For many people, when they hit a tough time in their life, the go to advice from well meaning friends seems to be “don’t worry about it” and while this is often easier said than done, the basis of this advice is to control what you can control, and let go of what you can’t. You can’t control certain things in life, such as other people’s reactions, and there are some things in finances that are also beyond your control.
Investments
Investing is a key component to financial planning, but there are uncontrollable factors involved with investing and if you can understand that, it may make your investing life easier. For example, you can’t control the markets. Despite your best efforts, you can’t time the markets, or control the companies that you’re investing in. What is within your control is how you react to your investments – such as not panicking or overreacting to your investing decisions.
Savings
Your ability to save money is another critical part of your financial plan, particularly as you plan for retirement. However, you can’t control things such as interest rates or taxes, but you can plan for them. And the good news is that you can plan around these uncontrollable circumstances, particularly with the help of a financial planner or tax expert.
Expenditures
The opposite of savings is your expenses, and its important to understand how your expenses play into your finances so that you have a comprehensive overview of your financial picture. While you may not be able to control emergency expenses, such as hospital stays or vehicle breakdowns, you can try to control your daily expenses by spending smarter and reducing your expenses where you can.
Earnings
How much money you bring in is certainly an integral part of your financial plan – and there are parts of this that are within your control, and some that are not. You can do your best to control what you can – in getting a job, negotiating a salary, keeping a job, negotiating raises, etc. but you can’t control all of it. You can’t control the job market and layoffs, or ultimately your full career path. What you can control is how long you work and when you retire – and the amount of earnings you earn within your lifetime makes a difference in your retirement savings.
When it comes to your finances, focus on what you can control and let go of what you can’t control. Working with a team of people, such as financial planners and accountants or tax experts, may also help you to feel like you have a better understanding and control over your financial situation as well.
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By Andrew Rosen, Contributor at Forbes
Published September 14, 2023