The excitement of the new year is often awakening and inspiring, particularly for those who want to make meaningful changes in their lives. Before we head off in a new direction, I think it important to recognize what’s going to be the same as it ever was in 2019.

Cash Flow is King

If we could boil financial planning down to one concept it would be mastering the timing of cash flows. Put another way: do you know how much money you will need to spend and when you will need to spend it? Where will that money come from? Any person who can answer those questions with complete confidence has financial security. This will never change.

What Do We Control?

It’s human nature to obsess on things we can neither control nor influence instead of those things we can.  Consider the following list of items:

• Market returns
• Recessions
• Inflation
• Political Upheaval
• Physical & Mental Health
• Savings Plan/Rate
• Allocation Strategy
• Spending Plans

In our experience most people spend a great deal more time and energy worrying about the first four than the last four. The tragedy of that approach is that no person I’ve ever met has any ability to control or even affect the first four.

The latter four are either completely controllable or at least heavily influenced by choices we make and actions we take. Even better: the success or failure of a financial plan is much more dependent on the second four than the first. This will never change.

What Happens When Something Goes Wrong?

It would be miraculous over the course of a year for nothing to go wrong. Stocks will almost certainly take a dive at some point. Something in your house is going to break. Someone important is going to let you down. Financial failures are much more a question of “when” than “if.” Responding to them after the fact is generally more painful than having a contingency plan to deal with sudden failures. Having at least a few bucks stashed away in the bank can go a long way to ease this concern. Much research has shown that more Americans than not could not deal with a surprise expense of $500.  If this is you, now is a good time to establish that emergency fund, because emergencies happen. This will never change.

Here’s to a happy, healthy and prosperous 2019!