When Your Wants Exceed Your Resources: Plan B

by Jeff C. Johnson

Most people who invest, I’ve learned over the years, develop some vision of what life will look like for them in the future. It’s not always focused and clear, but there is some idea of what the future could hold for them.

Some wish for an early retirement or international travel or second homes. Others have significant charitable intentions or plan to support a child or grandchild in pursuit of an excellent but expensive education. There are as many dreams as there are people. And, for some people, reality exceeds the vision; what a wonderful thing to have happen!

But sometimes circumstances impair the financial resources that would have supported those dreams, and this is when a plan B, an alternative vision, should be ready to implement.

The need for a plan B is not necessarily the result of a personal failure, though it could be. Overspending, undersaving, and underinvesting are often barriers to financial success that can be avoided, especially if they are identified early in life. Poor health, divorce, and economic conditions are all example of things that might be out of our control.

Creating a plan B is simple but not always easy, and implementing a plan B gets harder as life goes on.

Elements of downsizing into a plan B could include moving to a smaller, less expensive home, driving less expensive cars, or even going from two cars to one. It might include eliminating club memberships or a second home. It might mean limiting contributions toward a college education for children. It might mean reducing charitable contributions.

Reducing the footprint of your lifestyle might be a good idea anyway, even if it’s financially unnecessary. Socrates wrote, “He is richest who is content with the least, for contentment is the wealth of nature.”

I’ve known a number of people who cut back their high-cost lifestyle. Some needed to do it, others just decided they could live with less stuff. In most cases, they were just as satisfied with life, if not more at ease and financially confident.

When you review your financial situation, do you also consider your plan B? At what level of lifestyle can you be content?

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. IRN-20-1222