10+ Risk-Taking Tips: How To Take Risks That Pay Off

We'll cover risk-taking tips to help you understand the psychology ... The best solution for this is to go through a process of envisioning ... ToggleGlobalNavigation Mortgage PersonalLoan RealEstate Auto Home Learn RiskTaking 10+Risk-TakingTips:HowToTakeRisksThatPayOff HannaKielar14-minuteread October19,2021 Share: Whatdoyouthinkofwhenyouheartheword“risk”? Risk-takingcanbescaryforsome,asitcaninvoketheideaofchangeorthepossibilityofsomethinggoingwrong.Inevitably,thiscanleadsometoretreatfromrisk.Butareyoureallydoingyourselfafavorbyshyingawayfromrisksandchange?Probablynot. Changeistheonlyconstant.Youmaynothaverealizedit,butweencounterdecisionsandriskseveryday,multipletimesaday.Someoftheserisksaresmall,liketryinganewrestaurant,whileothersarelife-altering,likedecidingtostartanewjoborbuyahome.Riskscanbringgreatchangesandnewopportunitiesyouhadn’tanticipated. Inordertolearnhealthyrisk-takingbehavior,wetalkedtoexpertsandlookedatthepsychologyofrisk-taking,howtotakerisksinlifeandsomeadditionaltoolstohelpyoubecomeabetterrisk-taker.Thenwe’llexplorehowtoapplythesetacticstohomebuyingtohelpyoumakeimportantdecisionslikerefinancing,applyingforamortgageorweighingtheprosandconsofastarterhomevs.aforeverhome. ThePsychologyofRisk-Taking Therearemanyfactorsatplaywhenitcomestorisk-taking.We’rejusttakingalookatafewthatmayresonatewithyou,includinghowyourage,pastandpersonalitycanplayaroleinyourabilitytoseizeopportunitiesandtakerisks. Wewanttonotethatthecontentsofthisarticledonotreplaceanevaluationoradvicefromamentalhealthexpert. TheOlderYouGet,TheFewerRisksYouTake Thedecision-makingregionsoftheaverageadultbrainarecomposedof80%excitatorycellsand20%inhibitorycells1.Onaverage,thecellsresponsibleforinhibitiondon’tworkatfullcapacityuntilyourmid-twenties.Thereisalsoevidencethatlinksthedecreaseindopaminelevelsweexperienceasweagewithadecreasedinterestintakingrisks.2  Otherlifeeventscanimpactpeoples’willingnesstotakerisks.Forexample,newparentshaveanotherperson’swell-beingtolookoutfor;peopleapproachingretirementmaywanttotakeasteadierfinancialpathtonotjeopardizetheirsavings. YourPastCanPlayABigRole Studiesshowthataperson’spastandupbringingcanimpacttheirrisk-takingcapacities.3Somepeoplestruggletotakeriskswhileothersmayhavetheoppositeproblem.Understandingwhereyoufallonthescalecanhelpyoubettergaugefuturedecisions. Lookatpastdecisions,onesthatwentwellandonesthatdidn’t,aswellasopportunitiesyoufeelyouletpassby.Themoreexperiencewehaveincertainsituations,typically,thefasterandmoreaccuratelywecanevaluateoptions. PersonalityCanPortendRiskyBehaviors It’slikelytruethatyourpersonalitytraitscanalsohelpindicatewhetherornotyou’dbewillingtotakerisks.Manyofthesestudieshavefocusedonnegativerisk-takingbehaviors4butothersshowthatthesepredictivetraitstranscendintootherrisk-takingscenarios,likesports,forexample.5 Dr.FranWalfish,afamilyandrelationshippsychotherapist,6gaveusalistofpersonalitytraitsthatsheseesinpeoplewhoaresuccessfulatgettingoutoftheircomfortzoneandembracingriskandchange: