It probably comes as no surprise, but the most straightforward answer to the titular question is: it depends. The variables that one needs to address change depending on the context of the situation and other factors that come into play. As such, establishing whether the risk is worth taking or not can be a challenging and time-consuming affair.
Before making a risky decision, it is worth imagining the best and worst possible outcome in given circumstances. Can you afford to walk out empty-handed, or is the investment you made so significant that only a beneficial result can help you? Are there ways you can explore to minimize the risk? Is the idea still enticing after you shrink it into easy-to-understand parts?
Answering these and other risk-related questions is usually the first step in determining if the endeavor you wish to undergo is worth the effort. Here are some of the best guidelines for taking risks in life:
Know Your Level of Risk Tolerance
It is crucial to determine your risk tolerance level before stepping into a risky situation, as it will help you decide whether the endeavor is worth your time and effort. In general, there are three types of risk-takers:
- Risk-neutral. This type of person does not care if they get a positive result or not. They are willing to take risks because they believe that the risk itself is all they need to experience excitement and pleasure in life.
- Risk-seeking. Some people actively seek out risks and enjoy the adrenaline rush that comes with it. The goal of such people is to experience something new, learn from their mistakes, and as a result, find ways to improve their lives.
- Risk-averse. Everyone else falls under this category, as they prefer to avoid risks in favor of a more predictable outcome. For example, some parents don’t want their kids to participate in dangerous sports to minimize the risk of injury or harm.
As such, when you want to make a risky decision, you first have to decide which category your choice falls under. If you do not feel comfortable taking risks, it does not mean that you should avoid them at all costs. Instead, you should set yourself up for long-term success by ensuring that you put yourself in situations where you are comfortable taking risks. By doing so, you will be able to assess whether the effect of taking risks outweighs the benefits that come with taking safer routes.
For example, if you’ve always wanted to try gambling but are afraid of losing your money, you may consider choosing sports betting (here, see the best football betting apps) over casinos and lotteries, as this turns out to be the safest option. Getting familiar with teams’ performance and statistics can significantly increase your chances of winning, which doesn’t apply to entirely luck-dependent slot machines and lottery numbers.
Know What’s at Stake
When looking at your options, it is crucial to consider how much you stand to gain or lose, depending on the decision you make. Doing so can help you make well-informed decisions while reducing the chances of regretting your choices later on down the line. After all, no one wants to regret failing at something due to an oversight — especially when it involves money!
Before making any decision, consider the following factors:
How Much Can I Gain?
It is crucial to examine how much money you stand to earn depending on the outcome of the risky decision you wish to make — the greater the potential payout or loss, the bigger the incentive for taking risky action. For example, if someone were presented with two job offers on equal terms except for salary (e.g., $20k vs. $30k), they would likely choose the higher paying job due to its larger payout over time (assuming their expenses remain constant).
How Much Would I Stand to Lose if I Fail?
Likewise, it is critical for every individual who wishes to take a risk to consider what their downside would look like if things do not go as planned. For someone to take a risk financially, they need to be able to afford losses from their personal assets if things do not work out (for example, losing $100k in an equity option).
Consider Your Role in the Situation
Every individual has different roles in certain situations — whether we are talking about our professional or social roles (i.e., being a parent). When we break down our roles into further detail, we can see how they define our responsibilities towards others and towards ourselves.
For example, anyone who takes on a parental role has an obligation towards their children (e.g., to keep them safe) as well as towards themselves. As such, it makes sense for them to consider each risk carefully with respect to these obligations.
Consider All Possible Outcomes
In most cases, it is impossible for us humans (as limited beings) to fully understand all outcomes that come with our decisions. Therefore, it makes sense to spend some time thinking about them in detail to prepare ourselves mentally for what might happen next. The more you weigh the options in your mind, the less likely you will be to regret your decision later on.
Taking risks is an important part of life. Without them, we would never take on new challenges or make progress towards our goals. While we cannot eliminate risks entirely, we can reduce them with good planning and preparation.
There is no straightforward answer to how to take risks in life, as each situation is unique in its own way. However, if you follow a few key guidelines and think about the possible outcomes of your actions beforehand, you can easily cut down on the chances of regret later on down the line.
In the end, it all comes down to weighing your options carefully and knowing when the risk you wish to take is worth your time and effort. If you consider these steps before making any decision, you will be able to take better care of yourself and those around you.