There is no perfect personal finance plan

There is no perfect personal finance plan

We have a world in crisis – economies are collapsing. Healthcare systems are fighting a viral war. COVID-19 is taking over our every action.

The financial pros will tell you “this time it’s different.” Yes, the triggers for financial catastrophe are different but the outcomes are rather predictable – markets can and do crash. Sometimes the crash is significant.

Coming out of this crisis though, and we will eventually emerge from it, I’m optimistic. I say that because at the anthropological heart, we are a very resilient species. We also have tremendous ingenuity. With all those perceived superpowers, that said, I do sincerely hope we remember how we feel right now and turn it into positive action at some point – it would be great to be more collectively kind to Mother Nature after some of this stabilizes in the months or year to come…

On a personal finance note today, I’m here to tell you that as much as you might plan, financially or otherwise, nobody saw this coming.

There is no getting out of this healthcare and economic crisis unscathed – everyone is impacted to a degree.

I suspect how much you’re impacted depends upon how much you’ve planned over the years for events (that could be…) like this. Even then, nobody knows how this might play out – for you, for your family, for your loved ones and friends. That thought can be downright scary.

This means there is no perfect personal finance plan to combat something like this.

Perfect Portfolio

80,000 personal finance books and advice into simple bullets

I’ve read dozens of personal finance and psychology books on money over the years and I can distill those gazillion pages down into the following, simple, point-form bullets. Ideally, these are things we should all strive for and continually practice based on generations of financial expert suggestions:

  • You should work hard to get out of debt and stay out of debt.
  • You should spend less than you make.
  • You should establish and maintain an emergency fund. Ideally, at least a few months’ worth in cold-hard cash.
  • You should make savings for investment purposes automatic.
  • You should invest a good portion of your savings for long-term growth; as in equities.
  • You should invest a small portion of your portfolio in fixed-income, to act as a parachute when the stock market crashes. 
  • Investments should be made in a manner that consistently aligns with your risk tolerance; don’t take on any investment risk beyond what you need to, to meet your financial goals. 
  • Once invested in equities you should stay invested, without fail if you can help it.
  • Once invested, you should keep your investing fees as low as possible for as long as possible.
  • A reminder the 4% safe withdrawal rate is not gospel but a guideline. It make not make any sense for you.
  • You should diversify your investments across companies, countries and world economies.
  • You should mind your taxes.
  • You should obtain adequate life and disability insurance for the “what ifs” in life to protect against a catastrophic financial loss. 
  • You should keep a will up to date, including any powers of personal care. 
  • You should continue to educate yourself; continuous improvement will keep your mind growing and active.
  • Money doesn’t mean much if you don’t have your health. You should do what you can to stay healthy. Health is always the ultimate form of wealth.

Of course, these things are easier said than done. Let alone doing all these things with mistake-free proficiency over the years. 

I mean, who does all this stuff and stays on top of it?

Who has never made any financial mistakes?

Who is a real star on all things health and wellness?

Very few of us. I have no problems admitting I’m far from perfect on any one of these things. 

Amidst the COVID-19 crisis we’re all wrestling through right now, this is a perfect time to remember that you can’t have it all. Despite our best efforts, it’s near impossible to have all your $hit together all the time, let alone extremely rare to have it together for any short period of time. The notion that you or your family might have been better prepared for this crisis “if only I had…” is both fallible and just not helpful right now. Don’t beat yourself up. 

Yet on the flipside, you and I won’t be able to predict the resolutions from this crisis either. And in many respects, that’s a good thing.

Times of crises have a way of re-focusing our species on what’s really important. We fight or flight. Those decisions can actually deliver a plethora of longer-term opportunities we would have never realized without the crisis to wrestle with in the first place:

  • Maybe you now feel you own too much house and/or too much car. The financial strain caused by this viral pandemic could potentially allow you to reset how much you really, really need for you or your family. 
  • Maybe you’ve taken on too much debt over the years. Cheap credit seemed like a great idea and something easy to pay back the minimums on at the time. Hardly now with any lost family income. This crisis has exposed an unequivocal conclusion to us, while some debt is OK lots of debt and/or bill obligations can be financially crippling. These are financial stressors some of us never want to live through again. 
  • Maybe your portfolio is on life support by taking on too much investment risk. This recent market crash (including the thousands of points yo-yoing every day) could actually be a blessing for you – the gift of a bear market reveals how much risk you’re actually willing to take on and live through going forward. Maybe we all have a new-found appreciation for keeping more cash and/or fixed-income. I certainly do.

And my list could go on and on and on…

Crisis builds character

They say times of crisis builds character. They reveal things about your nature you didn’t know existed.

