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Dealing with uncertainty

“May you live in interesting times” is a traditional Chinese curse. Interesting times are usually times of trouble and deemed to be difficult and unhappy.

The last couple of years could definitely be described as interesting times! With rising inflation, rising gas prices, petrol pumps running dry and Covid still in the background, there are no signs of it becoming uninteresting any time soon…

But what can we do to deal with all this uncertainty?

Firstly, I can’t help with things like petrol problems! But some of the below solutions can be applied…

Have a plan

Have you thought about the short, medium and long term? Do you know what you have coming up and what resources you need to meet any commitments? And has that plan been stress tested? Do you know how it fares if something goes wrong? This is as applicable for your long-term future as it is for working out what happens if you can’t get fuel. If you know what the worst case is and have a plan for how you deal with it, it makes things easier and more relaxed.

Know your spending patterns

Knowing how much you spend and having control over this is so powerful. Nearly everyone will suffer from expenses creeping up. I’m not going to say budgeting, but you should definitely have a spending plan.

This means getting a handle on what you spend your money on. Track your expenses closely. You can then assess each expense based on whether you want to keep it or not. Does it match with your values? Does it bring you joy? If you are keeping it, would you like to lower the expense (e.g. swap car insurance provider), keep it the same or increase it.

Once you know your spending is at the right level and under control, you are better placed to face the future.

Cash buffer

Having an amount in cash helps with feeling secure for short term needs.

How much this is will be highly dependent on your personal circumstances. How much you spend on a day to basis,, upcoming capital commitments and the amount of money that makes you able to sleep at night will all be factored in.

But it just gives peace of mind. You know you have the ability to replace something if it breaks. You also have the ability to plug any income problems such as redundancy or lower than expected earnings. Lastly, if your investments take a tumble, you might have the ability to reduce or stop withdrawals to allow time for the investment to recover.

Investment strategy

Having a robust investment strategy that is focused on delivering inflation beating growth over the long-term can provide protection against the rising threat of inflation. If you are achieving returns above inflation, the uncertainty for your future self can be reduced.

There’s a lot of uncertainty around at the moment, but the best way to combat this is to have a plan and be prepared. If you need any help with preparing for the future, please do give us a call for a coffee and a chat.