Are you prepared for the unexpected?
Seventy years ago, today our country was attacked at Pearl Harbor and the world was never the same. America, which hadn’t been subject to another country attacking our territory since The War of 1812, had to deal with the terrible wave of war that would end up sweeping the globe and becoming a world war. While our political and military leaders had tried to prepare for this inevitability, we were still caught off guard and it took us about 2 years to get our footing and begin to turn the battle to our favor. We had to significantly scale up our industrial military industrial capacity and recruit millions of soldiers to sign up and join the fight which was taking place in multiple locations throughout the world. If you think about what was accomplished logistically in a brief period, it is quite impressive. Thank goodness we were up to the challenge.
I’m fond of the Yiddish saying, “Man plans, God laughs…” As much as we can hope to create certainty in our lives there are always things that pop up unexpectedly and challenge our conventional wisdom and plans. Recessions come and go, but was anyone really prepared for the depth of our current recession when it started? How many homeowners have and will continue to lose their homes based on making bets of increasing equity and job security that vanished over an abbreviated period?
When I bought my first home my dad told me to set aside 15% of my mortgage every month for the inevitable repairs that would be needed over time. I wish I had listened to him. I remember being a kid and having schools teaching us about balancing a checkbook, the importance of savings accounts and family rainy day funds. The basic lesson being that you had to manage your money carefully and set aside resources for things that might happen in the future. You didn’t want to be caught completely off guard or unprepared for what life could throw at you.
How many of us continue to live month to month and have a minimum margin for error? Families and businesses don’t have the luxury of the U.S. government to enact laws, sell treasury bills and raise taxes when more revenue is needed. We must be more prepared for the unexpected and plan for various contingencies. In high performing businesses it is commonplace to look at best case, expected case and worst-case scenarios and then plan accordingly. Key indicators are built into the performance tracking process to trigger certain decisions and actions. Individuals need to start thinking in this same manner.
If you haven’t done so already, I encourage you to meet with a highly regarded financial advisor. Part of the financial planning process you will go through will be to look at future goals, forecasted expenses and the ramifications of certain unexpected events. You should also seek out and develop a relationship with a trustworthy insurance broker to help you assess the risk variables in your life (and business if you are self-employed) and ensure there is adequate coverage in place.
Financial security and stability won’t happen by chance. Very few people ever win the lottery or become multi-millionaires. Some expenses are predictable, but others are not, and your goal should be to maximize your options not to minimize them. Success is built up daily over time through disciplined thought and action. We are all living longer, life is getting increasingly more expensive, and our government will have to raise revenues through increased taxes and reduced deductions to cover its budget shortfall. To ignore this reality is personally irresponsible.
I believe that our country can still step up and meet any challenge just like it did 70 years ago today. There is great capacity for resilience in the American spirit. However, we need to move away from a crisis mentality that waits until the last moment to deal with serious issues. We also need political leaders who will better balance their own short-term survival against the long-term needs of the country. The future is wrought with challenges that are predictable given changing demographics and economic realities. What we also need to realize is that our biggest challenges may be unforeseen and unpredictable. Whether it is at the government, business, or individual level, we need to ensure there is some margin for error and adaptive capacity. Please make sure you are prepared for the unexpected.
- Risk In an Inherent Part of Business (capacity-building.com)
- When Things Don’t Go As Planned (capacity-building.com)
- Making A Financial Plan (tfollowers.com)
- Can Your Financial ‘Plan B’ Withstand the Unexpected? (dailyfinance.com)
- How strong leaders handle surprises (cbsnews.com)
- Always Prepare for the Unexpected When Moving (movers.net)
- How to Create a Solid Financial Back-Up Plan (belifestylemagazine.com))