What is a margin of safety? Margin of safety is a common term within investing. It usually refers to the difference between the market price of an asset and its tangible underlying value. By seeking a margin of safety in a purchase, he/she protects themselves against a loss in the case of an unexpected event. It allows room for error in the investor’s attempt to guess what’s going to happen in the future.

We can apply this thinking to other areas of our lives. Consider it an insurance policy against life's curveballs.

A personal finance margin of safety allows us to handle an emergency or say yes to meaningful opportunities that arise last minute. Without this built-in buffer, we can feel anxiety and be forced to decide between what we want and what we “should” do responsibly.

A margin of safety for our health and fitness can mean staying in shape to handle what comes up during the day. There may be days we have to shovel snow off the driveway, balance on a ladder to clean out gutters or run to catch a bus. If we can’t at minimum complete similar tasks, then we are more vulnerable to injury, unnecessary reliance on others, and further disrepair.

So, how do we create a margin of safety for our psychological lives?

We cultivate a sense of belonging. Life is better with other people (yes, even for introverts; this is coming from a strong INTJ). The most impact comes from our connections with people around us and in our community. Developing these connections is a slow process. It will take more time and effort than you expect, as anything worthwhile does. This is also how they become so powerful.

By building connections with others, we become resilient to the messiness of life. As these connections are tested, they are strengthened. The more often you are there to help others, the stronger trust grows and both parties can handle tougher situations.

Let's take this one step further. There are tangible ways we see this in our lives. When we have friends and neighbors to assist with odd requests, the community bonds set in deeper. This protects our mental energy in addition to the pocketbook. It's difficult to put a price on the value of a reliable neighbor to watch your house and pick up your mail while you're out of town. Even more difficult is having an electrician, plumber, or mechanic you can trust or a friend with a truck that you can borrow for one-off projects.

More importantly, is preparing for the emotional curveballs life can hurl. Losing a loved one, failing at a job, or an injury that handicaps us from self-reliance to name a few.

Having even one good friend to listen and share in the struggle is worth his/her weight in gold. As we learn how important these connections are to our own well-being, we can mirror these benefits and enhance the margin of safety for our own friends, family, and neighbors.

Who’s margin of safety can you help strengthen?

Side Note —> Next is learning how can we build a protective buffer for our spiritual lives.