🟣🟢 Protect Your Wealth With This

Happy Sunday 👋

Change can be positive - but it isn’t always easy is it?

My youngest daughter is off to Australia next month. She has a 12 months’ work visa so could be away all year. I’m excited for her, of course, it’s an amazing opportunity and she should definitely do it. But. I’m going to miss her…

Knowing this big change is just around the corner I’ve gone into full planning mode - to make sure it’s a positive time for me as well - no moping around!

On the subject of Planning - have you heard of the concept of a premortem?

A premortem is a strategy often used by teams to identify potential risks and challenges in a big project or initiative before they occur. It involves imagining that the project or plan has failed and then working backward to determine what could have gone wrong.

Unlike a postmortem, which is conducted after failure to analyse what happened, a premortem helps you to anticipate and mitigate risks ahead of time.

What Is a Financial Premortem?

A financial premortem is like running a financial “stress test.” Instead of hoping for success, imagine your financial plan has already failed - then work backward to uncover why.

It could be you imagine not being able to sell your business, running out of retirement funds, being overwhelmed by debt, or serious health problems.

How to Run Your Financial Premortem

1. Picture Financial Failure
   Imagine yourself years down the line. What does failure look like? Perhaps you’ve retired but underestimated your expenses, or your investments didn’t perform as expected.

2. Brainstorm Risks
   Ask yourself, “What caused this failure?” Common reasons include:

   • Spending beyond your means.

   • Lacking an emergency fund for unexpected events.

   • Poor or overly risky investment choices.

   • Not saving enough.

3. Rank the Biggest Threats
   Not all risks are created equal. Focus on those most likely to derail your plans, like not saving enough or the impact of ill health.

4. Create Your Safeguards
   For every risk, devise a plan to reduce its likelihood or impact. Examples include:

   • Building a 6-month emergency fund.

   • Putting money into your ISA or pension each month.

   • Diversifying investments and reviewing your portfolio regularly.

   • Planning for inflation and potential tax changes.

   • Reviewing your financial plan annually to adapt to life changes.

Example Scenario

Failure Scenario: At age 70, you realise you’ve run out of money, can’t support your lifestyle, and are dependent on family or social benefits.

Identified Risks: You underestimated retirement expenses. Investments were too conservative and didn’t grow enough. You started saving too late and didn’t save enough.

Preventative Measures: Use a cashflow model to project what you might need based on current and future needs. Balance risk and return in your portfolio, adjusting over time. Start saving early and increase contributions when possible.

Why It Works

The premortem approach isn’t about doom and gloom - it’s about preparation.

By acknowledging the risks, you’re less likely to overlook them and more likely to take the small but meaningful steps needed to safeguard your financial future. Think of it as adding a safety net to your plan.

Your Next Step

Take 30 minutes this week to sit down with your plan and run your own financial premortem. If you need help spotting risks or finding solutions, don’t hesitate to get in touch - I’d be happy to guide you.

😎 THAT’S IT FOR THIS WEEK!

BUT if you need any help with your financial stuff or have any questions at all, drop me a note.

Hilary 😎

P.S Whenever you’re ready maybe I can help: Book a Discovery call and find out if we can help you

If you know someone who would appreciate this newsletter, send them this link» https://financial-stuff-by-hilary.beehiiv.com/subscribe

Check out my Youtube channel for short videos that you might enjoy and find useful! Subscribe for regular updates!