Real Estate Investor Magazine South Africa November 2014 | Page 66

LESSONS BY Vangile Makwakwa How to Deal with Financial Disappointment Play the game of life F or the longest time my fear of disappointment turned me into a spectator of life. I figured out early on the way to never get hurt is to never play the game of life. I learned it was safer to play to lose instead, of playing to win. Of course this had a negative impact on my finances, let alone investments. Who wants to experience the pain of losing money? Impact on investment behaviour According to Mellers (2001), our emotions - particularly disappointment - about the outcome of a decision, have the power to influence our decisions; people will make decisions that help them avoid disappointment. 1. Procrastinating on financial decisions Procrastination on making financial decisions can also stem from past disappointments that lead to action paralysis in the present moment. Dealing with disappointment If you’re an investor, you will eventually experience disappointment. That’s a fact. Things won’t always go the way you envisioned and you’ll need to know how to deal with disappointment. 1. Detach from the outcome When you detach from outcome you accept that the only person you can control is you. You can control the actions you take, but you can’t control the market, because that depends on so many variables, most of which are out of your control. 2. Have a plan B As soon as you make the decision to do something ask yourself these 2 questions: 2. Risk-averse investment • What’s the worst that can happen if this doesn’t go as planned? • What other actions can I take? Research shows that disappointment makes people risk averse. To protect yourself you invest in safe stock, save more money, spend less and never take risks with your career or business. These questions help you plan for the worst but also help you change your perspective if the outcome doesn’t go as planned. Knowing that you have financial options can make you feel empowered. 3. Become a miser 3. Separate the facts from the story You’re more focused on saving than investing. Your fear of money outweighs your desire to make money. If you made a lot of money in the past, lost it and experienced a lot of disappointment because of the loss, you’ll make the decision never to experience disappointment again by holding onto money more tightly. Understand that your interpretation of the facts is what leads to disappointment. The more you refuse to accept the facts as they are, the more disappointed you’ll feel. 4. Increased debt Continuous disappointment about money can leave us feeling hopeless, like nothing will ever work out, which demotivates us from budgeting or taking constructive financial action. 66 November 2014 SA Real Estate Investor I’ve come to understand that it’s not life’s events that hurt us, but the way that we choose to interpret these events. Life just happens - it’s when we believe it should unfold differently that we feel disappointed. RESOURCES Wealthy-money.com www.reimag.co.za