How to Deal With Emotional Pain Caused by Money

A lot of people right now are losing a lot of money. Real estate is still going down. Every day the stock market takes a giant step forward or back.

There’s a lot of uncertainty, fear, and pain happening.

Psychologists have been able to quantify how much people hate to lose. Research says that people respond twice as strongly to loss, as they do an equivalent gain.

If we play with the math, there are two conclusions we can draw:

If you just lost $5,000, your mind believes it needs to make $10,000 to make up for the pain.
If you previously made $10,000, but just lost $5,000, you don’t feel you’ve gained anything.

Acting on Pain

When you experience pain there’s a strong motivation to act. Going back hundreds of years, the pains humans dealt with far more serious than the types of pain you suffer from today.

Our ancestors dealt with death, predators, and starvation frequently. It’s a good thing their minds reacted strongly to pain or else you wouldn’t be alive.

Today, the pain you suffer from, such as losing money, is less serious. However, your brain still responds the same way your ancestors did to death, predators, and starvation – it’s highly motivated to act, to make up for or prevent the loss.

Imagine you just lost $1,000 playing blackjack. You feel horrible. The only thing you can think about is making up for that loss.

So what do you do? Play more blackjack of course. It’s what makes the pain go away for a short-period of time.

The period of time that comes after a loss, is a time where many stupid financial mistakes are made.

You’re so motivated to eliminate your pain; you’re willing to take giant risks. After all, in order to eliminate the pain you’re not only trying to make your money back but make twice the amount back.