Imagine being on a cruise to a fantastic island destination.
A storm comes up suddenly! The waves that are crashing against the hull are getting larger and larger!
At the dinner table, all anyone can talk about is how rough the seas are. Several are even worrying about whether the ship will capsize. It is hard to eat because you are feeling queasy! You see the crew scurrying around the ship with concern on their faces. You go to see a show and it happens to be the “Titanic”! To heck with the island, you just want to get OFF this ship!
You now have several choices.
The question is not whether you will have rough seas, but how you will handle them. A good captain will have charted the safest course. He will have a plan for when things are not going well. He will decide when to drop anchor or steer for the closest port.
Anyone that has any experience in the stock market will certainly agree that it is definitely a wild ride! The only reason you put your hard earned money into the market is so you can achieve your goals. The challenge with most financial goals is that they are long term. It’s no fun to think about events that will happen 20 years from now when you have things you want now. If you haven’t defined your goals, then how do you know you are on the right path toward achieving your goals? You can’t measure something that is vague and abstract. You have to ask yourself, “What happens if …?”
My wife wants a pool. (I want a happy wife!) We also need to provide college for our three girls, pay for three weddings (I don’t EVEN want to think about that!!), and set aside funds for our own retirement. Having a plan in place on how we are going to handle these issues, changes the pool question from one of a financial worry to a lifestyle question. Is it worth the mess and hassle? Would we have more family fun with an RV instead of a pool? Would we enjoy more family vacations?
Even though there are no guarantees to our long-term financial plan, I have the peace of mind to be able to focus on living for today. Balancing the wants of today with the needs of tomorrow is the essence of financial planning. A goal without a plan is just a wish.