A contributed perspective by Stephan J. Hess, CFP
Editor’s note: This is the first in a monthly column on financial matters
Harrisonburg is college town so – in more normal times – you can’t go too far on a nice day without seeing an outdoor college party. Recently I witnessed a rowdy event taking place at some houses that border the rear of our office parking lot. The students rented one of those bull riding machines with a huge surrounding air cushion. The precautionary air cushion was impressive. How responsible I thought. In my day that would never have happened. Danger and the possibility of bodily harm were just part of the experience. Admittedly, watching drunken college students getting flung through the air is quite entertaining. It was impossible to look away. Few lasted more than a second or two even at the slowest speeds.
Here is what I learned. The “Bull” pretty much wins every time because its movements seem to be completely random and unpredictable. Most people quickly lost their balance and with the next change in direction they would get immediately launched off the machine. More successful riders didn’t seem to be predicting the movements of the bull, but instead, always seemed to remain flexible and well balanced, absorbing the energy and riding out the jerky changes. Constant centering to a place of equilibrium prepared them for the next random movement.
So here we are, starting a whole new decade with many financial unknowns. What are your expectations for the next 10 years? Other than technological advancements that continue to make some of us feel older and more useless, I’m expecting the markets, the economy, and life in general to be just like the bull, making random and unpredictable movements like it always has. The coronavirus is a perfect example of something totally unexpected. How will you remain flexible and in balance as interest rates change or the economy hits a downturn? What if your employment or health changes? Consider more frequent reviews of your financial life. Don’t let multi-year gaps pass by before revisiting your emergency fund needs, your investment risk strategy, and of course your debt and budgeting plan. Clean up what needs to be cleaned up and reduce any areas of excessive risk. Most people do not find this fun, but it can make a significant difference in your ability to ride out the next random movement. Life happens. Be ready!
Stephan J. Hess, CFP®, is a CERTIFIED FINANCIAL PLANNER Professional and is the owner of Hess Financial in Harrisonburg. Neither he nor his company has any financial relationship with The Citizen or its publishers.