3 Financial Planning Tips for an Unknown Future

UPDATED: December 12, 2022
PUBLISHED: November 8, 2020
older woman planning financial future

If 2020 has taught us anything, it’s that even the best-laid plans can go awry. So it’s important to keep in mind some financial planning tips in the case of uncertainty or unpredictability.

Whether it’s a global pandemic, climate change or the rise of automation, the pace of change in our world is accelerating rapidly. As the future becomes increasingly unpredictable, our methods for planning must evolve accordingly. Use these three financial planning tips to get started:

1. Focus on what you can control.

You might not be able to predict your career trajectory or even your income from month to month. But you can focus on your “knowns” to help ground your future plans. For example, even if you don’t know your exact monthly earnings, you probably have a good sense of your monthly costs (housing, groceries, utilities, insurance premiums, etc.).

Use those costs to determine the minimum you need to earn each month to sustain your cost of living. You can also use these costs to figure out how many months your savings could sustain you in the event of a job loss or a significant earnings disruption.

You might not be able to control the future of your industry or your local job market, but you can control how much you spend and save.

2. Commit to actions over outcomes.

Speaking of what you can control, setting action-based goals (as opposed to outcome-based goals) can be another effective financial planning tip. Reframe your goals as actions. Instead of saying “I want to buy a house someday” or “I want to have a successful career,” try “I will save 5 percent of every paycheck in a dedicated savings account” or “I will apply for 10 jobs each week.”

Not only are these action-based goals more urgent and specific, but they also leave a lot more room for flexibility.

3. Think through the worst-case scenario.

Thinking through your responses to potential worst-case scenarios like losing your job, your home or your health can help you better hedge against those outcomes. In some cases, it can also help you brainstorm alternative financial plans that might be better suited to your present.

For example, at the start of the COVID-19 pandemic, my husband and I both experienced significant income loss. We turned our focus to what we could control—our spending and cost of living. We determined we could move out of our high-cost New York City apartment if we needed to.

Come July, we decided to move forward with that change. What had originally felt like a worst-case scenario actually became a huge relief. It freed up funds and helped us better pivot toward our next steps.

It can feel overwhelming—if not downright morbid—to consider worst-case scenarios, but giving them some meaningful thought now can help us better adapt to whatever lies ahead.

This article originally appeared in the November/December 2020 issue of SUCCESS magazine and has been updated. Photo by Ground Picture/Shutterstock

Stefanie O’Connell is a financial expert, Gen Y advocate, speaker and author of the book, The Broke and Beautiful Life.