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So often we see people, who are otherwise very independent people,
allowing money to control them instead of them controlling their money.
Controlling your income and expenses requires planning. In order to
continuously improve your quality of life you must be in control of how
you prepare for and respond to your economic circumstances.
I often see one of two things happen to people who do not plan for
changing economic circumstances. 1) People start losing their quality of
life right away and recognize the loss because it happened quickly or 2)
people whose hardship or challenge wasn’t very intense but the world
changed and they did not. The second group can be the worst because you
don’t have an urgent or compelling reason to do something right now.
However, I have seen these people “wake up” years later and ask “what
happened?”. They lost a little bit of ground each year and now they have
fallen far behind and have little to show for themselves.
When I enlisted in the Army Reserve years ago they had all of the new
recruits report to our local base prior to leaving for boot camp. The Army
wanted us to get familiar with our fellow reservists prior to leaving for
training. During my first weekend at the base we received mostly
orientation. One of the sergeants instructing us made the point that the
Army had a written plan of action for every possible scenario in every
possible location around the world. If something happened all they had to
do was pull the appropriate plan off the shelf and put it into action.
Everything had been thought out before hand and as reservists we would
regularly rehearse our roles in these plans.
Interestingly enough, this was in 1989 and the sergeant told us that the
Army expected the next big problem to be in the Middle East and it would
involve Iraq. Sure enough Iraq invaded Kuwait not long after the Army’s
prediction. Everyone’s situation in the Middle East changed immediately
and with little notice. Because of the planning and rehearsing the Army
had been doing for this potential problem it was prepared to quickly
respond.
As individuals we should be doing the same thing with our money as the
Army is doing with its soldiers and resources. We should be planning how
our money will be used in different scenarios. Sometimes we will have more
money then we expected and sometimes we will be facing economic hardship.
Either way we should be prepared for the situation. As responsible
budgeters of our money, whose goal is to create an ever increasing quality
of life for us and our families, we must have several plans prepared to
deal with many different economic scenarios.
Personally, I have several budgets written. Like other people, I know I
will have good years and bad. Each of my budgets map out how I will manage
my money at various income levels. If I were to lose any portion of my
income I will know ahead of time how I will need to adjust my lifestyle
and how I will make the most of my money during that time. I suggest that
you take a moment and think about various situations that you might
potentially face. Consider planning what you are going to do with your
money now, but also what will you do with your money when your situation
changes.
One last thought on planning for different situations. The Army recognized
the fact that the world constantly changes. That is why they regularly
review and update their “book” of plans. Yes, they had plans for all kinds
of situations but regularly updated them because circumstances around the
world would change. The same should be true for you. When you have
completed plans for various income situations in your life be sure to plan
on reviewing and updating them at least once a year.
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