3 Financial Planning Tips for an Unknown Future

If 2020 has taught us anything, it’s that even the best-laid plans can go awry.

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 strategies to get started.

1. Focus on what you can control.

Although you might not be able to predict your career trajectory or even your income from month to month, 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 known costs to figure out how much you need to earn at a minimum each month to sustain your essential cost of living. Or use it 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 today.

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 planning strategy. Instead of simply saying “I want to buy a house someday” or “I want to have a successful career,” you can reframe your goals as actions, such as “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 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—and 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 and what had originally felt like a worst-case scenario actually became a huge relief, as 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.

Read next: How to Become a Financial Optimist

This article originally appeared in the November/December 2020 issue of SUCCESS magazine.
Photo by @Nodar/Twenty20.com


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

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