Chance Favors the Prepared Mind

Louis Pasteur, the late French microbiologist, chemist, pioneer of Germ theory of disease, and inventor of the process of Pasteurization noted “chance favors only the prepared mind.”  By this, he probably meant that your success rate will improve if you mentally focus on the task at hand and prepare to be enlightened by the results.  While Mr. Pasteur is viewed as one of the most altruistic medical based scientists of all time, his quotes and unrelenting approach to finding solutions can be applied to other areas of life—even financial planning.

 If you’re going to make a plan, you have to make assumptions.  Assumptions are things like the expected rate of return, the amount of risk, the timeline for a particular event or investment, and are based off of facts we know.  If all goes according to plan, then everyone’s a winner.  However not many things go exactly as planned.

 Step two of making a plan, is to plan for contingencies and/or alternative courses of action if needed.  Contingencies are measures taken to allow flexibility in a plan in order to achieve the same (or as close to them) results as intended.  A contingency in financial planning would be to prepare for a possible job loss, disability, new baby, inheritance, and so forth.  Many of those changes can be addressed without too much pain or change while staying close to your original targeted goal.

 Step three of your plan should include a stop-loss plan.  A stop-loss is your hero when all hell breaks loose.  A family’s primary income earner dies, a home burns completely to the ground, a major car accident requires the amputation of an arm…these are examples where a complete plan would include insurance to limit the overall potential loss to you.  Insurance is a pillar of financial planning—as you’ve heard me express over and over through the years—as it only takes one small mistake to potentially ‘break the financial house down.’

 Over the past several years, I’ve provided “financial roadmaps” or “plans” to many families, divorcees, and widows who are seeking advice on securing their financial future.  These plans typically cover taxes, estate planning, retirement, risk management and insurance, investments, and education funding.  Clients then use this as guide to follow and measure up to as they pursue their personal financial goals.

 If you’ve recently spoken to a colleague or friend who is leaving their financial house to “chance,” kindly let them know that even Louis Pasteur knew that “chance favors only the prepared mind!”