Always in Transition: Planning for the Only Constant in Life

Life happens, they say. And so much of life is made up of transitions: changing jobs, growing families and care responsibilities, new relationships, moving homes, and beyond and often without even realizing it we’re managing big and small transitions, learning, and growing. I started thinking about this after attending a conference where Susan Bradley, who specializes in clients experiencing major life events, spoke. Her talk was about the financial elements of widowhood and a framework she applies for dealing with such a major transition. While widowhood is a truly profound life event, listening to her highlighted one of the essential truths of financial planning: there are many transitions throughout life. Some are a shock to the system, and others are smaller. And most important, a financial plan shouldn’t be static, or built with a static mindset, but rather an evolving approach that allows us to manage those transitions with confidence and clarity.

What it looks like in practice

Transitions that affect financial planning are wide-ranging, with various emotional implications. Divorce, receiving an inheritance, adoption, paying off student loans are just a few. Each of these examples change the picture. So there are a set of principles to rely on when developing a financial plan that can flex and handle change.

Build resilience

Flexibility in a financial plan helps so when change does happen – even a change that isn’t on the horizon – people are resilient and can deal with it. That might be having an emergency fund, for example, and thinking strategically about what that fund helps you deal with. It might be job loss, sudden or unexpected expenses, or an opportunity that comes your way you might want to invest in. That resilience built into a dynamic financial plan helps you deal with transitions with enough flexibility.

Read: Build Financial Resilience for Moments of Uncertainty

Understand what could change

When setting up a plan, there’s a conversation about what could change. A person might not have any intention of retiring, for example, but they work in a high-pressure, high-power job and they get to a certain age and decide they can’t or don’t want to maintain that way of working so their initial plan isn’t going to work. They might age out of a certain profession. Something health-related could occur that prevents them from going at the same speed. And even retiring voluntarily, going from working to not working, can be an overwhelming change as people get used to not receiving a paycheck, despite planning for it. All of this plays a role in financial planning, and the planner needs to be forward-thinking, understanding the variables so the plan can help with those decisions or changes when and if the time comes.

Prepare for complexity from a place of confidence

In that same vein, understanding different scenarios from an unexpected windfall to the worst-case scenario helps build more dynamic blueprint as does understanding which levers to pull when change arises. For example, I had a recent client who is directly going to be affected by the current political landscape, and we thought their job would be secure for the next ten years. That’s no longer the case and on top of that, it might be harder to find work because other people in the same boat are also looking for work. So how will they deal with that? It’s about all the work we’ve done up to this point. There are building blocks in place (enough saved for their future self, an emergency cash savings fund, a clear understanding of what needs to be earned). It doesn’t make it easier, and it’s an emotionally charged transition, but having that foundation helps cut through complexity and think more objectively. And in that way, someone can discuss and make decisions that feel most connected to their values, instead of making decisions out of fear or feeling they have to shortchange those values.