You’ve probably come across the term “diversification” before as it relates to your investments. Being diversified means you’ve spread your money across a number of different investments, which helps limit your exposure or level of risk to any one single investment. 

For example, investing your money across a bunch of index funds provides much more diversification than putting all your money in your employer’s company stock. With your index funds, the success or failure of one individual company won't have nearly as large of an impact as it would if your employer went bankrupt, causing both your income and investments to go away.

While the benefits of diversification in our investments seem obvious, I’m guessing you’ve never thought about it in terms of your identity. Allow me to make the case for why you might want to start.

Identity diversification is a great tool for handling life’s constant uncertainty.

How much of your time and effort is concentrated in just one or two areas of your life? 

The more concentrated your identity becomes, the more crushing the blow can be when life changes or even eliminates one of those areas. Some examples could include your job being eliminated or a strained relationship causing a separation from a previously close family member or friend.

To be clear, I’m not suggesting you don’t prioritize how you make money or spend time with family and friends. Rather, I’m just suggesting why you might not want to let any one or two things become the only things in your life.

For example, tennis has long been a diversifier in my own life. It’s a community of friends who I gather with on a regular basis. We engage in a physical activity together that provides a healthy mental reset. So when I have a rough day at the office or the kids are testing my last nerve, playing tennis provides an outlet that allows me to return as a better husband, father, planner, and person.

Other diversifiers could include having multiple friend groups, engaging in a hobby or activity, or volunteering to make a real impact in someone else’s life while gaining some perspective on your own.

So if you find yourself feeling like you’re riding the roller coaster of life a little harder than you’d like, consider a quick identity check. Maybe it’s time to diversify.