Normally this time of year I encourage all my business owner clients and faithful readers take a goodlook at what you’ve accomplished so far this year, to accelerate your efforts so you can finish the year strong, and to plan for what you want to have happen next year. This time I’m going to address how those plans can change wildly from what you thought was going to happen and applaud contingency planning.

When our plans change quickly we appreciate that our original planning also included planning for contingenes and building buckets of contingency dollars. Let me elaborate. My husband of 26 years has been the “rock” part of our financial plan. He holds what we like to call a “straight Job”, one with salary, healthcare and reasonable predictability. Many of you business owners out there can appreciate having some diversification in your income, so it is not all from the business which can vary season to season. Although he was dissatisfied with many parts of his job, our plan was for him to stay there until our kids no longer needed college tuition assistance. We accomplished that this year thanks to a plan gone well! Yeah!

With an eye towards eventual retirement we then embarked on a plan to build a small, energy efficient home. This we began in spring to look for property. Things did not go well. Desiring to move close to my office and family close to Reading we narrowed our search to easily commutable parcels. My husband is also an inventor, needing specialized workspace supported our desire to build vs. buy. That precluded us from building with standard model homes associated with new development properties. We had a detailed list of home characteristics we felt required a custom home.

The final straw came when we found land that, according to the zoning, could be subdivided into 6 lots leaving us a small parcel; then that the subdividing might take 2 years. Buying a pre-built house suddenly became way more palatable even if remodeling was involved. Turns out there are lots of houses on the market if you are flexible with your remodeling budget.

Two weeks later, we’ve found a great house in an awesome neighborhood close to my office. Did you remember my husband wanted to quit his job and go back to uncertain income of consulting and inventing? Although planned, the expenses hit in a very short time. A few months of carrying two mortgages and fixing the old home for sale (way ahead of schedule). Adding in the cost of remodeling the new home so my husband could have his special workshop. All these costs together are enough to strain almost any set of contingency buckets. Our buckets consisted of savings, lines of credits, escrowed retirement savings (thus still liquid) and getting an advance on the equity of our old home.

Although it was our plan to let my husband quit his job and become a full-time inventor, we could not have done it without our ‘planned’ contingency buckets.

Good thing we expect changes when we do planning, I still have extra savings buckets for unforeseen expenses. These include borrowing from my/our 401(k)s, investments I’d rather not sell, and a ready list of potential expenses I could cut. Good thing, because since my husband has quit his job, we now get to navigate the (unaffordable) ‘affordable healthcare’ system. But that’s a topic in itself. Bottom line, plan to build yourself contingency buckets. Happy planning!

Want help building contingency buckets? Call, click or contact me at 610.628.2055,
Merra Lee.net and merralee.moffitt@lpl.com.

Merra Lee Moffitt, CERTIFIED FINANCIAL PLANNER™ Professional (CFP®), is a Senior Partner at Good Life Financial Group, Wyomissing. She loves helping business owners and other families grow their financial independence. She helps her clients keep work/family balance while they pursue lifetime financial success. It’s part of her financial planning process.

Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Good Life Advisors LLC, a registered investment advisor. Good Life Advisors LLC and Good Life Financial Group are separate entities from LPL Financial.