Uncertainty can be really scary. Scary enough to discourage action of any kind. Think about it: when you have a big project to get done, like remodeling your kitchen, that feeling of “Where do I start?”, begins to creep in. What happens next? Unless you take some initiative and find out a good way to start, life goes on and the kitchen stays the same. When a big, multi-part process with no clear starting point is staring you in the face, it’s intimidating. People often experience this type of intimidation when it comes to their finances.
New York Times columnist and CFP Carl Richards blogged about this recently writing:
“Uncertainty has a way of paralyzing even the smartest people. If we don’t know exactly what we’re doing or when we’re doing it, we tell ourselves we’re better off waiting until we do know. The problem with this logic is that we’ll never know everything.”
All kinds of variables play into financial planning. Not only is the future of the stock market uncertain, so are our individual futures. Nobody knows exactly what they’ll be doing and where they’ll be doing it in five, ten or twenty years. All we can do is project, but that doesn’t mean we shouldn’t discuss financial plans at all. Unfortunately, this is precisely what happens with many individuals. They let uncertainty talk them out of investing, saving, and planning, and before they realize it a decade has gone by.
Carl went on to say that financial plans need to be flexible. Your financial plan will change over time, just like the market, your job, health, location and age. That’s the beauty of it all, we get to adapt. The only constant is change.