Increase Your Risk Tolerance — Even if You’re Not a Risk-Taker
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Welcome, welcome, welcome everybody. Today is Friday as I record this episode, and I just got finished filming a bunch of video for the online course I’m developing. I’m having a really bad allergy day, and I’ve been trying not to blink and scratch my eyes while I shoot these videos. Right now it’s a huge relief to just be a disembodied voice so I can rub my eyes and blink to my heart’s content.
It’s so crazy that a month ago I didn’t have a podcast or any experience with shooting video or editing video and now I’m doing all these things that I didn’t know how to do before. I knew that 2019 was going to mean a lot of new things for the business, but I’m thinking that my theme for this year is really the Year of Expansion. It’s really exciting.
Speaking of expansion, today I want to talk all about risk. More specifically, I want to talk about how to increase your risk tolerance in life and in your creative business. Getting comfortable with risk is really important in all areas of life, because if we don’t take risks, we aren’t going to grow.
If nothing we do feels risky or scary, that is usually a sign that we are stagnant. And life is too short to be stagnant.
Let me preface all of this by saying that I was not born a risk-taker. Up until my early twenties, I really preferred to play it safe. I was a rule-follower. I wouldn’t rock the boat. And I was always very conservative in my decision-making.
Over the last five years or so, I have progressively gotten more and more comfortable with taking risk, so I’m here to tell you that expanding your risk tolerance IS possible — no matter where you’re starting from. We’ll get into what determines your personal risk tolerance in a minute, but first I want to talk about the different types of risk.
I spent a lot of time thinking about this on my walk the other day, and I decided that all risk fits into two categories: emotional risk and physical risk.
If you really think about it, every risk you take in life fits pretty neatly into one of these two categories.
Emotional risk encompasses our identity and our feelings. A lot of you really like Brené Brown’s books. She wrote “Daring Greatly” and “Braving the Wilderness.” Brené Brown has become the poster child for vulnerability in the workplace in and in relationships, and vulnerability is just one form of emotional risk.
The other category risk is physical risk. This is where financial risk comes into play, because a big financial risk can threaten our ability to support ourselves, which gets into our fears around survival. Physical risk also encompasses bodily risk, so the risk you take anytime you get into a car or an airplane or go skydiving. There’s always a risk of bodily harm, so we say that the risk is physical.
In the context of our creative businesses, a lot of the risk we’re talking about is professional risk. And the reason professional risk can feel so scary at times is because it straddles emotional risk and physical risk.
So many of us have our identities wrapped up in what we do. When someone asks me who I am, I always identify as a writer. It’s a huge part of my identity.
But what we do as a profession also taps into our finances, our ability to provide for ourselves, and ultimately our survival. That’s why professional risks and business risks can feel so threatening.
So these are the basic types of risk. The first step to overcoming fear of risk a lot of times is to identify what type of risk it is. If it’s an emotional risk, it can sometimes help to realize that no outcome can physically hurt us.
If we’re getting ready to put a piece of work out into the world or put ourselves out there by having a tough conversation, it may feel like we will die if it doesn’t go over well, but really we’re just going to have an emotional response. We aren’t going to break an arm or break our neck. We’re going to be fine.
But in cases where a risk does impact our financial and physical survival, it’s important to understand what’s shaping our personal risk tolerance.
So lately, I’ve been kind of into Tony Robbins. I’m reading “Awaken the Giant Within,” which came out in 1991. I got this copy on Ebay, and it’s hilarious because when I ordered it I didn’t realize how old it was. The book is so old that his name is on the cover as Anthony Robbins. He’s in this cheesy suit that makes him look like a vacuum salesman, but I like Tony Robbins.
And Tony Robbins will often say that there are six core human needs that drive everything we do. Everybody has these needs, but we all rank them differently, and whatever need is number one for us is going to determine every choice we make.
It’s my personal belief that our risk tolerance is shaped by which need ranks number one for us, and this need is often at the core of our fear around risk.
So these are the six needs:
The need for certainty
The need for variety (or uncertainty)
The need for growth
The need for significance (so the need to feel special or important)
The need for love and connection
And the need for contribution (to give something back to the world)
I’ll repeat those one more time: the need for certainty, variety, growth, significant, love and connection, the need for contribution.
We all need these six things, but they rank in a different order for all of us, and the need we rank number one is going to be our driving force.
So for me, the need for certainty ranks number one. The need for growth is a close second, but my need to feel certain about things drives every single thing I do. I get this from my dad. For he and I both, we really like a sure thing.
I prefer to think that I’m optimistic, but my dad and I both have this creeping idea that the world is a minefield of disasters waiting to happen. This is why we like our routines and why we tend to drag our feet on big financial decisions.
Certainty drives every single choice I make.
Now my husband, on the other hand, is driven by the need for variety or uncertainty. It’s one of the reasons why he makes his living as an investor. It’s why he loves to travel, and it’s one of the reasons why he’s often reluctant to make plans. He likes to be on his own schedule and stay open to spontaneity. He has no problem taking risks, and being married to him is one of the reasons why my risk tolerance has increased so dramatically. I think I might have him on the show in the next couple weeks because he has a much sexier radio voice than I do and it would be interesting to get his perspective on risk.
But one of these six needs is your driving force, and anytime we find ourselves resisting risk, it’s usually because this core need is threatened.
If you are resisting the risk that comes along with having a hard conversation or being vulnerable in a relationship, it’s because you feel that your need for love and connection may be threatened.
So this brings me to my next strategy for expanding your capacity for risk: Ask yourself what need is being threatened by that risk. Usually, it’s a need that we’re familiar with. And once we see that that need determines everything we do, we may decide that we would rather lean into another need, like the need for growth or the need for connection, to practice taking small risks.
