We are always being told to have a plan.
That’s great advice!
… but there are some things you simply can’t plan for, as you never saw them coming.
None of us planned for this.
Covid-19 has turned everyone’s world upside down over the past month in an unprecedented way. None of us have ever seen anything like this in our lifetime and – hopefully – when we come out the other side of it, we never will again.
It’s happened though. In years to come, children will study this in the history books, in the same way that we studied the Great Fire of London, or the Plague, and we are living through it.
When the dust settles, and things return to normal, you could be forgiven for wondering what has just happened. This is an event that, quite literally, is impacting every single person across the world. Be it through illness, finances or social interaction, life – as we know it – is just not the same right now.
We couldn’t have planned for this specific event, but we are able to plan for unforeseen circumstances, and this is one of those.
Through all the heightened emotions, it’s important to remember why you had a plan in the first place, and – if you didn’t have a plan – there really is no better time than now to start thinking about putting one in place.
A strong, lifestyle financial plan, will guide you through this tough patch when the financial markets are volatile and you could be forgiven for getting ‘twitchy’, but look at history and you will see that the markets always recover. The main thing is not to let these negative emotions of worry, fear and uncertainty, push you into making short term decisions that could have a negative longer-term impact.
Of course, that’s easier said than done, but following these three steps can help:
- Your emotions are valid – acknowledge them
We are all human so whatever you are feeling, be it fear, frustration or even the odd moment of laughter at the crazy world we all now live in, it’s OK.
Your world has probably been turned upside down, and even if you are one of the lucky ones who is able to carry on with some degree of normality, you are most likely aware of close friends, family members and colleagues who are not. This is going to lead to concerns, and it’s understandable if some of these concerns are financial.
Emotions are likely to be a bit jumbled right now, so if we advise you to take your emotions out of any financial decisions please know that we are not telling you to ignore how you are feeling in general. We actually want you to do the opposite of this, as it’s extremely important to talk through your feelings with your partner, spouse, children and other friends or colleagues you spend a lot of time with. When it comes to your finances though, as hard as it is, do try to leave these emotions at the door and you will be better able to make rational, logical decisions for the long term.
- Remember your story
When we first started working together, we would have discussed the potential for market fluctuations, and the fact that there could be market swings. At the time, we would have all sat calmly and discussed how, during these times, we would need to keep calm and sit tight while waiting for the markets to recover. We also would have discussed what you wanted for the longer term – your ‘story’ as it were, and what you were saving towards.
Now is a good time to remind yourself of this story. What did you want your future to look like? Think about the long term, because, while the short term is a little confusing right now, your longer-term plans are still the same. This Life-Centred Planning process was designed to get you the best possible life with the money you have, and that plan is still in place.
- Prioritise for the ‘now’, the ‘soon’ and the ‘later’.
Lifestyle financial planning is all about the long term. Of course, the short term matters too, but when we work with clients, we invest in more than just their money – we build close relationships that help plan for their future goals. By starting at the end point of where they want to go, we are in a better position to look at the wider picture and understand that whatever happens today is just going to be a mere blip in the longer-term plan. This doesn’t mean we ignore what’s going on now, it just means that we prioritise what to do based on the now, the soon and the later.
- Now: Financial concerns to address as soon as possible, such as mortgage and bill payments, or health issues
- Soon: Things that will be important in 6-12 months’ time, giving you a chance to prepare for them
- Later: Everything else
We will most likely have discussed all of these things already, but simply by categorising all of your financial concerns into these brackets, you will see that we can work through your plan, restructuring when and where necessary, but without losing sight of the longer-term issues and thinking we have to deal with everything in the short term. The current situation might alter your path a little bit, but your end destination remains the same.
Articles on this website are offered only for general informational and educational purposes. They are not offered as and do not constitute financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional. Past performance is not a guide to future performance and may not be repeated. Capital is at risk; investments and the income from them can fall as well as rise.