Losing Money is Hard: How to Cope with Losses

Losing money is more common than you think. Take it from someone who lost loads of money both in the stock market, gambling, and by making bad purchases. It makes you feel like nothing will ever make the painful feeling go away and that your future is doomed forever.

I remember getting back to my luxurious hotel room. It’s the most expensive and spacious room they offered me. It was filled with decorations, lavishness, and a killer view of the pool. However, none of that soothed my feelings of knowing I lost an entire year’s worth of expenses by gambling. In just 6 months.

That was just gambling. I remember losing money day trading in college. I got something like ~$5,000 in scholarship money and managed to lose it all over the years. Money that was supposed to go towards food, water, rent, and books. Gone and poof, just like that. Someone out there was very happy that I day traded.

In any way you can think of me losing money, I’ve dealt with it. My worst purchase was buying a $600 Dell computer for no other reason than the fact that it came with a TV. I haven’t used the TV and the Dell computer actually broke after two years and doesn’t work as intended anymore. The keyboard doesn’t register the keys.

Those are some big losses in my life that I dealt with. I know that I’m going to lose a ton more money in my life going forward. However, losses don’t dictate your life. As long as your wins tower over your losses, everything is just fine. Just know that it’s going to get better even if you don’t think it does.

It’s going to get better. As long as you put in the work.

Losing Money is in Various Forms

Losing money doesn’t just apply to gambling. It can be in the stock market, making a bad purchase like a car, or getting robbed. Each incident may result in a financial loss, but that doesn’t mean each one hits you the same. Each one hits you differently. Robbery hits you the hardest while the others are more manageable.

When I lost money gambling, it made me question my life choices. Even if the monetary amount was less than the other forms of losses. It still hurt me more psychologically than other losses. It made me question why I even stepped foot inside a casino, why didn’t I listen to others, and so forth.

Even if I had only lost something like $4,000 that day. I felt like a failure and that I hit rock bottom. $4,000 is a lot of money but it’s nothing compared to what I did lose day trading and other forms of risk. The most I lost in a single day day trading is about $12,000. However, it didn’t hit me as hard.

It was because I lost five figures in the comfort of my own home. I wasn’t in another foreign soil but I was within good company. Food was still enjoyable and I could eat as much comfort food as I could. Losing money isn’t just about the money, it’s about how it affects you that makes the difference.

Make no mistake about it, losses still hurt. However, understand and know about the different kinds of losses. Otherwise, you may remedy and try to combat it one way when another way is better. Don’t be me who probably lost close to $35,000 over my lifetime doing bad things like gambling and day trading.

Bad Ways to Cope with Losing Money

One bad way to copy with losing money is by not SLAPPING that social share button and posting to your favorite social media! Your friends could be going through losses and could use an article like this.

So with that let’s get into the bad coping mechanisms.

1) “Revenge” Trading

This doesn’t just apply to trading. It applies to gambling as well. I know how you feel. After losing money, it feels like you need to, “get it back”. You’re more than confident that you can “get it back” so you double down and put in more money to do so. That is the worst thing you can do. I’ve been in this position countless times.

What I’ve learned is that it never works out that way. Every time I tried to do “revenge” trading, I failed. When I lose money day trading, I should have just let the losses go. However, I used to get into more trades, which locked me into the trade because I already reached the trading limit.

Or gambling, I would take out cash from the ATMs and hoping that I can turn myself into a “$500 to $10,000” story. That story never happened, by the way. Those stories are almost a mathematical anomaly that it’s foolish to try to be one of those stories. You’re not going to be the one in a million when it comes to that side of risk.

2) Physically Stepping In Again

Now that you agree revenge trading is a bad way to cope with losing money, then you just say, “what’s the harm? I’ll just go into the casino for a little bit, I have self control”. No you don’t. Just by physically being present at temptation will lead to you putting in more money at risk. It doesn’t work like that.

It’s the same concept with day trading. You don’t open up the brokerage app ever again until the next day. The temptation to trade will cause you to trade over time. Except this time, you may not be able to trade because you already reached the daily trade limit. You have to completely disconnect yourself.

If you just half heartedly disconnect from the temptation, it’s only a matter of time before the temptation takes over. We have less self control than we think If we have food within arm’s length, there’s little chance we’re going to resist it. Distance does not make the heart grow fonder. It’s out of sight, out of mind.

Coping Mechanisms to Combat Losing Money

So then let’s get into the right coping mechanisms to combat the effects of losing money.

1) Step Away From the Game

Physically, mentally, and spiritually. Step away from the game. Period. No exceptions. It can be for a day, a week, or a month. Your mind and body will tell you when it’s the right time to go back. You don’t decide it, your mind does. There are so many days where I thought I would never return only for my mind to tell me it’s the right time.

Your mind has to be in a state of balance. We’re biologically wired to be in a balanced state. Therefore, whenever you feel bad from losing significant amounts of money, you feel bad. However, your mind has a way of balancing that out over time. It may not be today or tomorrow.

However, it will go back to normal eventually. How do you know it will? You start to feel bored and itch to return back at it. It would, at most, take me 3 days for my psyche to get back to normal. It may take longer or shorter time for you. One thing you can’t do is force it.

2) Learn from Losing Money

Losing money was an absolute meaningless exercise if you didn’t learn anything from it. When you lose, the other side was better than you. Then you start to figure out how the other side was better than you. Then you try to figure out how to be better yourself.

