Seatbelts Save Money

Risk is tricky. It will have us believe that highly probable things will never happen, and low probability things will. Like experiencing the death of a loved one and having regret for not following through on that coffee date. Or, how the fear of flying overshadows the risks of driving.

I am guilty of this. Many are.

But here’s what happens: we unconsciously substitute security for certainty. Like believing there will always be more time, or assuming that operating a motor vehicle tilts factors in my favor over commercial flying.

This juggle for equilibrium often results in underperformance and disappointment, and the effect is not prejudice on which area of life deteriorates: poor nutrition, negative mindset creep, job stagnation, career disappointment, or viewing wealth as a noun.

I discovered how I used these proxies for risks, and they were linked to my concern with safety, security, and desire.

But here’s the deal: these illusions were really anchored to my perception of control and normalcy. And together these two variables made the risky feel ordinary!

What I’ve learned

For instance, the fear of flying outweighs the fear of driving for most people. But in the United States drivers experience two automobile fatalities each hour. Compare this to US commercial airlines where fatalities in 2021 were zero.

So why the fear gap?

Simple — we start cars as much as we use toothpaste and deodorant. (hopefully)

Normalcy feels Normal

I’ll admit, flying is more expensive than driving. And taking a plane to church and to the ballpark is not realistic.

Also, flying demands trust in certain variables that don’t exist while driving trucks. And the actual probability that we survive a plane crash is slim-to-none; and slim left town.

The paradox here is not that we fly despite our fears, but that we drive despite the risk. There’s simple comfort in the known and routine, so we dismiss the risk.

This same illusion of control and normalcy is at play in our money stories, and it hurts us more than it helps.

Take for example investor sentiment. For many, it is often more about preventing loss than gain. Why? Because the fear of losing is stronger than the desire to win.

Does this sound overly simplistic?

Ask yourself: why does bad news sell?

Because bad is sticky!

Tilting the Factors in Our Favor

It’s easier to defend and protect than it is to hope.

Remaining disciplined to a strategy with the probability of something uncertain goes against 10,000+ years of genetic coding.

To offset evolution, we need to train ourselves towards a mindset of gratification and abundance.

But since we are unlikely to stop driving anytime soon, maybe we can learn something from our time on the road with seatbelts, momentum, and statistics that will help combat our proxy for risk.

Not Wearing a Seatbelt Saved My Life

In 1995 the driver of a 1977 Ford made an illegal pass and hit my driver-side door. My head broke the fall of a forty-foot injection. All parties survived. Believe it or not, my life was spared by two things: the momentum of the other vehicle and not wearing a seatbelt.

For some, this creates a strong argument for seatbelt anomalies.

But today, my truck and I have an oath: I wear a seatbelt.

Not because I fear becoming an unfavored statistic, but because tilting the factors in my favor works for me.

My reasoning: the same science that put man on the moon is the same science that developed the modern automobile, seatbelts, and modern portfolio theory. And the benefits of wearing a seatbelt simply compound in my favor and overshadow the “what if” scenarios. Plus, driving beats waking.

The Momentum of Probably

When positioning ourselves to choose Wealth as a Verb, we use momentum, financial seatbelts, and data to our advantage. This is referred to as a behavioral approach to finance.

Using a behavioral approach does not guarantee perfection. No plan is perfect. What counts is that we have a plan.

Dr. Daniel Crosby, an expert in behavior finance, writes:

“A behavioral investor will have no grand thesis, instead she/he will pursue a process-driven path of tilting probability in her favor at every turn, secure in the knowledge that “probably” is a powerful word in investing.”

Life Lesson: “The only constant in life is change. So keep changing.”

Engineer the Plan for Safety, not Comfort

The same fear that creates anxiousness while getting ready for liftoff on the runway is the same fear that plagues financial plans. There are no guarantees.

But the science behind jet propulsion technology is just as sound as rubber tires, gasoline engines, and efficient markets. And despite the risk of oncoming traffic and crashing airplanes, we still drive and fly……and we enjoy it.

So, fear should not paralyze our potential, rather we need to embrace the reality that any life worth living is one worth planning for. And leaning into life with a purpose has risk, just like driving our vehicles.

Instead of ignoring the risks, we should curate a financial plan with seatbelts. Just as seatbelts save lives, managing risks and managing expectations saves us from ourselves.

Enjoy the journey. Turn up the music!

#Wealth_Is_A_Verb #MoneyMindset #MoneyStory