Life doesn’t go in a straight line

I saw this picture the other week and had to laugh at how true it is. We go through life expecting for it to go nice and smoothly with no bumps in the road but the reality is life doesn’t go in a straight line. Mostly, we are really unprepared for the ups and downs and have little put away for that contingency plan.

So how do we forecast the unpredictable? Life can go off in so many different directions that it is impossible to predict for every possible scenario.

Some of these changes in our lives are completely outside our control and there is nothing we can do to prevent them. Let us look at some of the things that have happened in Ireland in the last 5 years which were completely out of your own control:

  1. Property market crash
  2. Recession
  3. Stock market crash
  4. Increase in taxes
  5. Pay cuts
  6. Interest rate cuts
  7. Changes in legislation regarding pensions, taxes on pension funds

Then there are the things that are within your control that will change

  1. Birth of a child
  2. Changing jobs/ careers
  3. Going back to college

Or your priorities and interests may just change. You may decide that paying off your mortgage early is a new priority or you have taken up a new interest that will cost you time and money.

That is why I tell my clients how important the annual planning meeting is. We won’t try to solve every problem in the first meeting’ just the important ones. We will constantly adjust the plan to reflect the changes in both your own life and external factors such as investment returns or changes in taxation. It is easier to stay on track by making small adjustments each year than to having to make major changes when something big happens.

Have a think about what has changed in your life in the last 5 years, what kind of impact has it had on your life and how did you adjust to it?