Former heavyweight champion Mike Tyson once dismissed a reporter’s question about an opponent’s plan to beat him by saying “Everybody’s got a plan till they get punched in the mouth.”
Financial planning can be like that. You come up with a perfect plan to pay all the bills and meet your goals, and then life punches you in the mouth. Something breaks down, or you lose your job, or there’s a medical emergency or.... Well, life is full of surprises.
Too often, those surprises can throw your financial plan completely off track. However, the best financial plans don’t just account for what you expect to happen. They also leave room for the unexpected.
Strategic planning for surprises
A key step toward financial freedom is building allowances in your financial plan for unexpected setbacks. This path teaches how to create a flexible, strategic plan that helps you:
- Prevent, prepare for, and reduce the cost of unexpected events.
- Maintain and protect appropriate cash reserves given your situation.
- Position financial tools and resources to pay for small and large expenses on the fly.
- Reassess and rebuild cash reserves, pay new expenses, and determine how to improve the plan to perform better in the future.
It’s good to play defense
You have to play offense to build wealth and get ahead. But given that no one knows when a financial emergency will happen to them, it’s important to have a strong defensive playbook as well. Playing defense can help you protect the financial gains you’ve already made, and that’s an important part of the game too.