The more risks we take, the more comfortable we get with risk. Where you start is going to depend on how low your risk tolerance is to start.
If you’re scared to put your work out into the world, start small. Show it to someone who you know loves you. Start with a receptive audience. As you practice taking risk, your comfort zone is going to expand. Risk-taking is just like performing — and in some cases, it is performing. The more you can get in front of an audience, the less nervous you feel, and the more natural you act.
So practice with small risks to gradually expand your risk tolerance.
Another way you can use your dominant need is to leverage that need to reinforce the decision that you want to make.
The best example I have for this is when we invested in the property where we are now building our new house. My husband is an investor as I mentioned, and we originally bought this property as a flip.
He found it listed, and initially there appeared to be a lot of problems with the property. The site was land-locked, there was no road to get us to the property, and there were issues with the easement. The previous owner had signed a really terrible contract with one of her neighbors, and this agreement had scared off every potential buyer. The realtor was so ready to be done with it, and so my husband, being a natural risk-taker, wrote the owner a letter with an offer that was essentially half of what the property was listed at.
I wasn’t worried about it at the time because I honestly never thought the owner would go for it. But she did, and so then we had to decide “Are we really going through with this?”
Immediately, my alarm bells started going off. My need for certainty was screaming at me because we weren’t certain how much it would cost to get the easement resolved. We didn’t know if we would have to take the neighbor to court. We didn’t know what this might cost.
But Ben really wanted to do it, and in this case, I got my need for certainty to work for me. I wasn’t certain how much it might cost to get the easement resolved, but I was certain that we couldn’t lose money on the land since we’d gotten it at such a crazy price.
So now we have a piece of land in the mountains, and we’re building a house on it. Crazy.
My final strategy is to ask myself a series of questions about that risk I’m afraid to take.
In his book, Tony Robbins talks all about the power of questions, and he says that “quality questions create a quality life,” and “the difference between people is the difference in the questions they ask consistently.”
So the first question I ask is “What am I really afraid of?” and “How likely is that outcome?”
So for me, it helps to follow this trail of fear to the very end. So, anytime I’m afraid of making a big financial decision, usually it’s because I’m afraid I’m going to go broke, lose everything I own, and end up living under a bridge with two dogs, a cat, and my husband.
How likely is that outcome? Not very likely! I have family. My husband has family. We have some generous friends with couches and futons and guest bedrooms. No one is going to let us live under a bridge.
So if you’re afraid to put out your book or show your art to someone, ask yourself what you’re really afraid of. Are you afraid that someone won’t like your work, or are you afraid that they won’t like YOU?
Once we can pinpoint the end of the fear trail, it usually seems less scary.
The second question I ask is “What are the consequences of making this choice now? What are the consequences of NOT making this choice now?”
Now, my husband and I have a saying in our household that there’s no good time to get a puppy. The idea is that there’s always something going on in life that makes it not a good time to adopt a puppy or have a baby, but in business, timing is important.
A good example of this comes from my author business. Right now I am in the process of trying to get audiobook versions made of the current series I’m producing. I’ve sold audiobook rights to publishers in the past, but I don’t love the royalty percentage I’ve been getting, and so this time I want to pay for the audiobook production out of pocket so that I can maintain a higher percentage of my royalties.
But right now, for three books, I’m looking at spending anywhere from $6000 to $7000 to get those produced. Now, I know that’s a good investment. I know I would get my money back. But the consequences of making that investment now means that I would really deplete my savings WHILE MY HUSBAND AND I ARE BUILDING A HOUSE. Is now a good time to pour my savings into audiobooks? No! The consequence of making this choice now to invest in audiobooks could be that I don’t have $6,000 to do my kitchen, okay? That’s not cool.
The only consequence of waiting is that I’m losing out on some sales over the next six months. I can live with that.
The next question I ask myself is “What do I Want?”
Sometimes, we can think of a million reasons why we should do something and a million reasons why we shouldn’t do something — or a million reasons why we should delay doing something.
Oh, the economy! Oh, mercury is in retrograde! Oh, the president is a Republican! Who cares? What — do you — want?
When I was thinking of quitting my day job to write full time, I talked to my dad, I talked to friends, I looked into moving to Thailand where the cost of living is lower, I thought about putting it off until I had more money saved…But in the end, quitting my job to become a full-time author was what I wanted. And so I did it.
There are two final questions I always ask myself right before I take a big leap that I’m scared to take. The first question is “What will I regret more: Doing this and failing, or not doing this and wishing I would have?”
The absolute final, final question I ask is “When is a time that I took a big risk and it paid off?”
When I look back at my life, I never regret the risks I took — even if they didn’t pan out. I’ve had books that flopped. I still have one book that never sells. I don’t know why — it’s a great book. It’s probably one of the best things I’ve written, but it just doesn’t sell. Do I regret publishing it? No. It’s just part of my body of work.
And when I think of risks I’ve taken that have paid off, I realize that all of my best decisions in life have come from major major risks. All of them felt like jumping off a cliff at the time, but in the end they were life-giving and freeing and wonderful.
That doesn’t mean that it’s always a good idea to take a risk. As creative entrepreneurs, we must always be honing our decision-making skills so that we can take calculated risks when they make sense. Remember: No risk, no reward.
So if you have any ideas for future show topics, you can get in touch with me on Instagram or Twitter @writewithtarah. There’s a contact form on the website that goes straight to my inbox. We also have a real web address for the podcast itself now, so it’s super easy to share the podcast with a friend. If you have an artist or a writer in your life, just direct them to www.TheFearlessCreative.Me. You can play the episodes directly from the website or open the podcast in your favorite app.
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