Financial risks will always be present in money transactions. It can be as simple and straightforward as a savings account or it can be a more complex transaction like investing in stocks or mutual funds. The risk usually involves losing some value in your hard-earned money. No matter how foolproof your financial systems are, there will always be a level of risk in it.
This is the reason why people are scared of taking a risk when it comes to their money. Take for instance what happened to the housing market during the Great Recession. We always thought that you will never lose when you invest in a house and lot property. After all, land is a resource that you can never replicate. It will run out as more people buy real estate properties. But when the economy crashed, the house that we thought would never depreciate suddenly lost its value. A lot of homeowners were forced to give up their property because their monthly amortization was already bigger than the actual value of the house.
While financial risks can lead you to lose money, it is still something that you need to take. Taking a risk is better than not doing anything. The truth is, one of the financial mistakes that you can make is to be too complacent when it comes to your money. Being safe is okay. However, it does not necessarily translate to security. Sometimes, a financial risk is necessary to place yourself in a more secure position.
Saying that you need to embrace a certain level of risk is easy. Doing it is another thing. The reality is, we are finding it hard to risk our money because it is limited. We have a lot of financial obligations and we do not have a lot of finances to meet all of them. This makes us cautious to take risks because losing is sometimes not an option for us.
If you want to put your finances to the next level, you need to be ready to take financial risks. While there is nothing we can say to lower the risk, there is something there are things that you can do to make you brave enough to take them.
4 ways to find the courage to take money risks
Complacency can become a fault when it comes to your finances. That is why you need to find the courage to help you take on the money risks that can improve your financial position. You may be hesitant to take risks, but you should not let your fear keep you from the gains that you could be getting.
Here are 4 things that you can do to help you be braver in taking financial risks.
Start by educating yourself. The only way that you can make smart decisions about your money is when you are knowledgeable about it. When you educate yourself, you will find yourself more courageous because you know what is at stake. Even if there is danger ahead, you understand what it is. That will make the risk less daunting. According to an article published on CNBC.com, your decision about financial investments like buying a house will depend on what stage you are in your life. Unfortunately, their study revealed that even the older adults could use some improvement when it comes to their financial knowledge. Not only that, you have to understand that although there are many risks when it comes to your money, not all of them will reap rewards. You have to find out the specific risks that will help you achieve your financial goals. These risks, as uncontrollable as they are, can be lessened. You just have to make the right decisions about it.
Secure your future.
Another thing that you need to do so you are braver to take financial risks is by securing your future. The best way to do that is to save up for it. Of course, we are talking about your retirement. But beyond that, you also have to save up for your emergency fund. Your savings will serve as your safety net. Although the money that you are investing is at risk, you know that even if it fails, you will not be completely at a loss because you have your savings. Even if your investment does not gain profit, you will still be left with some money to spend or possibly invest again. This is the best way for you to remove the possibility of a financial ruin in your future.
Secure your family’s future.
Sometimes, people are scared to take financial risks because they have people depending on them. They cannot afford to lose money because their family is relying on them for financial help. This is why it is also important to think about the financial security of your family. If something happens to you, they will be left with nothing. If you care for them, you need to ensure that they will be taken cared of financially. Once you know that they will be okay even if something happens to you, then you will be braver when taking money risks.
Be aware of your financial position.
The last thing that will help you be braver in taking risks is when you know and understand your financial position. The truth is, you need to know your finances if you want to be better at managing your money. How can you manage something if you know nothing about it? Once you understand your finances, you will be wiser and smarter when it comes to making decisions about it. That confidence will then help you find the courage to take financial risks.
Benefits of taking risks with your money
While the above-mentioned activities will help you find the courage to take risks with your money, there is one other thing that is also effective – motivation.
When you know what you will get out of risk, you will find a way to overcome your fears and take the plunge. To motivate you in taking more high financial risks, here are the benefits that it will bring to your personal finances.
High risk equals more return.
When something is risky, you know that it is of value. If it is not worth while, then nobody will risk their money on it. This is why it is only logical that the higher the risk, the greater the chances that you will earn from it. According to an interview published on CUTimes.com, Jeanne Kucey (CEO of JetStream Federal Credit Union) was noted to be a believer that great risk leads to bigger returns. If you want great returns, you need to be brave enough to take a great leap of faith on your risk.
You learn lessons along the way.
Taking risks is the best way to learn lessons. As you make mistakes, you get to be more cautious of your decisions. As you make mistakes, you will increase your knowledge about the financial market, and your financial capabilities.
You become confident with your money.
When you are used to taking financial risks, you start to become confident with your money. It does not matter if you have your share of failures. Every time you are successful, you will increasingly gain the confidence to take on more risk. Repeating the process will help you be more financially confident.
You overcome your fear of failure.
As you gain confidence, you will naturally overcome your aversion to failure. Sure, nobody wants to fail but sometimes, it is by failing that we figure out how to succeed. Sometimes, we need to learn the wrong path before we can discover the right one. According to an article published on CNN.com, you cannot really cure fear. What you can do is to overcome it by coming up with a plan. This plan will involve taking risks because facing unknown is the best way for you to gain the courage to overcome your fears.
Financial risks may be daunting, but it is the only way for you to grow in your finances. Unless you learn how to face these risks, you will never find the courage to take the steps that can help improve your financial position.