Who thinks they know where the stock market is heading for the rest of the year? Anyone have President Trump figured out, or how China will continue to maneuver in trade negotiations? Who has grand insight into the Federal Reserve’s next steps? Crystal ball on this next election cycle and on what an inverted yield curve will mean for the timing of a recession this time around? I try to read insights from some of the smartest people on the planet and I haven’t found anyone who’s predictions and projections consistently work out.
What about predicting the future events of your own life? Do you know exactly where you’ll be in 10 years? Try to remember exactly how life was for you 10 years ago today. Where were you and what were you doing? Were your relationships different? Job change at all? What were the most important things for you back then? How were you making/spending money? Could you have imagined streaming TV on your phone, getting mortgages for 3% or having the ability to order anything in the world and have it on your doorstep in 48 hours?
Here’s my point. You can be extremely well-read. You can be incredibly intelligent. You can have a “good gut.” You can be the best, most organized, goal-oriented planner in the world. And that plan from 10 years ago still would have failed to predict exactly how things would go for you. That’s the reality of life. And that’s ok…
- You cannot know what’s going to happen with the overall economy
- You cannot know what’s going to happen in the real estate market
- You cannot know what’s going to happen in the financial markets
- You cannot know what’s going to happen around the globe
- You cannot know how weather or natural phenomena will affect your life
- You cannot know when your employment will be disrupted
- You cannot know when your life or that of a family member will experience challenges
Planning isn’t about predicting how things will go. It’s quite the opposite actually. Planning is setting goals, finding measurable ways to get there and then controlling direction along the way, no matter what comes our way. Things will inevitably change. But being wrong with your original assumptions doesn’t make the work you did any less important. The certainty of uncertainty is precisely WHY you need to plan. It’s the process of discussing all these “what ifs” and making a plan to address them, no matter what, that stays in line with your values.
I know it can be stressful to think about uncertainty. And in the short-term, that might cause you to avoid planning for it. But far worse is being faced with a stressful situation, perhaps an even catastrophic situation that could have been avoided or mitigated with planning. The triggering situations may not be avoidable, but the negative financial impact, we hope could have been minimized. The sooner you can accept the certainty of uncertainty, and plan because of it, not in spite of it, the better off your financial plan will be.
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