Assumptions (and How They Could be Hurting Your Financial Future)

Originally aired 2/17/2021



We all know how the saying goes… assumptions make a *certain something* out of you and me. So, why do assumptions tend to dictate our decisions with our money? 

You’ll Learn:

– Common assumptions that could be hurting your financial future
– How to address them
– Truth to help shift your perspective about planning

Downloadable Content:

What’s the Plan: A Manifesto for Your Life, Your Worth, and What Happens Next



You Know How the Saying Goes…

  • You know how the saying goes: “Assuming makes a {certain something} out of you and me.”
  • But if that’s the case, why do we allow assumptions to dictate our choices with our money?
  • On today’s show, we’re talking all about some assumptions that could be damaging to your financial independence!
  • Assumption #1: My Financial Goals are Isolated
    • We often hear people talk about their financial goals as if they’re isolated from the rest of their lives.
    • It’s easy to assume that money goes over “here,” and everything else goes over “there.” But that doesn’t do your money, or your life, any favors.
    • The truth: Your money can’t be separate from everything else. It’s integral to every choice you make: whether you work or stop working, to stay here or move there.
    • If you try to isolate your financial goals from the rest of your life, odds are, your financial independence will always be just out of reach.
  • Your life is comprehensive. Your financial plan should be comprehensive, too – it should take into account all of your needs, goals, and expectations.
    • What you do next isn’t “dictated” by that plan, but it does start with one.
      • Even if that plan shifts, pivots, or evolves to respond to your own needs and desires.
    • Feeling secure about your future starts with how you see your future.
    • Click here to download What’s the Plan: a manifesto for your life, your worth, and what happens next.

Assumptions about Money

  • Assumption #2: I Can Live on Less / I Don’t Need Much
    • We’ve heard it so many times: Clients who tell us that they have a little money saved, and that the entirety of their plan is to live on as little as possible. Period.
    • They think in terms of worst-case scenarios and think the lump sum will save them. But will it? No. Because the lump sum just sits there, losing value year over year.
    • Per the American College of Financial Services, people actually give themselves permission to enjoy their money when they receive it in a regular income as opposed to when they withdraw it from a lump sum.
      • Basically, seeing the withdrawal come out makes them sad and insecure. You need an income plan to even be able to truly give yourself permission to spend the money that you receive.
    • The Truth: Having the right plan for you means not having to function in emergency mode. It means you’ve taken all possibilities into account. It means thinking beyond “just in case” to having a robust, definitive income plan, so that even if you don’t know what will happen, you’ll know you have options.
    • You’ve worked too hard to live on less.
      • Your money should work as hard for you as you’ve worked for it.
    • That’s the beauty of a plan.
      • It’s a boat, not a life preserver.
      • It doesn’t assume you’re going to drown. It assumes you have a place to go and need a way to get there – even if a storm rolls in.
  • Assumption #3: My Investments / Savings Alone are Enough
    • We often speak with people who believe they have a plan, but all they really have is a handful of investments or “their retirement number” of cash stashed away in savings.
    • It’s not the same thing.
    • It may feel like having money saved is as good as a plan. But it’s not. Because even if you never touch it, that money won’t be worth tomorrow what it was yesterday.
    • The Truth: With interest rates way down and pensions all but extinct, you simply can’t afford to only live on what you have. The goal of a plan is to keep your money working, long after you stop.
    • What happens if you get to retirement and all you have is a few investments?
      • Do you know if this will allow you to live your life, for the rest of your life, as it is right now? Does your advisor?
      • Debunk the 4% rule

Assumptions about Time

  • Assumption #4: It’s Too Early to Worry About Planning
    • We see young people all the time hindered by the assumption that they’ll have more time/more money/more knowledge in the future to worry about planning (therefore, it’s too early to worry about it).
    • The Truth: Compound interest is your friend! The earlier you get in the game, the more potential it has to work to your advantage.
      • Ben and Arthur
        • At age 19, Ben decided to invest $2,000 every year for eight years. He picked investment funds that averaged a 12% interest rate. Then, at age 26, Ben stopped putting money into his investments. So, he put a total of $16,000 into his investment funds.
        • Now Arthur didn’t start investing until age 27. Just like Ben, he put $2,000 into his investment funds every year until he turned 65. He got the same 12% interest rate as Ben, but he invested for 31 more years than Ben did. So, Arthur invested a total of $78,000 over 39 years.
        • When both Ben and Arthur turned 65, they decided to compare their investment accounts. Who do you think had more? Ben, with his total of $16,000 invested over eight years, or Arthur, who invested $78,000 over 39 years?
        • Believe it or not, Ben came out ahead . . . $700,000 ahead! Arthur had a total of $1,532,166 while Ben had a total of $2,288,996. How did he do it? Starting early is the key. He put in less money but started eight years earlier. That’s compound interest for you! It turns $16,000 into almost $2.3 million! Since Ben invested earlier, the interest kicked in sooner.
  • Assumption #5: It’s Too Late for Planning to Do Anything for Me
    • We also see a lot of people near retirement (or even already in retirement) who think it’s too late for planning to do any good for them.
    • What we said earlier holds true: the earlier you start, often the better off you’ll be. However…
    • The Truth: it’s never too late to get a plan in place to help you make the most of what you have.
      • How you spend your assets makes a difference!
    • Do you really know for sure whether you have enough money to last through retirement?
      • We’ve had clients walk through our door who assumed they could only have the bare-minimum in retirement, but having a plan allowed them to see that they could do more.
      • We’ve also had clients who assumed they had enough to last through retirement, but once they saw it put together on paper, they realized they needed to work a little longer to cover their expenses.
    • A plan gives you the clarity to make decisions based on fact, not feeling.
    • Even if you are very late in life, a plan can help you meet your goals of leaving a legacy.

Assumptions about You (and What to Do)

  • Assumption #6: I’m Not Worth More than I Have Now
    • Most of the people we work with hail from humble beginnings. Some weren’t even that lucky.
    • Where you come from is an unchangeable fact, but it does not and should not dictate where you’re headed—or what you’re capable of. We should know. We’ve been there ourselves.
    • The Truth: How you feel about your past, or even your present, shouldn’t get in the way of planning for your future. You simply can’t afford to let that happen.
    • “But do I have enough to work with you?”
      • Yes.
      • Plain and simple: we value all levels of wealth.
      • We see financial service as a public service, and anyone who wants the support should be able to get it.
    • You don’t need special connections, insider knowledge, or a particular pedigree to get the support you need. All you need to do is call.
  • What to Do with Your Assumptions
    • Your assumptions aren’t helping you.
    • Allowing your assumptions to dictate what you do with your money is a costly decision.
      • Worrying is the opposite of planning.
    • The best thing you can do with your assumptions is to talk them over with your financial advisor.
      • Remove the emotion to make logical decisions.
      • Get a better understanding on the long-term impact of your assumptions.


    • Recap of 6 Major Assumptions:
      • My financial goals are isolated
      • I can live on less / I don’t need much
      • My investments / savings alone are enough
      • It’s too early to worry about planning
      • It’s too late for planning to do anything for me
      • I’m not worth more than I have now
    • We all know how the saying goes.
      • More or less, your assumptions hurt you more than they help you.
      • We’re more likely to accept that in the rest of our lives before our finances. But your finances are an integral part of your life – they impact every choice you make.
      • So why do we let assumptions dictate our financial decisions?
    • So, what’s the plan?
      • Feeling secure about your future starts with how you see your future.
      • Reshape your idea of planning with our free download: What’s the Plan a manifesto for your life, your worth, and what happens next. Click here to get your copy.