Solidegostrength:Thepersondoesn’thavetobe“right”allofthetime,nordotheyneedtohavethingsalwaysgotheirway(orthehighway!). Capacitytoself-examineandbeaccountableforone’sownmistakes.Thepersoncantakeanhonest,painfullookwithinandownuptoanerrorandofferagenuine,heartfeltapology. Humor:Theabilitytolaughatoneselfandthenaturalmisstepseveryonetakes. Painthreshold:Painisusuallythemotivatorforchange.It’sthegasolinethatdrivesaperson(toseekchange). Reasonablyhealthycommunicationskills:Theindividualcangenerallymaketheirfeelings,needsandwantsknownthroughverbalexpression. Determinationandwill:Theindividualisusuallynotpassive.Theyarethetypeofpersonwhodoesn’tgiveupeasilyandhasthedrivetomakeittothefinishline. Understandingthesedifferentfactorsastheyrelatetoyoucanhelpyoufindroomforimprovementandrecognizewhenyou’reholdingbacktoomuch(orinsomecases,notenough). HowToTakeRisks(Successfully) Thereisnoexactscienceforsuccessfulrisks–hencetheterm“risk.”Buttherearestepsyoucantaketoapproachrisk-takingfromahealthyplacetogiveyourselfthebestoddsofapositiveoutcome. We’vegatheredtipsfromexpertswhoworkcloselywithriskmanagementandhelpingpeopleembracechange. 1.KnowThe‘Why’ Thefirststepinfacingrisksandtoughdecision-makingistoprovideyourselfwithsomeinspiration.Rev.Dr.RickPattersonnotesthatyoushould“knowthewhy”–understandingmotivationmakesallthedifference.Whetheryou’retakingonriskoravoidingit,thekeytosuccessfuldecision-makingisknowingwhyyou’redoingwhatyouaredoing.7 Totakethatastepfurther,MeredithPrescott,LCSW,8recommendsthatyou“setyourgoalsonwhatyouwishtoaccomplish.Outlinethemclearly.Makesurethattheyarespecificandmeasurable.Weareoftensoafraidtofailthatweavoiddecisions.Challengeyournegativelimitingbeliefs.Whatevidencedoyouhavethatyouaren'tgoodenoughorthatyouwillfail?” 2.OpenUpToUnseenPossibilities Beingarisk-takercanhelpyoustandoutinmanysituationswhichcouldcreatenewopportunitiesyouhadn’teventhoughtof.Understandthatthoughtherearepotentialnegativeconsequences,therearelikelypositiveoutcomesthatyouhadn’tconsideredyet. ElaineTaylor-Klaus,CEOatImpactParents9,explainsthat“manypeoplefindcomfortinreliabilityandcertainty.Andasaresult,theyfearwhattheydonotknow.Theywanttobeabletoanticipatewhat'sgoingtohappentosuchanextentthatevenwhentheyareterriblyuncomfortable,they'lltakenoaction.Forthesepeople,thefearofchangeisgreaterthantheirfearofthestatusquo.” 3.PracticeOnASmallerScale Unfortunately,there’snoswitchthatyoucanfliptobecomeabetterrisk-taker,likemostthings,ittakespractice.Prescottrecommendsthatyou“identifywhatisholdingyoubackfrommakingachange.Often,procrastinationstemsfromfearandaninabilitytotolerateuncertainty.Sitwithdiscomfortandacknowledgethatyouwillneverhavecertainty.Talkaboutyourfeelingsandnamethem!”(8) Somegreatexercisesinclude: Takesmall,dailyrisks Talkaboutwhatyouwant Journalaboutwhatholdsyouback Visualizewhatyouwantingreatdetail Roleplayasthepersonwho’salreadyachievedit Engageinotherconfidence-buildingexercises Recitemeaningfulmantras Makeitatime-limitedbucketlist Meditate VisualizationAndRolePlaying Taylor-Klausexplainsthat,“ifyoucan'tenvisionwhatchangewilllooklike,thenyoucannotevenseehowtotakethefirststep.Thebestsolutionforthisistogothroughaprocessofenvisioningthechangeyouwanttosee,inasmuchexquisitedetailaspossible.Role-playingandbuildingconfidenceisanotherkeytocreatingchange.”(9) FlexYour‘RiskMuscles’ NicoleArzt,LicensedMarriageandFamilyTherapist(LMFT)andboardadvisorymemberforFamilyEnthusiast10suggests,“practicetrainingyour’riskmuscles.’Themoreyoucanstepoutofyourcomfortzone,theeasierthose‘biggerrisks’tendtofeel.Thinksmall–getinthehabitoforderinganewentreeatyourusualrestaurant,takeadifferentcommutehome,reachouttosomeoneyouwouldn'tnormallytalkto...Inotherwords,embracechangewithinyourdailylife.Themoreyoucanbeopentochange,thebetteryoupositionyourselftonovelty.” CommitToABucketList Arztalsopointsoutthat,“abucketlistissuchagoodwaytoforceyourselftotrynewthingsandtakerisks.Butthecatchisthatyouneedtomakeitatime-limitedbucketlist(i.e.for1monthor1year).Writedownthreetofivethingsyou'dreallyliketoaccomplishortry.Takethetimetoidentifythestepsyou'dneedtotaketoachievethatgoal.Placethislistsomewherevisible.Themoreyouareremindedofyourgoals,themorewillingyouaretogoafterthem.”