As a financial advisor, I get a lot of questions. Some people ask me if it’s a good time to invest in the markets, or if they should be sticking their money under a mattress. Others ask me about the economy. A few ask me about specific investments. But the most common question I get is probably the best.
“What,” they say, “is the number one tip you can give me?”
So here’s my answer:
Precautions are useless after a crisis!
You’re probably wondering what I mean. It’s simple. When’s the worst time to buy a home-security system? After a break-in. When’s the worst time to check your tire pressure? After you’ve already had a blowout. When’s the worst time to put your seat belt on?
You get the idea.
It’s a fundamental fact of life, and it extends to your finances, too. Money can take hits just like everything else. People lose their jobs. Investments can plummet. There might be a death in the family. We have to contend with natural disasters, theft, fraud, and just plain bad luck. There’s only one way to fight it: by having a plan. But a plan is nearly useless after the fact.
We’ve known this lesson since we were kids. Aesop, that ancient master of common sense, says it better than I can in his story,
A singing bird was confined in a cage which hung outside a window, and had a way of singing at night when all other birds were asleep.
One night, a bat came and clung to the bars of the cage. The bat asked the bird why she was silent by day and sang only at night.
“I have a very good reason for doing so,” said the bird. “It was once when I was singing in the daytime that a fowler was attracted by my voice. He set his nets for me and caught me. Since then, I have never sung except by night.”
The bat replied, “It is no use your doing that now when you are a prisoner. If only you had done so before you were caught, you might still have been free.”
So what’s my number one tip as a financial advisor? Do now what you’ll wish you had done later. If you take suitable precautions for your money, you’ll find that it’s always there to support you, even in your direst need. Those who don’t are like the bird in the fable: trapped by the hardships of life.
Because precautions are useless after a crisis.