When we think of financial planning, we naturally focus on the future. We start by getting really clear about where we are today, then we spend time thinking about where we want to be 10, 20 or even 30 years from now. Part of the process includes deciding how much we’ll want to spend, when we’ll want to spend it and how much we can save. Someone has to decide when the plan will end, too, and estimate a year of death, perhaps for two people.
So any plan will involve projections. Before we can draft them, we need to make a bunch of assumptions, or guesses, about what will happen to things like interest rates, inflation and the stock market.
As our plans start to take shape, we can weigh different situations until we identify the exact plan for us. It’s the adult version of playing What If? For example, if we can’t save as much as we need to meet our goals, we can adjust the rate-of-return assumption by shifting more of our portfolio to stocks, or we can decide to spend less in retirement years from now. Or there’s my personal favorite suggested by a reader: We can die earlier. These are all ways of making the plan work. But remember, they’re still just guesses.
This process is full of potential problems. I’ve watched salespeople disguised as financial planners abuse this process by moving assumptions around until they’ve made it painfully obvious that the only solution happens to be the product they’re selling. I’ve also watched well-intentioned advisers use this process with a false sense of precision that leads to disappointment when things don’t work out as promised.
We could also do the opposite and give up on the whole process of planning. Just forget your goals and projections and focus on the process of living today! As silly as it may sound, focusing on the process instead of the goal is an idea rooted in the teachings of many ancient traditions.
Jesus pointed to the lilies and noted that they don’t toil or spend time thinking about tomorrow, and things work out. The emphasis on the present moment is said to be one of the most distinctive characteristics of Zen Buddhism. Attend a yoga class, and you’ll get another modern-day reminder to focus on being present.
By this point, you may be wondering, “Why bother?” I suggest we look at a middle way. I think of it as living in the present and, every once in a while, peeking into the future. It’s incredibly hard for humans to imagine a goal so distant as retirement (even if it’s only 10 years away). But we need to remind ourselves that if we want to get there, we have to take at least some action today.
One way to do this is to set a goal, any goal, even if it’s based on an assumption. Fundamental goals ought to reflect our deepest values — the things we actually believe are most crucial. These future goals can give us a deeper yes, so we can say no to things that aren’t really important to us, but might feel urgent at the moment.
Yes, goals are themselves based on guesses about our future selves, but instead of obsessing, we can simply identify them as a potential destination. They represent a place we think we want to go, sort of like a destination on a trip. Even the most carefree of travelers has an idea of where to go, but by following the middle way, we keep ourselves open to the possibility of an unplanned side trip.
By giving ourselves permission to let go of certainty and the false sense of precision that often goes with planning, we relieve the pressure of feeling like we must get it right every time. Once we put planning in this light, we can shift our focus solely from the future and share it with right now. With goals and a flexible plan in hand, we’re that much closer to happily living in the moment instead of stressing about a future we can’t predict.
This commentary originally appeared April 21 on NYTimes.com
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