Ignore Your Sunk Costs

In college, I was a finance major. If you know me well, that might sound like a dramatic miss, and for the most part, that would be true. My first job was at a bank, and I was truly a fish out of water in so many ways. However, I did capture a few powerful nuggets from my major and from my work in the financial industry. The biggest one, and one that I use constantly with my family, is the sunk cost fallacy. What is the sunk cost fallacy? It’s our tendency to follow through on something (an activity or an investment, for example) if we have already invested time, effort, or money into it, whether or not the current costs ultimately outweigh the benefits.

So why would a coach/psychologist be telling you to ignore your sunk costs? Because so many of us are spinning our wheels in situations we’d be better off walking away from. Have you ever stayed in a relationship that was miserable because you had already invested so much time and energy into that relationship? Have you ever not left a job because you’d worked there so long and thus invested many years of your career there? Have you ever thrown good money at something that you had already invested quite a bit into because it felt painful to walk away? I have, and every time I realize that I’m better off ignoring my sunk costs.

Here’s why…you can’t get your sunk costs back. They are gone. The time is gone. The money is gone. The energy is gone. So do you want to invest more time, energy, and money into something that isn’t giving you the return you are looking for? How much more time do you want to give that relationship that isn’t really working? Wouldn’t you rather spend that time enjoying yourself and possibly meeting new people that are a better fit for you? How about that job that is making you miserable? So what if you’ve put twenty years in. How many more years are you willing to be miserable? Time to ignore your sunk costs.

Learn to ignore your sunk costs. Don't invest more time, energy, and money into something that isn’t giving you the return you are looking for. #sunkcostfallacy #investment #effort Click To Tweet

If you are saying some version of this to yourself, “But I’ve invested so much into this…,” you are not ignoring your sunk costs. Let me repeat. You can’t get those sunk costs back. They are gone and that’s okay. You can, however, move on with your life and learn from your sunk costs. What won’t you invest in again? Where won’t you spend your money or your time? Sunk costs are great life lessons. Learn from them and then move the heck on. More powerful and wiser investments wait for you once you let those sunk costs go.

Love,

Lisa Kaplin Psy. D. PCC