Watching the Headlines Isn’t a Financial Plan

When I was kid I used to think the finance section of the news was serious, important and something only experts understood.

Now I see it differently, a lot of it is noise and sentiment (aka vibes).

Most people do not understand the economy, geopolitics, or company fundamentals.

What they react to is how they feel. Negative headlines shape those feelings quickly.

In the last week I have had a few conversations with new clients about the economy and what it means for them.

Interestingly some of these people described themselves as aggressive wealth builders. They saw themselves taking on large amounts of debt, to buy assets, and do whatever it takes to get their money working harder.

My first piece of feedback was simple, slow down and build a strategy first.

Once you dig a little deeper it becomes clear how unprepared most people are for even a small change in circumstances that goes "against them".

Let's look at the last few weeks. When petrol prices rise, when interest rates move, or when both happen at the same time. Suddenly the same people who wanted to take on risk are looking for the exit until things feel “more certain”.

Following the emotional wave of the economy is not a strategy.

No one can predict the future and that is exactly why you need a plan.

You will still need somewhere to live.
You will still need to earn an income.
Debt will likely still exist somewhere in the mix.

The solution is not trying to predict every outcome in the short term.
The solution is building uncertainty into the plan from the start.