(10) 4.ReframeYourFears Don’tjustlookatthenegativeoutcomes,giveequal(ifnotmore)thoughttothepositiveoutcomes.ChrisNorris,certifiedsleepsciencecoach,11explains,“knowingthebenefitsofyouractionswillmakeyourselfmoreconvincedtotakerisksbecauseyouwillgainsomethingoutofit...Whenyoutakerisks,youopentheopportunityofgainingalesson,sobebraveenoughanddoit.” JoelThielke12remindsusthat“wecanreframe[ourlimitingbeliefs]intoempoweringbeliefs.Sotake‘changeisscary’andturnitinto‘changebringsnewpossibilities.’Or‘takingrisksopensmeuptomoresuccess’”tolookatyourfearfromanewperspective. Ifyoufindyourselffeelingstuck,Dr.BrianWind,Ph.D.,aclinicalpsychologistandchiefclinicalofficeratJourneyPure,13recommendsthatyou“identifythethoughtpatternsyouhavewhenitcomestoembracingchangeandrisk-taking.Maybeyoutendtogrumbleorpushbackagainstchanges,blameothersorblametheworldwhenithappens,orwaitforthechangetopasswithoutadapting.” Healsorecommendsthatyou“learntomanagethesethoughtswhetherit'sthroughrelaxationtechniquessuchasmeditationthatwillhelpreduceyouranxietyaboutthechangeandfeelmoreincontrol.Youcanalsofocusonthewaysthatyouhavesuccessfullyadaptedtochangeormanagedrisksinthepastandhowtheseexperiences,lessonsandskillscanhelpyoumanagethechangeyouaregoingthrough.” 5.PursueGoalsWithConviction Taylor-Klausexplainsthat,“ultimately,avoidancehappensovertime,andchangehappensquickly.Allittakesisabout20secondsofbraverytostarttheconversationandtherestunfoldsquicklyfromthere.”(9)Youcan’tjustwantsomething,youhavetoactivelymakeithappen.Complacencyiscomfortableforalotofpeople,soittakesefforttogoafterwhatyouwantandthewillingnesstotakerisks. LynellRoss,resourcedirectoratTestPrepInsight14remindsusthat“it’seasiertostaywhereyouare,notchangejobs,notasksomeoneout,ornotmakeaninvestmentbecauseofthefearoffailure.Peoplesubconsciouslythinkthatiftheydon'ttry,theycan'tfail.However,atimecomeswhenstayingthesamemaybecomemorepainfulthanriskingchange.” Activelyseekoutopportunitiesandlearntobetterevaluatetherisks. 6.CalculateRisksAndAskForHelp Dr.Walfishrecommendsthatyou“becomeinformedbeforeyoumakeadecision.Dotheresearchandfindinformationonyourown.”(6)Createaprosandconslistthattouchesoneverythingfromtheverybestoutcometotheworst. Aboveallelse,don’tbeafraidtoaskforhelp.Rosspointsoutthat,“ifyoufeellikeyouwanttomakeachange,butcan'tmakeadecision,askforhelp.Whetheryouareconsideringabusinessmove,financialdecisionorrelationshipchange,seekthecounselofanexperttohelpyoumakeyourdecision,butultimately,yougettomakethechoice.Thennomatterwhattheoutcome,takeresponsibilityforyourchoices.”(14)  ButDon’tOverthinkIt Whileit’simportanttomakecarefulcalculations,there’salsovalueinlooseningthereinsonyourfear.ExpertinvestorandCEOcoachEricLochtefeld15pointsoutthat“ifitscarestheheckoutofyou,chancesareitcomeswithhugerewardsandiscallingonyoutodoit!EverymajorwinIhaveinmylifeisbecauseIchosetotakearisk.” FounderandpresidentofSuburbanJungleAlisonBernstein16agreesthatoveranalyzingsituationscanbedetrimentalandlead“toanalysisparalysis...withtheworldchangingsofast,itisimportant...tostaynimbleandatthereadytoembraceanewcourse.” 7.ReadYourEmotionsAndReactions CarrieKrawiec,LMFT17tellsusthat“oftenpeopleshyawayfromriskoravoiditaltogetherbecausetheybelievestressoranxietyisbadandareavoidingthefeeling.Thebody,however,doesn'treallydistinguishbetweenanxietyandexcitementanditcouldbeyouaremissingtheopportunityforsomethingexhilarating.” Dr.Walfishalsorecommendsthatyou“determineifthereisalegitimatereasontopanicorworry,orifyouarereactingbeforeanythinghasgonewrong.”