Saving & Spending


Let's Play "Worst-Case Scenario"!

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By Dayana Yochim (TMF School)
January 4, 2005

Like a midlife crisis or the car going on the fritz as you're on the first leg of a long-awaited road trip, there are some things in life you can count on. The key is to be prepared, whether you're getting serious about buying a house with your new bride, your son declares a new major the semester before he's supposed to graduate, or the market takes a dive just as you start to build your retirement getaway.

While you might not necessarily be financially prepared to cover all these costs, at the very least you should anticipate them. Having a financial plan -- an accurate one that you consult on a regular basis -- can take the guesswork and stress out of managing your finances, no matter what life stage you're in. It will help you project future costs, see how your current savings match up with them, pinpoint current and future financial issues, identify weak spots, and provide a much-needed wake-up call regarding savings, spending, and orthodontia costs. Most importantly, a good plan can save you and your family from life's unfortunate and unpredictable financial catastrophes and turn a wretched retirement into a golden one.

The key is to play with various scenarios -- even plan one downer evening where you play the "Worst-Case Scenario!" game and see whether you are really prepared for any emergencies.

There are a lot of ways to formulate a financial plan -- and a lot of people are quite willing to do it for you for a price. We encourage you to meet with a professional financial planner at least once in your life. If nothing else, the meeting will make you gather all of your important papers in one place. (Here's a checklist that will give you a head start and a chart that compares the kind of advice that's available.) And at its very best, input from a knowledgeable and impartial third party may uncover some icy money patches in your future.

Good financial habits need to change over the years. Investing on autopilot will keep you in the air, but if you want to land safely with your finances intact, you've got to take the controls at different times in your life.

Life happens. Make sure that your financial plan happens right along with it.