How Guessing and Adjusting Can Help You Find Peace of Mind

Not having things to look forward to on the calendar was one of the (many) challenges we all faced over the past year. Thankfully, now that Michelle and I have completed vaccine #2, traveling to see family and friends is something we’re looking forward to again. In fact, we’ve already booked a few trips back East for late summer and early fall — and, wow, does it feel good to see those things on my calendar.

When it comes to travel, the value and enjoyment gained by planning ahead of time might seem fairly obvious. However, we often neglect to apply this same logic in other important areas of our lives.

“If a man knows not to which port he sails, no wind is favorable.” - Seneca

When’s the last time you packed your bags, headed to the airport with the whole family, and only THEN decided where you’re going?

Probably never.

And yet, how often do we apply this same approach to our financial lives?

Instead of charting a course ahead of time, we focus on what’s right in front of us based on whatever the financial winds have blown in our direction.

Here are three steps that will allow you to become more intentional about aligning your finances towards what you personally value.

1. Give it your best guess

I have no clue when I want to retire, how much money I’ll want to spend, where the kids will go to college, whether we’ll sell our house or stay put, or if we’ll want to buy a vacation home...

Sounds familiar, right? Let me let you in on a little secret.

We’re all just taking our best guess at an unknowable future.

We know that we will either a) change our minds or b) something in our lives will change that will cause us to change our plans. 

There’s no getting it ‘right’ when it comes to planning our future but that shouldn’t stop us from making our best guess in the moment. That’s because when we make our best guess, we can start to…

2. Build out our own flexible framework 

Once you’ve made your best guess, you can start to build a flexible framework around them. 

Using your guesses as a starting point, you can now reverse engineer to figure out things like how much you might need to save, where you might want to save it, and how you might want to invest it given your personal comfort level and individual priorities.

Instead of showing up at the financial ‘airport’ with infinite options/destinations, you’re now starting to be more intentional about aligning your money with what you uniquely value. 

Reducing your choices to what matters most to you creates constraints that are freeing, as opposed to limiting. You now know why you’re making the choices that you are and that creates confidence around those choices. You’ll also become more confident when you...

3. Maximize for flexibility

One of the many things that the past year has taught us is that life can change dramatically in what seems like an instant. That’s why I believe in applying the concepts of ‘guesses over goals’ and ‘maximizing for flexibility’ wherever possible in both our lives and finances. 

We shouldn’t plan on everything going right, nor should we plan on everything going wrong. The most likely yet unknowable outcome probably lies somewhere in between those two extremes.

A good rule of thumb is to default to making choices now that maximize your options and flexibility in the future. You can figure out what those choices might be by asking yourself…

What happens if things go worse than I expect?

What happens if things go better than I expect?

What am I missing or haven’t yet considered?

As we talked about last time, an either/or mindset might be a simple and convenient form of decision making, but it’s rarely an effective mindset for living the life you want. 

Instead, start by using your best guesses at this moment in time to create your flexible framework. Then, just like a sailor or pilot would, use your flexible framework to make the necessary adjustments or course corrections along the way. Having a system in place that allows you to adjust to life’s many uncertainties can help you gain that peace of mind you’ve been looking for.

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