Imagine that you’re an engineer building a bridge. You know that, on an average day, the bridge will need to support about 10,000 tons of traffic at any given time. Would you build it to withstand exactly that weight?
Hopefully, your answer is “no.” What if your estimates or calculations are slightly off? What if the bridge gets heavier traffic than average on certain days? What if your building materials are weaker than expected?
To account for all that, you decide to build a bridge that comfortably supports 50,000 tons. In engineering terms, the additional 40,000 ton capacity is a “margin of safety.” It’s the ability of your bridge to withstand challenges greater than expected.1
And that principle is very useful, not just in construction and engineering, but in many areas of life. Let’s have a look at some examples.
If you’re always running late, it’s because you’re living your life without a sufficient margin of safety. The planning fallacy makes you overoptimistic, and you perpetually overlook that life is full of unexpected delays. To overcome that tendency, you can add extra buffer time before each task in your schedule.
If you push yourself to lift as heavy as you possibly can in the gym, you’re eliminating your margin of safety. By instead finishing each set with at least one more repetition in you, you can execute every lift with proper form and reduce the risk of injury.
If you spend every dime you earn each month, you don’t have a financial margin of safety. There’s no protection for unexpected expenses. Conversely, if you can get by on 90 percent of your income, the remaining 10 percent can provide a helpful financial buffer.
If you buy a stock because you consider it slightly undervalued, your investment has a poor margin of safety. Predicting the future is extremely difficult, and that’s why famous investors like Warren Buffett usually only buy stocks that are excessively underpriced.
If you don’t take care of yourself, you won’t have a buffer to deal with the inevitable stressors in life. Good habits like sufficient sleep, healthy eating, regular movement, and mindfulness practice provides an emotional margin of safety for unusually bad days.
Always Have a Margin of Safety
All information contains some amount of error. The future is uncertain and, as I’ve covered in another article, entropy makes it ever more complicated. By using a margin of safety, you get a cushion that protects against incorrect estimates, unforeseen events, and plain bad luck.
Always account for the hidden errors. Always leave room for the unexpected. Always be stronger than you need to be. That will make you confident and unshakable—even when things get extraordinarily difficult.
This article is an excerpt from my book The Decision-Making Blueprint.