the world has this fear of losing money. And honestly speaking, I’m no different from the others.
However, I found that my fear of losing money was preventing me from prospering in various ways. That was a time when I’d to take this radical decision: live all my life with a fear of losing money or take some calculated risks and become wealthier.
The temptation to stash away money in heavily hedged savings plans was too strong for me. Unfortunately, the returns they would provide would have actually caused me to lose money instead of gaining. Hence, I decided it’s better to take a few risks and try to flourish instead of playing it safe and losing on prosperity.
If you’re among those millions of people that fear losing money, then continue reading. Because I’ll be explaining in-depth, how to conquer the fear of losing money. It’s working very well for me and I’m fully confident it would work for you as well.
Let’s begin by understanding why we humans have this innate fear of losing money.
Reasons We Fear Losing Money
There’s a strong psychological factor that explains the reasons we fear losing money. As a matter of fact, humans are scared of losing almost everything- from relatives and friends to health and reputation or prestige.
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Three main reasons dictate these fears.
The fear of loss of anything- material or immaterial- causes a deep sense of insecurity among humans. Basically, we fear facing the future after losing something. That’s the reason majority of people in the world hold on to everything firmly- from money to even old and outdated ideas.
Money is something that gives us a sense of security, regardless whether the amount is small of large. Therefore, losing money translates as loss of security. Because money can help meet basic needs such as food, clothing and shelter while paying for some necessities such as communications and transport, among others.
We’re all attached to several things in our daily lives. Humans are attached to their material and non-material possessions in some way or other. Things towards which we have attachment eventually become an integral part of our lifestyle and influence the way we behave and live.
Losing something that we’re attached with leaves a sense of vacuum in our lives. And this vacuum impedes normal lifestyle and behavior. Most people that lose something often experience a lack of clear thought and proper direction for some time- that can range from a few hours to a number of years.
Anyone that’s lost a pen, pack of cigarettes or keys or even a currency note will testify to this fact.
3. Survival Instinct
Regardless whether you believe in the Theory of Evolution expounded by legendary scientist Charles Darwin or religious scriptures that propagate that humans were created through divine intervention, one thing stands out clearly.
That humans are the dominant species on Earth because of their strong survival instinct. While every living creature possesses a survival instinct, it’s not as well advanced as humans.
This primordial survival instinct causes us to shun everything and anything that could cause us some fear of loss. As a result, we subconsciously or even consciously view fear of loss as a threat to our very survival or even existence.
And this lurking survival instinct prevents us from taking risks that could bring us some grief while causing us to tread carefully in every sphere of our frail human lives.
What This Means?
The above three reasons simply point out to one thing. That we humans live in constant fear of losing something or the other. And one of the things that we fear losing is our money. Obviously, who would like to lose anything they’re earning through daily toil and extra effort? Nobody, for sure.
At the same time, the above facts also prove that lot of our fears, including those related to losing money, arise from our attachments, unfounded beliefs and baseless worries. If this weren’t true, there wouldn’t be any explorers, astronauts and investors- because nobody would take risks.
Conquering Fear of Losing Money
Ultimately, this brings us to the billion Dollar question: how to conquer the fear of losing money?
I’ll explain this with personal examples and a few steps that I’ve been taking to overcome the fear of losing money.
1. Change Your Mindset
American entrepreneur and author, Robert Kiyosaki says: “Before you can transform your wallet from poor to rich, you’ve got to transform your spirit from poor to rich.” In these few, wisdom packed words, the author of bestseller ‘Rich Dad, Poor Dad’ aptly describes the importance of changing our mindset.
Our mindset is defined by several factors. Main among these are our beliefs and lifestyle. To change these can prove a bit difficult but it’s definitely not impossible. If we strongly believe we’re condemned to live poor and adjust to our lifestyle without making any efforts to upgrade, surely, you’ll never conquer the fear of losing money.
But when you think to the contrary, you’ll find it’s easy to overcome these fears, take some risks and change your lifestyle for the better. In fact, Robert Kiyosaki himself as well as countless other millionaires around the world rose from dithering poverty because they were able to change their mindset and shed fears of losing money.
2. Consider Time Value of Money
Considering Time Value of Money or TVM is another way to conquer the fear of losing money. Most people remain blissfully unaware about this vital fact: Ignoring TVM causes you to lose money– whether or not you like it. And over a span of several years or lifetime, such losses can be considerable and serious.
Therefore, I’ll explain TVM in simple words. Consider you’ve $200 right now. You stash away $100 in a jar and invest the other on a savings plan that pays 4.5 percent interest per year. After a year, you’ll find that things you could buy for $100 today now cost $104.50, for example.
Means, the $100 you’ve kept in a jar is worth only $95.50 after a year. Whereas, the one you invested fetched you $104.50. This means, you’ve managed to match the TVM. You’ve neither earned more money because of inflation. But nor have you fear of getting lost any because you earned interest.
