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The plan is the path

Sep 08, 2020 | Peter Alepra


No one planned for this - having a financial plan with mechanisms in place will help you get through these uncertain times due to the coronavirus and ongoing market volatility.

Biking along a dirt road

No one planned for this.

Having a financial plan with mechanisms in place will help you get through these uncertain times in our lives due to the coronavirus and ongoing market volatility. The key is not letting heightened emotions and bad headlines steer you towards decisions that could have a negative impact on your finances long after this crisis has passed.

Much easier said than done - right?

The following three steps will keep you on the proper path for your plan during the uncertain times and moments when your anxiety levels are high. Your plan is only as good as you believe it to be….understanding its purpose will strengthen your belief.

1. Acknowledge your Emotions

Worry...fear...anger...uncertainty...nervousness and the bewilderment of the overall craziness of the “new normal”. Whatever you are feeling right now, is OK. 

It is important to understand that your financial concerns are complicated and very personal involving your family, work, health care, and basic needs. Add in the anxiety we are all feeling about the world situation and you wouldn’t be human if your emotions weren’t a bit confusing at this time.  Acknowledging these emotions for what they are and not allowing them to impact your long-term financial decisions is critical in the planning process.  

The goal is to separate the emotions out of your financial decision making during a crisis….don’t ignore them, but recognize why you have them. It is constructive to talk through these feelings with your spouse, family, close friends and Advisor. Burying your emotions only makes stressful situations more challenging. Our human capacity for empathy, understanding, connection, and mutual concern will help us all weather this storm. This will also allow you to lead a healthier and more productive outlet for your feelings. 

2. Create a Narrative for Yourself and Your Plan

Once your feelings are out in the open, it will be easier for you to think about the financial part of your situation with a clear mindset. 

For a moment, try to set aside the recent market swings that may have been dominating your news feeds for the past few months. Instead, think about the reason you created a disciplined plan in the first place….

Your plan was created with a long-term horizon and long-term goals….a good plan focuses on you and your family’s timeline and needs. Of course, news headlines, volatility, politics, and many other events impact our daily attention and emotions, but your plan is about you and the process that will provide the best possible life with the assets and income you have.

3. Prioritize Your Buckets: Now Bucket, Rainy-Day Bucket, and Everything-Else Bucket

A good plan focuses on clients’ lives, not just their money, it is important to always take in a wide view of your financial progress. Today’s market correction and bounce will look like a blip with a long-term perspective. But “stick to your plan” doesn’t mean you shouldn’t do anything during a major market correction, especially if you’re at or nearing retirement age. Ideally, you have already planned accordingly, but “in-the-moment” market corrections test everyone. It means any possible changes you are contemplating should be based on your Objective lifestyle needs more than on unpredictable market movements. In most situations, clients’ needs are measured and satisfied with liquidity and cash flow/income. Even during market corrections, income sources and short-term liquidity are not typically impacted to any great degree depending on your plan structure.  Understanding your liquidity and income needs will also help boost the confidence in your plan. 

To maintain a disciplined focus on things you can plan for, grab a sheet of paper and prioritize the following timeline “Buckets”. Create three sections:

  • Now Bucket: Financial needs that will need to be addressed in the next six months; monthly expenses, travel (during normal times…), home repair, health care, etc.,  
  • Rainy-Day Bucket: Expenditures above and beyond monthly expenses over the next six to twelve months that you still have time to prepare for.
  • Everything-Else Bucket: Any expenditure above and beyond the above timelines

The “Now” bucket above in all likelihood has already been funded in liquid accounts or will be with monthly income. It is possible that events may sometime cause you to re-prioritize your needs within the respective buckets. Expenditures above and beyond monthly expenses are often fluid and can be moved up or delayed depending on circumstances. A plan should flexible enough to allow these types of changes without disrupting your overall long-term goals.

It will help to re-visit your plan during uncertain times and remind yourself what your goals truly are - both the monthly needs along with any longer-term expenditures. Staying on the path of your plan will allow you the peace of mind knowing you have already built in the flexibility to adjust accordingly without compromising your long-term plan. 


Wealth planning