The next time you are facing what is considered a life-changing choice, instead of thinking about the outcome, ask yourself – “What is the downside?“. It’s a strangely powerful and positive question, it gives perspective, it gives comfort, it allows us to take action.
In reading Tony Robbin’s Money Master the Game, I noted how varied the strategies of the most successful financial minds of the last 50 years were, from Branson to Buffett. It trying to distil a blueprint, I realised there were no patterns, there was no consistent secret sauce to their success in what they do.
Sometimes the way to isolate and solve a problem is not looking at what is there, rather it’s what is not there. Looking through that lens, it becomes obvious more. The most successful people (financially), don’ just focus on the potential gain, they first focus on protecting the downside, they don’t lose money.
It’s similar with a lot of things. When we evaluate a decision we think about the risk and about the opportunity. When doing this we have a bias to what is known, our current path and we don’t evaluate the risk effectively. We have a bias towards inaction. We are still moving but with inertia, staying on the highway, not taking the off-ramp.
All to often it is often riskier to do nothing and less risky to do something. Especially when we realise that even if we take the off-ramp, we can join the highway down the road with little lost, but potentially we take another route all together and that can make all the difference to our success.
A couple of examples:
- A friend is shifting his career from Finance to HR and is naturally worried it is a mistake, but what is the downside? – He goes back to finance a few months later with a differentiating skill set. The upside is that he finds a new purpose and passion.
- A friend has started her own business. She is worried that she won’t be a success. At worst is she goes back to corporate with a new perspective. The upside is she realises far more of her potential.
Where to be concerned:
- Timelines shift – taking a few months off, becomes a few years without any progress. Think in terms of 3-6 month blocks.
- Debt – If it erodes your financial stability it needs to be evaluated more carefully (I have made this mistake in the past). Ideally you should have 3-6 months of wiggle room.
Perhaps the next time you are making a big decision, as yourself – “Well, what is the downside?“