(6)Thisisanotherreasonwhyit’scrucialtogetmoreintouchwithyourselfandyourfeelings.Isthisreactionatruegutreactionordoesitstemfromanoutsidefactor?PallahBurdis,MSW18,pointsoutthatyour“sociallearningsystemcanalsohinder[yourrisk-taking]traitduetolearnedbehaviorfromotherswhodon’ttakerisks.”  8.WhenInDoubt,SleepOnIt Heightenedstressandanxietycouldhamperyourabilitytofairlyassessarisk.Stayintunewiththewisdomandcuesyourbodyprovides.Ifyou’reoscillatingtoocloselyinbetweendecisions,sleeponitandevaluateyouroptionsagainwithaclearermind. TeresaLodato,CPCC19,encouragesyouto“calmyournervoussystemtoaccessinnateandlearnedwisdomtomakebetterdecisions,seepossibilities.Rememberpastexperiencesandlearnings.Tuneintoyour[body’ssignals]tohelpinformdecisions.Whenindoubtsimplychooseanoptionandseehowitmakesyourbodyfeel.” 9.StudyYourFailures Knowthatnoteverythingwillgoaccordingtoplan–that’sjustthenatureoflife.What’smoreimportantiswhatyoudoafteraperceivedfailure.Krawiecexplainsthat,“throughriskandchallenge(eveniftheoutcomeisimperfect)wemakeourselvesvulnerable.Whenweuseourownskillsandabilitiestogetthroughit,wegainstrengthandpride…Don'texpectperfectionthefirsttime.”(17) AsKrawieccleverlyputsit,“‘FAIL’can[serveasanacronym]forthe‘firstattemptinlearning.’Peopleavoidsomethingwhentheythinktheyshouldknowwhattodoperfectlywithouttryingit.Insteadpredict,planandpraisegradualapproximationsforsuccess.”(17) Flipthescriptonfailures.Lodatoexplainsthat“everyperceived‘failure’canprovidelearningswhichhelpsbuildasenseofresilience.Recognizingtimesinthepastwhereyouhaveovercomechallengeswhileconsideringwhathelpedyouatthattimegetthroughit,canprovideopportunitiestoreusethoseskillstomovethroughthepresentchallenge.”(19) 10.EmbraceChangeAndAdapt DarcieBrown,LMFT20explainsthat“humansaremeanttogrowandchange,sowhenweresistchange,youmaystarttorealizedissatisfactionwithyourlife,orevendepression.Ifyoushyawayfromrisk,remindyourselfthatit'sOKtobescared,butyoucandoitanyway. “Also,rememberthatmostdecisionsaren'tpermanent.Ifyoudon'tlikewhereyouendup,youcanalwayschangecourse.Andthemoreyouleanintochange,themoreyourealizeyouarecapableofembracingit.” Risk-TakingInHomeBuying Yourhomeislikelythebiggestpurchaseyou’llmake,sounderstandably,theprocessmayseemdaunting.Therealestatemarketcanbetumultuous,21butbuyingpropertyisalsooneofthemostmentionedwaystobuildwealth22,makingitariskworthtaking.Smarthomebuyingmovescanhelpyoumoveupthepropertyladderandevengettoaplacewhereyousupportyourselfthroughyourinvestments. Withtherightstepsinplace,youcanmitigateyourriskandlandthehomeofyourdreams. ThinkBigPictureAndLong-Term Justlikeanyotherrisk,understandingyour“why”iskey.Thinkaboutwhyyouwanttopurchaseahome.Areyoulookingforyourforeverhome,astarterhomeoraninvestmentproperty?Understandingwhatyouwantoutofapropertycanhelpyousavetimesiftingthroughoptionsthatdon’tfityourultimategoal. KnowWhereYouStandFinancially Thefirststepinevaluatinghomebuyingrisksistoknowyourfinancialsituationandwhatoptionsyouhave.Therearemanyavenuestohomeownership,butthegreateryourfinancialhealth,thebetteryourmortgagerateoptionswilllikelybe. Beforeapplyingforamortgage,payoffasmuchdebtyoucan,lookintocreditrepair(ifneeded)anddoadeep-diveintoyourbudgettoseewhereyoucansavemoreforadownpayment.     