Choosing What's Hard But Worthwhile

Loss aversion is one of the most popular cognitive biases we have. Most people have heard of it, or at least know how it feels to lose something. We humans have this itch in our minds to avoid loss wherever possible. Going against this urge can feel like pulling teeth, but sometimes we just have to accept risks.

Lately, I’ve been weighing moving somewhere new. I’m thinking about all the decisions that I’ll have to make in a new city, whether or not I’ll be successful there, and whether I’m making the best possible choices given my circumstances. To me, that means it’s about money.

For me, spending money is hard to do. I associate money with freedom. Spending is therefore deliberately deciding to let go of some of my freedom in exchange for something else. It’s tough to do it.

I’ve dealt with student loans myself. I’ve dealt with having low income. I’ve seen others deal with debt and bad credit. I’ve seen how my good money habits help me, and how others’ bad money management has hurt them. (And I’ve seen others make good decisions that seemed better than some of mine as well.) This has all stuck with me.

I’m so wired to sit on my money and save everything I can that big-ticket items and large purchases can be hard for me, even if I’m getting a good deal.

Like everyone, I hate to lose what I have. We’re built to feel this way. Maybe I feel this more intensely than most, but I hate losing what I’ve got and choosing to ante up often means there’ll be a lot of anxiety while I decide whether to hold ‘em or fold ‘em.

Studies have revealed that in our minds, losses are about twice as painful as gains are pleasurable. That’s been useful over the eons, since we’ve needed to carefully guard resources to survive another day.

That’s not to say it ever stopped being useful, or is unhelpful now. There are lots of times when such thinking is helpful, especially in the world of investing. Having an aversion to loss is a good way to ensure you take stock of your choices and consider all the angles before making big decisions--up to a point.

At that point, you’re up to your eyeballs in it and you simply have to choose. (Of course, inaction is always a sort of choice in itself.) Choosing what seems best is all you can do.

Yet it still leaves us with managing our emotions as we make decisions, no easy task. We have to figure out how to navigate around our own bias, even if we know about it.

If I feel losses twice as much as what I might gain, how can I even the scales?

For me, it means that I just need to hold my own hand through the process of making decisions that involve big expenditures. I have to visualize the pros and cons, the costs and benefits of action, convincing myself of both sides of the argument so I can take the measure of them both. Stepping outside myself, I have to counsel myself until it’s decision time.

Decisions often wear you down. Decisions burn up a lot of energy, which is part of why being poor is so taxing, but they’re also a reminder of what to cherish. I have to remember that being in a position to choose in the first place is something to be grateful for, and that I’m fortunate to have options.

In the end, then, it comes down to finding things to say yes to that are magnificently obvious in how they make your life better, things that seem so likely to work out well for you that even at twice the price, you’d still probably pay.

So, for me, it’s moving time.