Do you often feel like you are flirting with disaster, especially when it comes to money? Maybe it is ensuring you have an updated will, but you don’t know where to start. Maybe it is having an accountability partner evaluate your saving and spending plan. Or maybe you are anxious because your wealth has increased suddenly, and you don’t even know exactly what risks you are now facing.
Learning to manage risk is a big component of financial success. Despite being necessary to determine, risk is hard to measure. So what does that mean and how should you move forward when the success of your goals and peace of mind depend on it?
It’s important to understand the type of risks and how they can and will affect your financial goals. And as with most things, I find a good story and healthy dash of humor make anything like this much easier to digest. So let me share a little recent happenstance of mine that I hope will help put things in perspective.
Learning from Our Mistakes
Even I get it wrong about what “risk” looks like in my own life sometimes. Recently I decided to go for an afternoon run with my dog, Rogue. As I always do, I put on my shoes, put on Rogue’s leash and then stuck the key fob for my Highlander in the small pocket on the side of my running shorts.
After an invigorating run on the trail, I went to unlock my car and realized that my key fob was no longer in my pocket. And not only that, but the pocket zipper was wide open, and it had likely fallen out of my pocket at some point while running. This was very bad.
What put me into full on panic mode, however, was the fact that I do not have another key to my car. Not hidden away in a drawer at home. Not on my husband’s key ring. Ugh. I always meant to get another one,but I just never quite found the time. I hate ‘dealing’ with anything that has to do with car maintenance, and usually push it to the bottom of the to-do list.
Take a Breath and Evaluate the Situation
My next step was to take myself through a series of wishful thinking exercises to keep hope alive (and prevent a mini breakdown in the crowded parking lot). After all, I had a muddy dog staring up at me wondering what our next brilliant move would be.
Maybe I dropped it next to the car? I scrambled around the car on all fours, looking everywhere. No key. Maybe I dropped it in front of the bathroom? Again, no key.
I took a deep breath and asked myself: What would I do if I found something of value on the trail, like a bracelet (or a key fob)? The common convention is to put lost items in the most visible place you can find in the parking lot. I remembered seeing others do it with a random glove or hat they had found on the trail.
I sprinted over to the fence post at the entry to the trail abd, lo and behold, my key fob was sitting right there. I was just one Good Samaritan away from total disaster.
Managing Risk Doesn’t Have to Be Difficult
“Experience is making mistakes and learning from them.” – Bill Ackman
So, what did I learn from this particular experience? The next day I was in AutoZone building “redundancy” and “risk management” into this particular part of my life.
Perhaps this anecdote will get you thinking about where in your life you’re living on the edge, especially when it comes to your financial life. What is the key fob in your life right now? What mistakes do you find yourself making time that could reveal the need for change?
I started my firm with a recognition that we are all human, we all make mistakes and have different strengths and weaknesses. Understanding what your particular “key fob” is might take time, patience and empathy.
That is why I love working one-on-one with clients to help them chart a path to financial success that is uniquely built around their individual needs. No two people are the same, so no two financial plans should be, either. We all have our strengths and weaknesses.
If you’d like a little professional guidance in this area, I’m here to help you build risk management into your own financial life. Please get in touch and let’s discuss how to ensure your risk is successfully managed, and your keys remain firmly in place.