Updated: September 17, 2021
When it comes to investing money, starting a new hobby, or purchasing an item, most people think of the long-term benefits that we’ll get.
However, there are circumstances when the things we buy or the activities we start don’t live up to our expectations. Most of us will keep using these items or finish these activities even if we don’t enjoy them anymore because we don’t want to waste them.
This phenomenon is called the sunk cost fallacy. It refers to financial or other losses that one can’t earn back but continue to affect one’s decisions and behaviors.
The fallacy lies in trying to make up for the losses by finding value for the costs (whether financial, emotional, or time-based) you’ve made. However, doing so may incur more losses and more stress on your well-being.
While there are losses you can no longer redeem, there are ways to overcome the guilt of the sunk costs we’ve made previously. Here are four tips you can do so:
Seek Emotional Help
Seeking emotional support from loved ones may help you get over your losses, whether financial or otherwise.
Having a healthy support group to talk to about your losses allows you to express your feelings healthily. Doing so means you won’t bottle up your guilt or project your frustrations through counterproductive ways.
Adam Grant, a professor of the University of Pennsylvania, said it is crucial to battle your pride in keeping your loss to yourself. Investments of any kind are essential, but your wellness and maintaining a healthy relationship with family and friends are more vital.
Change What You Can
Sunk costs are lost forever, and they’re losses that can’t be earned back or controlled. While that is the case, that doesn’t mean you have to live with your losses forever. Sure, you might not be able to change the past, but you can change your decisions and actions for the future.
Reevaluate which future purchases are worth every coin and bill. For example, you may throw away products that don’t work for your hair or skin type. Cancel any gym or club memberships you’ve only used once.
Before investing in a piece of real estate, you might want to rent first to see if the lifestyle changes are suitable for you. Thankfully, condos for rent in Metro Manila are there to help beginner property seekers find their footing in the real estate market.
Be Cautious Of Scammers
Some people lose profit because of scam business deals. Others lose money because they gave to fraud charity drives or people asking for financial help. Whatever the case, scammers may cause sunk costs if you aren’t careful.
If you’ve been a victim of scams, report it to the police and the right departments. Discuss with a lawyer about the possibility of recovering a portion, if not all, of the money you’ve shelled out. You may not be able to redeem the time, effort, and money you’ve lost, but you can still save your sanity and peace.
It is also wise to learn from your previous mistakes to avoid scams in the future. Research the websites and businesses you plan to invest your money.
Do the same when searching for real estate properties to invest in; if you’re eyeing a contemporary home like those in Sentosa Calamba, you want your budget to be ready and plans to go smoothly before buying.
By discerning your investment plans, you will reduce the sunk costs you’ll incur in the future.
Evaluate Your Earnings
Sunk costs may be lost forever, but there are times when you might have earned from those lost investments.
For example, that condo you’ve bought might not have been the dream home you want, but you can offer it for rent to those looking for accommodation near their office or business. Bought a modern Italian-style house like what Camella Calamba offers?
A concert you’ve watched may haven’t been the most fun, but the people you’ve made friends with may have made the experience more bearable. These may be sunk losses, but that doesn’t mean the earnings you’ve reaped cannot influence your decisions and behavior in the future.
Sunk costs may have negative consequences on your goals and wellness. Letting go may sound easier than it seems, but evaluating what you can reap from these losses helps you make the right choices for potential investments and plans.
Learn from these four tips to overcome your guilt and frustrations with your sunk costs.
Note: This article is written in collaboration with Lamudi Philippines.
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