Whether you aspire in your life to live like The Millionaire Next Door and adopt some lifestyle principles on that path to financial independence is your choice. No blog or book or podcast or personal financial talking head is going to make you really do anything you don’t want to do anyhow.

It is my hope however that in any time of crisis, including the one we’re collectively trying to work through called COVID-19, that we all take some time for deeper reflection and realize what’s really important in our lives. 

I’m certainly going to do quite a bit of that.

Do take good care and stay safe,


My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

29 Responses to "There is no perfect personal finance plan"

  1. My first time reading your work. I went back a few and read more. Really great stuff here. Thank-you for making it available. I am glad there is no perfect plan because mine certainly isn’t, but it is a plan. The plan evolves as I learn, and I am doing lots of that.

  2. Awesome list – should be taped on every refrigerator door in the country, including in the workplace kitchen (when we’re allowed back). Health=wealth is becoming readily apparent today.

    One further thought – don’t act alone. If you have a partner, make sure they are part of the plan and know your combined standings on all of the above, too many couples leave it all to one person to figure out. If you have kids, educate them about these and role model for them to set the next generation up for success.

    1. Great point about the “don’t act alone” – get fee-only-advisor help if you need it.

      Health is absolute wealth in any era, generation or place in our world. If someone disagrees, happy to discuss 🙂

      Stay well please!

      1. If a person wants to live simply and cut down expenses, the person is able to do it. It’s a matter of how far we want to go. With all the advertisements out there, it encourages people to keep buying non essential items in good times. The excessive consumerism is what keeps the economy thriving.
        It’s a frightful thought to live pay check to pay check with no financial safety net.

        1. That’s a great point Rn about the barrage of marketing. You really need some critical thinking skills these days to overcome all the hype. I suspect that essential skill is quickly dwindling in numbers.

          I would be absolutely scared _____less if I had to live paycheck to paycheck. I really feel for people in that position through no fault of their own. Sometimes, sadly, life happens. It is those people I try and support via donations, other.

          Some people are not going to come out of this very well whatsoever. I will do what I can to donate resources (food, clothing) and funds for them.

          Take good care, stay well.

  3. Great list! So simple but of course so hard to implement.

    One I’d like to add is having an emergency budget. Knowing you can live on 20% – 30% less in an emergency situation provides a lot of peace of mind and stretches an emergency fund even further. Sometimes we’re in a better place than we think but the uncertainty can cause enormous stress.

    1. Very hard to implement. I don’t know anyone that does this stuff perfectly, all the time, let alone doesn’t have something to improve upon.

      It is our hope we can absolutely live on less once the mortgage and actually saving for retirement is done. We have a few thousand $$ per month that goes into a) mortgage and b) just saving for retirement. Once those obligations are gone, essentially any money we can make will be for our day-to-day living and any future workplace pensions and/or government benefits in our financial future will pay for everything else.

      It will be interesting to see what COVID-19 does for the Canadian taxpayer bottom line. I suspect my generation (Gen X) is going to get absolutely hammered with taxation over the coming decades.

      Stay safe and well Owen,

      1. Regarding taxation, specifically income tax (’cause we all know there are so many other taxes, including many hidden ones). A few years back, when I was wanting to clean out some very old files, hubby and I looked back at what we paid in income tax from the early 80s up to the current time. It was very surprising how much income tax levels had dropped over these decades.

        So if taxes went up, they have a very long way to go before they reach the 1980s levels.

      2. I’m early Gen X and worry as well about the looming tax bill that will have to be paid for this crisis and the economic bailouts/tax breaks required to restart the economy and keep small businesses afloat. This has to be thought of in terms of paying back wartime costs.

        We will need to be realistic about retirement entitlements (delay OAS/GIS to age 67-70, smaller future increases, higher clawbacks), less healthcare coverage, and demands for Gen X and leading Millennials to pay even greater shares. It won’t be enough to “ask the rich to pay a little more”, it will need to be more broadly based. Say goodby to the 50% capital gains rate, it will have to go back to 75%. Death taxes (‘ahem, probate’) will come next, and if things get really bleak, wealth taxes.

        I know I’m being a bit over the top with all of this, but this is not a run-of-the-mill deficit. And to end, what other choice do we have? Where else would you rather be right now?

        1. Our taxes will be hit Bart – we’re in the same cohort (Gen X). No 40-something is going to get out of this unscathed from a tax perspective….

