Trial Runs

Wesley and I are weeks away from meeting the newest member of our family, and if someone could tell me the exact timing of when our baby boy might arrive, I would really appreciate that. As many of you can relate to, it’s hard to plan for something that could happen tomorrow or in several weeks! I am the type of person who really appreciates certainty, and I try my best to eliminate unwelcome surprises. Even though this impending change in our family is an exciting one, it still signifies a whole host of other changes will follow in close pursuit. We’ll have new schedules, rhythms, free time, capabilities, and to bring this brief back to the world of personal finance – new expenses and planning goals.

Welcoming a new child is one of the changes in life when we at least have several months to prepare. Other changes in life occur with varying timelines of advance notice, but result in similar adjustments to life rhythms and expenses. Examples that almost all of us experience at some point include job changes (whether your choice or a employer’s choice for you), moving to a new house (which brings a change in upfront expenses and ongoing mortgage/upkeep costs), and the big one, retirement (or whatever version of this you adopt in your life).

So as a person who likes to prepare, but also recognizes that no one can predict the future, what are my steps for preparing well for an upcoming financial change? One option is to do some trial runs in our budget and long-term financial plan to see what works, while the stakes are low. There are no repercussions for having an unfunded expense – since the expense does not actually exist yet. I started to add in new line items into our monthly budget to see how we might be able to accommodate shifting expenses within our cash flow. As we work on a new budget, at least I have some certainty – that I’ll get things wrong and will not predict our exact future budget! Some future expenses are more known than others, like monthly childcare costs, but others are a complete guess. However, the guesstimates are at least a starting point for the trial run. Testing out a budget for retirement is similar – while you still have an income stream, observe your spending to see if the goals in your plan are feasible, or if they might need to be tweaked.

Trial runs can be valuable practice as they reveal parts of us that may be hidden. Practicing for a financial change helps illuminate the potential hazards that might pop up when the stakes are higher. For example, when I think about how to accommodate a future daycare expense, if I’m honest with myself, my gut reaction is to “just stop saving!” but the planner within me knows that’s not the answer. If a reduction in one area of our discretionary spending is required to meet necessary expenses, am I willing to accept that and change my spending now? Or am I tempted to shift that burden to my future self? Do I decide that I am okay with spending less later on in life, if that means I could spend more now by saving less for the future? The trial run makes us wrestle with ways that our current spending may not be in line with long-term goals.

Three traits are helpful to have in order to see the most benefit from a trial run

  1. Discipline: Taking the time to plan, practice, and observe requires effort. And it’s not always the most fun task to plan in advance before the stakes are higher. Much like an exercise training program, starting small builds stamina that helps us reach the long-term goal. Having an accountability partner (like Beacon) can be immensely helpful as well.
  2. Reflection: Creating and testing scenarios can only take us so far if we are unwilling to examine what happens, from both a technical and emotional standpoint, during the trial run. Money decisions are very tied to our emotions and self-reflection is necessary to sort through the emotions that pop up during the process. Am I willing to face the possibility that my actions are not aligning with my stated priorities?
  3. Compassion: When the trial run does not go as anticipated or hoped, grace and compassion toward oneself is necessary to move forward and try again. No one can truly predict the future (although pundits and investment articles often try to convince us otherwise). Compassion is also necessary when we realize that we’ve lacked discipline or reflection in the past. If the choice is to keep our head in the sand or have compassion for our past selves, only the latter moves us forward again. 

At some point, we eventually run the real test. Hopefully, trial runs help smooth out the transition period, but we also have to be okay with the fact that we will not catch everything that might pop up. Otherwise we would live in constant paralysis or regret, and that is not a meaningful way to live.

Planning wisely does not result in black and white success or failure. Planning is not a set it and forget it task – instead we dream, plan, try, observe, adjust as needed, and try again – on repeat. This is one of the reasons why Beacon does not offer a one-time fee to create a financial plan. We want to be in it together for the long haul. Planning takes ongoing work, and although elements of a plan may seem to be “set it and forget it” tasks, the plan requires monitoring, upkeep, and adjustments along the way. Unexpected surprises pop up and we take actions, together, to keep moving forward.

Ellen Martin
[email protected]

After graduating from UVA (go Hoos!), I moved to Raleigh for the Raleigh Fellows program where I fell in love with the city, its people, and a fellow Fellow who is now my husband, Wesley. I worked for another wealth management firm in Raleigh for seven years before joining the Beacon team in June of 2021. When not at work, you can most likely find Wesley and me walking our dog, Ollie, on the lovely Raleigh Greenways, or enjoying a cup of coffee and a La Farm white chocolate baguette.