Every loss taught me a lesson that carried over to me in subsequent rounds. You’re not going to learn all of the lessons at once. You’re going to learn all of the lessons over a long period of time. Therefore, if you don’t have the capital to withstand the long periods of time, don’t go back to doing it.

I don’t day trade anymore. Rather, I invest in long term index funds. I don’t gamble anymore. Rather, I just stay home and enjoy my day off. Whether it’s reconnecting with friends or trying out a new restaurant. There are many lessons that should carry with you through the losses. Learn from them.

3) Follow the Results

You want to know what’s better than losing money? Not losing money. This doesn’t mean winning money, but it means staying neutral. Zero is better than negative. Therefore, if your results are telling you that you’re consistently losing money, then it’s time to avoid losing in the first place.

The way to do that is by doing nothing. Not by opening up the Robinhood app and seeing if you can day trade. But by doing nothing and sitting there. That is a better result than losing money. Then after you find a profitable venture is when you can follow the results and go all in on the profitable ventures.

Don’t try to “break even”. Follow the results. If you lose money, it means that others are telling you it’s neither a profitable nor a winning venture. Stick with the things that are making you money and get rid of things that are losing your money. The results don’t lie.

4) Seek a Therapist

Not just any therapist. A therapist who knows and deals with what you’re going through on a consistent basis. There’s a popular personal finance blogger who sought out a therapist that was related to the financial independence, retire early movement.

However, the therapist couldn’t understand nor relate to any of the problems that he went through. His situation was so unique that only probably less than 1% of people went through it. Therefore, he ended up wasting money on the therapist who couldn’t help him in the first place.

There are plenty of therapists who deal with people who are losing money. Seek them out. They are the ones who are the most understanding of your situation and can give personalized and tailored responses and advice. That’s what separates the therapist that you need from the one who’s just there listening to you.

5) Carefully Talk with Others About Losing Money

It has to be carefully because the tactic can backfire if your friends don’t understand what you’re going through. Otherwise, you’re going to get the old, “you’ll get them next time”. Or “everything is going to be OK by the end”. That works on some but it certainly doesn’t feel like it after you’re reeling from a loss.

There’s very friends I know who take the same amount of risk that I do. Most keep their cash in a savings account instead of putting all of it in the stock market. Some of my friends keep $150,000 in their savings account. It was eye popping. They could’ve been richer than me by now but they’re choosing not to.

For an experienced risk taker, it’s more than a matter of “everything’s going to be OK”. It’s more of telling the other person that they have to let time pass before they decide to embark on a new journey or a new venture. That’s the part that my friends don’t understand about losing money.

6) Channel the Energy into Positive Activities

Right now, your emotions are running high. You just lost a lot of money and nervous energy is consuming you. Channel that energy into positive and profitable ventures. You can go to the gym and work out in order to blow off steam and let it all pass. Or you could throw yourself into your work.

Whatever the case may be, channel the energy into positive activities after losing money. Now’s not the time to chase losses and go after the losses and dig a deeper hole for yourself. Now’s the time to focus your attention and energy into things that work. It’s much better that way.

For me personally, after losing money, I threw myself into my work. Day in and day out, I provided quality output to my employer. That allowed me to build my net worth slowly and surely over time. After I slowly built wealth over time, that’s when I started to feel like myself again.

7) Accept What Happened

It’s not a bad dream. You’re not going through a “phase”. Accept what happened because you can’t change it. I know you have feelings of, “if I hadn’t just done it today, I would be set for life”. Life doesn’t work like that. You can’t undo anything. Accept what happened and figure out how you’re going to move forward from it.

You took the risk, which is a good thing. Risk is good. It gives you a chance to win. It just happened that you were on the wrong side and ended up losing money. It’s much better than never trying at all because you can’t coast through life by not taking on risk.

The aftermath of your efforts are the hardest to accept because you consider yourself better than the average. By having losses, you’re not just the average. You feel like you are worse than average. That’s not the right way to look about it. Plenty of people lost big just to win everything back and then some later on.

Losing Money Just Feels Horrible

Believe me when I say that I’ve been there. Losing money feels like the end of the world at some times. Especially if you lost a large amount of money, as I have. What’s even worse is that I was a young guy. I lost those amounts of money by the time that I was 24. When money is the most important because of compound interest.

Money in your 20’s is worth more than money in your 50’s. So imagine how I felt? I felt like I lost a million dollars and people took away my dignity and pride away from me. It felt like I’ve been gutted because that’s my hard earned money that’s gone just like that. Poof into thin air.

EVERYONE lost money at some point. The person who lost the most amount of money in the world goes to Masayoshi Son. Guess what? He’s a billionaire today. Your losses doesn’t matter, what matters is what you do next that counteracts the effects of that loss.

For me, I delved all of my money into long term index fund investing. I put my money into the S&P 500, which allowed me to make an extra $40,000 – $80,000 over my lifetime so far. I expect index fund investing to make me millions of dollars over my lifetime.

It’s not as difficult to go into a profitable venture today because the information is readily out there. There’s nothing wrong with trying out a proven method such as index fund investing to combat the effects of losing money. I know it feels horrible but now’s the time to see how you can dig yourself out of the hole.

Coping Mechanisms for Losing Money List:

• Step away from the game
• Learn from losing money
• Follow the results
• Seek a therapist
• Carefully talk with others about losing money
• Channel the energy into positive activities
• Accept what happened