How NASA recently taught us that it pays to plan for the worst
In September this year, NASA successfully redirected the course of an asteroid in space known as “Dimorphos” by sending a probe into space to collide with the asteroid.
NASA Administrator Bill Nelson hailed the Double Asteroid Redirection Test (DART) mission “a watershed moment” for humanity and our planetary defences.
Even though the asteroid wasn’t heading for Earth, the mission was part of a test run to see whether this kind of redirection was possible. We now know that if a celestial object were to ever be discovered on a collision course for Earth, NASA has the technology to potentially remove the threat.
Even though the DART mission is an incredible story in itself, it can also teach you a lot when applied to financial planning. So, what can you learn from the mission, and what does it have to do with your wealth?
The DART mission is a great example of planning for the worst
No one wants to imagine how scary it would be to learn that an asteroid is heading towards Earth. We’ve all seen Deep Impact and Armageddon and are quite content for them to remain science fiction!
It’s the same for catastrophic events that could happen in our lives, like falling ill or facing a sudden and unexpected financial commitment.
The thing is, burying your head in the sand and avoiding thinking about these potential future challenges won’t stop them from happening. Instead, it will mean that you are far less prepared to deal with them if they do occur.
No financial plan is complete without confronting these fears so that you know how you would cope should the worst happen. Not only does planning ahead allow you to get through these challenges more easily, but it also means your finances will be less adversely affected if you need to unexpectedly dip into savings, for example.
Just like NASA’s DART mission, the hope is that you will never need to fall back on these plans. None of us has a crystal ball though, so it’s far better to have thought things through in advance just in case.
Knowing that the strategy works gives peace of mind
Financial planning isn’t just about money. It’s also about creating a life that you love and making sure you and your family can live comfortably and joyfully.
Even though it’s scary to think about challenges that could come up in the future, having a plan is the best way to know that you can handle any challenges that come up.
When you’ve mapped out the possible outcomes with your planner and decided how you want to address them, you can focus on how you’ll pull through those challenges instead of living in panic mode. You can live your life much more happily without that black cloud of “what if?” looming over you.
When we ask our clients about the reasons for working with us on their financial planning, the number one answer we get is the peace of mind they have from knowing their finances are in good shape.
It may not quite be on the scale of protecting humanity from an existential threat but, for your family, the knowledge that you would still be able to pay your mortgage and your bills if you weren’t able to work for a while, or that your loved ones would receive financial support if you passed away prematurely, could make the world of difference to your stress levels and peace of mind.
Read more about the real value of financial planning on our website.
Cashflow modelling allows you to play out what might happen in the future
The key thing about the DART mission is that the asteroid knocked off course wasn’t actually heading for Earth.
It’s just the same for planning potential challenges in your life. Thanks to cashflow modelling, you don’t need to be experiencing something to be able to see how your finances will hold up in certain circumstances.
When you work with a financial planner, they will be able to model or forecast your future wealth and income. They input your income, your current assets and investments, and major life events to the timeline. The software then produces a map of what your wealth could look like and the likely value of your assets and income at any given year of your life.
By modelling various scenarios, you can see what would happen to your finances if, say, you weren’t able to work for a year. The impact on your overall net worth and income will be modelled so that you can see any shortfalls.
Together with your planner, you can then adjust your current strategy as and when needed. Just like NASA, you’ll know exactly how to respond to whatever asteroids the universe decides to throw at you.
Get in touch
If you’d like to put some plans in place to protect yourself and your family should the worst happen, we can help.
Email theteam@fortitudefp.co.uk or call us on 01327 354321.
Please note
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.