If you fear losing money, think about how much you stand to actually lose if you keep your money at home or invest on plans that fetch lower returns. The amount would be staggering. You’ll have fear of getting lost the money without actually taking any risks or even by simply doing nothing.
3. Money Begets Money
There’s an ancient proverb: “Money begets money.” This axiom holds true till date. It simply implies that without investment, there can be no returns. Or, in other words, you need to spend money to make money.
Some years ago, I read about blogging and digital marketing. The topic interested me quite a lot because I found, there’s a lot of money to be made with blogging.
A little Googling and I found a few online courses to learn basics of blogging and digital marketing. But as I was actively considering taking the course, several doubts and fears over losing money would come to my 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 I wouldn’t fall into that vast quagmire of failed bloggers. At the same time, there’re were no assurances that I would fail. Hence, I decided to take the risk.
I spent over $600 on basic course and a couple of advanced ones online. And about $300 on setting up a website with domain name, hosting and other necessary paraphernalia. I’d spent over $1,200 by the time I wrote my first blog and posted it online. I’m not calculating or considering man-hours spent on crucial research or writing.
Months of writing and doing digital marketing processes, I was about to give up and write off the money and effort I’d spent. However, these investments finally started paying some dividends, when I got my first cheque of $65 from Google AdSense. Gradually, my blog grew popular and my income began rising in leaps and bounds.
Here I learned one vital lesson: money begets money. Had I not taken the risk of investing the $1,200, time, effort and other resources, I would never have made tens of thousands of Dollars as a side income every year during my spare time.
The same adage also holds true for investments. We fear losing investing on stocks, Exchange Traded Funds, Mutual Funds, commodities, currencies and cryptocurrencies.
That’s mainly due to the extreme volatility of these money markets. But stock markets have a proven track record of bouncing back after every slump and paying rich rewards to investors that’re patient.
4. Start Small with Calculated Risks
Legendary American billionaire, Warren Buffett started his investment journey in a small way. He invested on 11, he invested on just three stocks of Cities Service. At the beginning of 2021, Warren Buffett’s estimated net worth stands at whopping $85.60 billion that places him as the fourth richest person in the world.
Understandably, we’re not Warren Buffett and the year isn’t 1941. But what the CEO of Berkshire Hathaway did about 80 years ago holds vital lessons for all of us. Start small and take calculated risks, if you fear losing money. That’s one more superb way to conquer the fear of losing money too.
Thanks to advances in Internet and mobile communications technologies, there’re over two dozen apps that’re available free or for a small monthly subscription. These apps provide valuable insights into the stocks, commodities and money markets.
And at least half a dozen of these apps allow you to embark on your investment journey with as little as $5 only. And this is an amount- $5- that you really wouldn’t miss sorely and can easily afford.
You’ll surely wonder what an investment of $5 can get. Quite a lot really. You can invest on blue chip stocks, Exchange Traded Funds, Mutual Funds, commodities, currencies and cryptocurrencies.
These apps work with the principle of ‘fractional shares.’ This means, you’ll get a fraction of a stock, ETF or Mutual Fund units, among others, worth whatever you invest.
You can choose the stock or other instrument to invest. Over a period of time, these fractions add up to a whole share or currency, ETF, Mutual Fund or cryptocurrency unit. As you keep investing the value keeps rising over a period and pays off richly.
Starting with small investments helps us take calculated risks and conquer the fear of losing money. It’s a time tested and proven method to build wealth gradually, even when we don’t have a lot of money to spare.
5. Find a Side-Gig
Let’s get one thing clear. The fear of losing money doesn’t necessarily mean losing our savings or investments. It also implies fear of loss of a regular or steady source of income and the uncertainties that come alongside.
Losing regular income from wages or salary means we’ve to dig deeper and deeper into our savings, causing it to dwindle rapidly. Though we might be paying only for basic necessities with these savings, the money can often prove to be irreplaceable.
It’s fairly easy to conquer such fears about losing money. And that’s by finding a superb side-gig which adds to your income. One in every three Americans have a side-gig nowadays, according to various news reports. And there’s no reason you shouldn’t have one as well.
Contrary to popular belief, a side-gig doesn’t need to necessarily have connections with your education or profession. Instead, you could use a hobby to launch a side-gig such as online coaching, selling handcrafted products or writing books and poems.
There’s a lot of money to be made on side-gigs only if you’ve got the inclination and are willing to invest a couple of hours daily or sometime every week on earning more money.
Freelancing and side-gigs are progressive in nature. Meaning, once you begin freelancing or having a side-gig, your income starts rising gradually. Very often, this income exceeds the one from a regular job. And all this adds up to negate the fear of losing money due to fear of loss of employment or regular source of income.
The year 2020 has wrought havoc on the personal finances of almost everyone in the world, due to the economic aftermath of the Covid-19 pandemic. This could perhaps led to heightening your fears about losing money. Yet, there’s no need to panic. Following these simple six tweaks, I write above can help you conquer that fear easily while finding prosperity in 2021 and beyond.