In preparing for battle I have always found that plans are useless, but planning is indispensable.
Dwight D. Eisenhower
In today’s world, we are bombarded with messages of the now. Everyday life moves quickly and everything is readily at our fingertips, literally. You’ve probably heard the popular message to “live in the moment”. Also called mindfulness, it’s a state of intentional attention on the present.
Human beings are also hard-wired as optimists, both neuroscience and social science suggests. Those rose-coloured glasses? We might be born with them. Collectively and externally, we can become pessimistic – about our political leaders, about the future of our country. However we have a tendency to remain optimistic about our individual futures.
The best example of how we are innate optimists is a well-known experiment conducted by Prudential in the US. They asked participants to think about things that happened to them in the past 5 years. Positive events were written in yellow magnets and shared on a “Past” board. Negative experiences were written on blue magnets and also shared on the board.
They then asked participants to think about the next 5 years - what did they expect to happen? All those thoughts were captured on a “Future” board, again using the yellow and blue magnets:
Interestingly, the “Past” board had an even mix of blue and yellow(negative and positive), but the “Future” board was predominantly yellow (positive).
While an optimistic bias and living in the now are well-intentioned and have some benefits, they also impair our ability to make good decisions about the reality and risks of the future. People hugely underestimate their chances of being diagnosed with cancer, losing their job or getting divorced. Ironically, planning for the future actually gives us the ability to live in the moment.
Take a minute to think about all the things that have happened to you in the past 12 months. Maybe you’ve upgraded your car, gone on holiday, had a baby or paid off your mortgage? How about the negative things - did you or someone you know get sick, have a divorce, lose their job?
Now think about the things you expect to happen in the next 12 months. What came to mind? Was it mostly positive or negative?
Rather than living with an optimistic bias, it’s best to strategise and manage the risks. The smart way to manage risk for injury, illness or death is with the right income, health and life insurances. Start getting sorted with the following 3 steps:
- Spend 1 hour every year on your financial health – no ifs no buts. You can make it a date with your partner, just set time aside to think about your plans
- Think about the things that have changed for you and your family and if they have an impact on your ability to manage future risk
- Look at your existing plans and think about possible adjustments you may need – from updating your insurance, getting a better mortgage deal to planning for your retirement
A little time now can save you a lot of stress in the future! We know how important this is – check out Duncan’s story here. Which is why we encourage our clients to meet with us on an annual basis. So if you haven’t met with your adviser recently or there have been changes to your circumstances, it might be a good time to arrange a catch up. They’ll even take along a bottle of wine for making the right decision, click here to get in touch.