Episode Details

Episode 59 – The Beauty of the Worst Case

Do you remember those Worst Case Scenario Survival Handbooks that were around everywhere about a decade ago? How to land a light aircraft if the pilot has a heart attack, or how to survive a bear attack. I don't know if they extended to surviving a zombie apocalypse, but I wouldn't be surprised if they did. They were good fun reads and made a great Christmas present.

In today's episode we're going to explore how planning for the worst case can be liberating. How it can melt the ice that has you trapped in your current state.

And the best bit? It's not hard – just two easy steps.

Planning for the worst case is a key tool in enabling you to gain the choices in life that you deserve. So let's dive into today's Financial Autonomy episode – The Beauty of the Worst Case.

When investing, we know from history that the best investment returns come from growth assets – shares and property.

Why then don't investors have all their money, 100%, in shares and property? Why diversify and hold things like bonds?

The answer is that whilst we always hope for the best, a wise person plans for the worst.

Planning for the worst case is something that's common across government agencies and businesses. The Emergency Services for instance will plan out their response to a large bush fire or flood. A bank might develop a plan to handle a significant global disruption to financial markets. Or a pharmaceutical company might have a plan for dealing with an extortionist tampering with their products.

So how can you use this proven process to help you achieve your Financial Autonomy goals?

Step 1 is to acknowledge your fears and define them. If your Financial Autonomy dream it to make a career change, like we heard from Tim in episode 55, then perhaps your worst case scenario is that you quit your current job and can't break into the new career that you dream of. That's a totally reasonable fear. And for many of us, that fear is enough to stop us moving forward. It's paralysing.

Now one solution to overcoming this paralysis would be to just try and push it out of your mind – the "be positive, it'll never happen to me" approach. Having a positive mindset is certainly important in leading a happy and fulfilling life. But to achieve big changes, we need more.

So on a piece of paper, or my preferred method, a white board, write down your worst case. What's your greatest fear in embarking on your Financial Autonomy goal? Perhaps there's more than one.

There's some relief in achieving this step alone, in acknowledging your fears.

But of course we're only half done. Now that you've defined your worst case, in step 2 we need solutions. So it's brain storming time! If you feel comfortable, perhaps you could invite others in to join you to get some fresh ideas.

Imagine what you would do if your worst case actually happened. Write down your solutions. Now this is not your preferred outcome, and it's also not the most likely outcome either. So therefore your response are likely to be things you'd prefer not to have to do. But the point is they are things you could do if you had to.

If the career change didn't work out, could you go back to your old career? If the new business you started just wasn't delivering what you needed it to, could you get your old job back? What if you took a year off to travel with your partner, and half way through the trip decided you couldn't stand one another and went your separate ways. Would you fly home, or continue the journey solo?

When I made my big jump from employee to self-employed in 2006, I had 8 months of income saved up. That was my runway. If it didn't work out, I had to go and find another job. That was how I dealt wi