When I first started writing this article, it had a much more challenging title. I originally titled it
The Power of Negative Thinking
The problem with that title is that negative thinking, just like positive thinking, is unbalanced on its own.
Let me explain what I mean.
I’m a huge believer in using positive thinking as fuel in your own life. Positive thinking can help you set powerful goals, can help you keep on track with those goals, and can get you in the right mindset for opportunities that can come your way.
The problem is that positive thinking alone ignores risks.
It is pure positive thinking that enables a bank to give someone a loan with payments that exceed that person’s monthly income.
It is pure positive thinking that convinces people to simply put all of their money in a stock-heavy retirement account and believe that money will always return at a 10% annual rate, thus funding an early retirement.
It is pure (or at least excessive) positive thinking that convinces people that they don’t need health insurance, life insurance, or long term care insurance.
It is pure positive thinking that causes people to leave great jobs for unestablished side projects.
Simply put, pure, unbalanced positive thinking can be an incredibly dangerous thing. It leaves you woefully unprepared for failure and setbacks because if you absolutely believe that the best outcome will happen, you don’t have to waste thought or energy considering the consequences of that best outcome not happening.
In my experience, successfully achieving a goal usually involves a mix of positive thinking and negative thinking. Let me show you what I mean, using an example from my own life.
Balanced Thinking and Running
A while back, I wanted to be able to make a reasonable appearance in a 5K (a five kilometer run/walk/jog). I had about twelve weeks to get ready for it.
My initial thoughts about the goal were very positive. I imagined myself participating. I visualized a smooth progression right toward that goal. I even came up with a wonderful plan that would get me right to that goal.
Of course, that plan was far from perfect. In order to make that plan more realistic, I had to engage in some negative thinking. What might go wrong during my progress toward that goal? How might I injure myself while practicing? How can I keep myself motivated when the going gets tough?
In each case, I had to plan for that negative thought. I consulted a personal trainer, who helped me modify my plan a bit and also helped me to find some better running shoes and other training suggestions. Knowing my own personal habits, I worked on a new training plan that incorporated more short bursts of training rather than longer and less frequent sessions.
As I started rolling, positive thinking kept me motivated when things were on course.
The problem was that when I fell off the path, positive thinking wasn’t enough to get me back on. I had to turn on the negative thoughts for a while by looking at my mistakes that caused me to fall off the path, figure out exactly where I went wrong, and fix those problems.
Balanced Thinking and Money
A similar philosophy comes into play with almost every single financial decision we make.
If you’re buoyed solely by positive thinking, you’ll throw your retirement investing into the riskiest investments, believing completely that you’ll receive the huge rewards because you’re ignoring the risk. Do that and you’ll have a strong likelihood of working well into your retirement. Balanced thinking leads to good investment choices.
If you’re using nothing but positive thinking, an emergency fund seems like a complete waste of time. Of course, the first time you need to cover something like a car repair, you’re going to be using credit, and the interest on those credit payments will eat your money like a hungry wolf. A more balanced thought process will lead you to a healthy emergency fund and much more success in terms of dealing with such crises.
If positive thinking is ruling the roost, you’ll never take out life insurance or health insurance or disability insurance, all of which are wastes of money if nothing negative can enter the picture. Investing in such things requires some negative thinking, but if something bad does happen, it’ll be one of the best investments you ever made.
Simply put, positive thinking has its place, but so does negative thinking. If you want to achieve personal goals and plan successfully for your future, you have to balance these two elements effectively.