Overcoming the Emotion of Fear
Why emotional intelligence is key to success
A big part of being human is being human. And, being human means having emotions. We all feel fear, sadness, anger, love, hate, disappointment, joy, and more. What makes us each unique is how we respond to those emotions.
When it comes to risking money, we all experience fear, even the most successful of us. The difference is how each of us handles that fear. For many people, that emotion of fear generates the thought: "Play it safe. Don't take risks." For others the fear of losing money makes them think: "Play it smart. Learn to manage risk."
Same emotions, different thought: different being—different doing—different having.
The greatest cause of financial struggle
In my opinion, the greatest cause of financial struggle is the fear of losing money. It's this fear that causes people to often operate too safely. If fear keeps you back from pursuing your dreams, I recommend you read Emotional Intelligence by Daniel Goleman. In his book, he explains the age-old puzzle of why people who do well in school do not always do well in the real world.
Goleman's answer is that your emotional IQ is more powerful than your academic IQ. That is why people who take risks, make mistakes, and recover often do better than people who learned not to make mistakes and are afraid to take a risk.
Too many people leave school with good academic marks but no marks earned by taking a chance. They are not emotionally prepared to take risks, especially financial ones. Financial freedom comes when you finally feel free to make mistakes and manage risk.
Emotional IQ is stronger
After reading Goleman's book, I came to realize that financial IQ is 90 percent emotional and 10 percent technical information about finance and money.
Goleman, quoting 16th-century Erasmus of Rotterdam, uses the ratio of 24:1 in comparing the power of the emotional brain to the rational brain. In other words, when emotions are high, intelligence is low. I don't know if the ratio is scientifically valid, but it is useful in terms of practical experience. All of us have experienced events in our lives when our emotions overtook our rational thoughts. It often seems impossible to overcome our emotions and act rationally.
When it comes to money, our emotions often get the best of us. We know what we should do, but instead we do what we feel like doing—and that's usually the safe route.
Recognize the patterns
As I wrote about a couple weeks ago, part of becoming successful is recognizing patterns that hold you back , and taking action to overcome those patterns. When we are faced with fear of risk, we must be able to rationally recognize that fear before it becomes too strong to overcome. This requires self-knowledge that is the result of constant self-assessment.
If you can keep your emotions in check and go for what you know to be logical, you have a good chance of being successful. It's a process of knowing which of your thoughts are emotion-based and which are logic-based. The most important conversation is always the one you have with yourself.
A little help
When dealing with your emotions, it's always helpful to have someone to talk to that can give you objective advice—especially when it's advice you may not want to hear. When Kim and I were going through hard times, she was always there for me, to remind me of what we were working for. Her guidance kept me going, and I did the same for her. And we both had other coaches in our lives as well, who were committed to our success.
If you're ready to make the next step in your financial journey, you may want to consider a coach. We have our Rich Dad Coaching program and our coaches work with you to help you develop your own personal plan of success, and they keep you on track—even when you don't feel like it. If you feel our program is not for you, that’s fine; I still highly encourage you to find a coach. You’ll be better because of it.