          I don’t think we have much choice but to offer stimulus and bailouts. I just wish we had more streamlined government processes (e.g., some form of Universal Basic Income) as to deliver funds to those in desperate need/who need it the most vs. many bureaucratic programs that are not really solving our poverty needs. I don’t see why we cannot make a case for UBI after this. It boggles my mind, at least a good pilot to end any doubts why it couldn’t work…

          Just me 🙂

    2. great suggestion Owen!
      Personally I don’t do budgets but I do have an accurate handle on expenses (multi-decade) so if push comes to shove, expense categories that require cutting are obvious and I’m capable of eliminating them
      I can get by on food (good stock and I can cook), shelter (owned; free and clear) and utilities (gas, electricity, communications) if need be – hopefully I’ll never have to test my resolve.

  4. Superb summary Mark. If people did 1/4 of the items on your list they would be so much better prepared. I think this current time in history might serve as a wake up call for many. You’re right, there is no perfect financial plan. Mine is different then others since my life is different, my risk tolerance is different and my attitude toward money has evolved. I encourage everyone to take a moment and think about how blessed/fortunate you may be – even during this challenging time. Keep this time in perspective, it will pass. Think I’ll go for a walk-practicing physically distancing of course.
    1. I am loved 6. I am income secure
    2. I am healthy 7. I have friends
    3. I am safe 8. I have children
    4. I have food security 9. I have freedom
    5. I have a warm place to sleep at night 10. I have hope as I refuse to live in fear
    Stay well everyone.

    1. I know it’s a wake-up call for me to keep more cash on hand for sure. Not sure I really need bonds yet but this crisis has me thinking! 🙂

      I do take a pause from time to time and think how fortunate I am to date. A good job. A home I enjoy and can afford. First and foremost my health. Good friends. Family that loves me. My mental wellness (almost every day!). Food security. The ability to travel. The luxury to dine out where I want and when I want without worrying about a budget, so much, much more.

      To have a roof over my head in arguably the greatest country in the world with few money worries (for the most part), I’m very blessed.

      All the best to you.

    2. Gruff: regarding having a warm place to sleep at night. It must have something to do with being a mother and watching my kids grow up, but seeing homeless people started bothering me so much. Of course the reasons for homelessness are complex, but the thought of a loved one ending up that way…..its so awful. All I can do personally is donate to our local shelter that helps these people, maybe I need to re-think what I could do.

      Ten years ago I was at a night clinic waiting to see a doctor. A lady in there was also waiting and was a bit agitated. She and I chatted and she revealed that she was one of the homeless people who were attacked in a back alley the week before, at night while they were sleeping. It had made the news–young men had dumped paint over their heads. She was crying about having to have her long thick hair all cut off. Made me cry too, how heartless can people be?

      1. Very sad story Barbara yet great point in that you can’t possibly imagine what other people are going through sometimes. Empathy is just so important.

  5. Great list Mark.
    I agree that health is the most important thing.
    But of course, worry about money can lead to health problems/issues. Anxiety, depression, suicidal thoughts etc. So everyone, try to keep it together and realize that all the money in the world cannot always save your life. If you have your health, you are better off than the richest people in the world, who are sick and dying.
    Stay safe everyone.

    1. Yes, it can for sure re: money can create anxiety, depression, other. All the money in the world does not help you if you are gravely ill.

      Always appreciate your takes Barbara, stay safe!

  6. nice executive summary, Mark, of multiple personal finance tomes – my only quibble would be with number 3 – a few months may be to short, particularly in this current crisis
    – the offset would be to have income streams that will continue on, hopefully without interruption – unfortunately in this current calamity I feel all income sources, including government sources, will be affected by varying degrees – the oft repeated “this situation is unprecedented” applies – nobody has any idea how this will eventually play out.

    1. You’re probably right on the 3-months for any fund. I know we’re not perfect and only have ~ $10k in the bank for emergencies at any time. Well, maybe closer to $12k now. I hope to increase that by $40k more in the coming years. That fund will absolutely be for times like these that are challenging.

      How are you doing through all this?
      Any plans to buy anything or simply stay the course?

      1. I bought some stocks (TD, T, BNS, NWH, BPY.un ) on the first major dip – they went down a bunch more afterwards 🙁
        – but I’m staying the course – this is not my first rodeo 🙂 and even if the divvies are cut by 50% (hope not! and don’t think they will) I can get by dipping into the emergency fund which is well stocked – easily a year’s worth of normal outlays – and we’re self-isolating at home and healthy for now and intend to stay that way.
        keep safe everyone

        1. Very smart. I DRIP TD, T, BNS, and BPY.UN – a few shares of each every quarter some I’m confident if we can weather this viral storm over the next 3-6 months (a couple of quarters) then things should get back to a bit of normal and none of those dividends will be cut (hopefully?) and I will have bought more shares commission-free much, much cheaper.

          Hope to have 1-years’ worth of cash for all living expenses in the bank in the coming years. This is a great test for me what it will be worth it.

          Stay well!


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