A financial planner has a 3-step exercise for anyone who's worried about the worst-case scenario

Stígur Már Karlsson/Heimsmyndir/E+/GettyPlanning for a worst-case scenario isn’t fun, but it’s worthwhile.
  • One of the best ways to plan for the future is by confronting your fears, says a financial planner.
  • Think about the worst-case scenarios for your money during the coronavirus pandemic – and beyond – and how each might impact your household. You can do it in less than an hour.
  • It’s tough to confront the what-ifs, but when you develop a playbook, you realise how much you still have control over.
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America is in a severe state of economic, social, and political unrest.

If you’re especially worried about your money and what threats the future could bring, you’re not alone.

More than 43 million Americans have lost work over the last three months. While emergency federal aid in the form of a $US600 boost to unemployment benefits and $US1,200 stimulus checks bolstered personal incomes and led to a heightened savings rate, that’s temporary relief. It’s unclear what lagging effects the coronavirus pandemic could have on our wallets in six months or a year from now.

It may be overwhelming to think about what else could go wrong and how you might react to it, but that’s actually one of the most effective ways to plan for the future, says Brian Fry, a certified financial planner and the founder of Safe Landing Financial.

“Focus on what you can control,” Fry says. “What I’m telling clients, and prospects as well, is focus on building out a playbook – evaluate all the worst-case scenarios that can happen in your situation and how that would affect your situation.”

Whether you’re worried about job security, your or your family’s health, or your ability to meet financial goals, Fry recommends a three step exercise:

  1. Write down your fears
  2. Brainstorm through each scenario
  3. Write up an action plan

It may be difficult, but there’s a big upside

“For someone that’s not working with a [financial] planner or maybe doesn’t necessarily have their financial plan built out, just having these tough conversations and putting a pen to paper and writing down what your greatest fear is financially with this situation, with coronavirus … come up with your worst fears, write it down,” Fry says.

For example, if job loss is a concern, you should think through whether your company offers a severance package, whether you’ll be entitled to health insurance continuation coverage, or how the loss of income will affect your immediate cash flow and ability to pay your bills.

This thought exercise will help you come up with a bullet-point list of steps to take if you do lose your job so that you can right the ship and get back on track by applying for health insurance, temporarily cutting back on a specific spending category, calling your bank to ask for financial relief on your mortgage, or whatever applies to your situation.

“When you think about all these things, I know it hurts. No one enjoys doing that,” Fry says. But the upside to confronting the what-ifs is they become less intimidating, and you can quickly spring into action if the worst-case scenario happens.

“You already know how you would react and what you would do, how this would impact your family,” Fry says. “Then you can focus on the things that you can control. And you know, if this doesn’t happen, you’re going to be OK.”

Related Content Module: More on managing money right now

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