EducateYourselfAndLookIntoResources MakesuretolookintolocalprogramsorgetadvicefromyourlocalHUDadvisortomakethemostofyoursituation.Forexample,researchersbelievethatsingleparenthoodmaybeadrivingforcebehindthewomen’shousinggap.Singleparentsmaynothavethesamefinancialflexibilitytowaitoutthemarket.Seesomeadditionalresourcesbelow: Homebuyingforpeoplewithdisabilities Guideforfirst-timehomebuyers Downpaymentassistanceoptions Homeaffordabilitycalculator SpeakToAMortgageExpert Whilethereareatonofgreatresourcesonlinetohelpinformyouabouttheprocess,thereisnosubstituteforpersonalizedassistanceandadvice.Speaktoamortgageexperttohelpyoufigureoutahomebuyingplanthat’llsetyouupforsuccess.   FollowTrendsAndBePatient SignupforalertsonMLSlistingsitesandkeepacloseeyeonthemortgageratetrends.Ifyoucanaffordtobepatient,youshouldtrytoholdoutforthepropertythatfitsyourcriteria.Weknowthat’snotalwayspossibledependingonyoursituation–thismakesseekingprofessionalguidanceallthemoreimportant. 10+Risk-TakingQuotesAndMantras Stillneedapushtogoafterwhatyouwantortotakealeapoffaith?Below,seesomegreatrisk-takingquotestokeeponhandfordailyinspiration: “Therealriskisdoingnothing.”–DenisWaitley “Doonethingeverydaythatscaresyou.”–EleanorRoosevelt “Ifyouarenotwillingtorisktheunusual,youwillhavetosettlefortheordinary.”–JimRohn “Inthemiddleofeverydifficultyliesopportunity.”–AlbertEinstein “Takingrisksdoesn’tmeanyoudon’tfeelfear,acknowledgefear,orletfearinformyou;youjustdon’tletitstopyou.”–CarenMerric  “Ashipinharborissafe,butthatisnotwhatshipsarebuiltfor.”–WilliamG.T.Shedd “Don’tbeafraidtotakeabigstep.Youcan’tcrossachasmintwosmalljumps.”–DavidLloydGeorge “Thebesttimefornewbeginningsisnow.”–Unknown “Embracewhatyoudon’tknow,especiallyinthebeginning,becausewhatyoudon’tknowcanbecomeyourgreatestasset.”–SaraBlakely “Everytimeyoustatewhatyouwantorbelieve,you’rethefirsttohearit...Don’tputaceilingonyourself.”–OprahWinfrey “Ifyouwanttobehappy,setagoalthatcommandsyourthoughts,liberatesyourenergyandinspiresyourhopes.”–AndrewCarnegie “Whetheryouthinkyoucanoryouthinkyoucan’t,you’reright.”–HenryFord Printoutandframeone(ormore)ofourwallartprintstoinspireyoutobecourageousandkeepyoumovingtowardsyourgoals: Don’tmissoutonagoodthingforfearofchange.Theonlythingthat’sguaranteedinlifeisthatthingswillchange.Ifyoupracticethoughtfuldecision-makingonadailybasis,evaluatingandtakingriskswillonlybecomeeasier.      Sources: CarnegieMellon CurrentBiology DevelopmentalScience PersonalityandIndividualDifferences  ResearchQuarterlyforExerciseandSport  Dr.FranWalfish,BeverlyHillsfamilyandrelationshippsychotherapist,author,TheSelf-AwareParent,regularexpertchildpsychologistonTheDoctors,CBSTV,andco-staronWEtv  Rev.Dr.RickPatterson  MeredithPrescott,LCSWatPrescottPsychotherapy+Wellness  ElaineTaylor-Klaus,CEOatImpactParents.com  NicoleArzt,LicensedMarriage&FamilyTherapist,whoservesontheadvisoryboardforFamilyEnthusiast  ChrisNorris,CertifiedSleepScienceCoachandEditoratSleepStandards  JoelThielke,CEOatMotivationalHypnotherapy  Dr.BrianWind,PhDclinicalpsychologistandChiefClinicalOfficeratJourneyPure,andformerco-chairoftheAmericanPsychologicalAssociation'sAdvisoryCommitteeonColleagueAssistance  LynellRoss,ResourceDirectoratTestPrepInsight  EricLochtefeld,expertinvestorandCEOCoachandFounderofBlissChampions  AlisonBernstein,FounderandPresidentofSuburbanJungle  CarrieKrawiec,LMFTatBirminghamMapleClinic  PallahBurdis,MSW  TeresaLodato,CPCCandfounderofFounderBecomingAwareCoaching  DarcieBrown,LicensedMarriageandFamilyTherapistatDarcieBrownWellness  CNBC  Forbes SeeWhatYouQualifyFor HannaKielar HannaKielarisaSectionEditorforRocketAuto℠,RocketHQ℠,andRocketLoans® withafocusonpersonalfinance,automotive,andpersonalloans.ShehasaB.A.inProfessionalWritingfromMichiganStateUniversity. 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