Plans are Worthless but Planning is Everything

“Plans are worthless, but planning is everything. There is a very great distinction because when you are planning for an emergency you must start with this one thing: The very definition of ‘emergency’ is that it is unexpected. Therefore it is not going to happen the way you are planning. So, the first thing you do is to take all the plans off the top shelf and throw them out the window and start once more. But if you haven’t been planning, you can’t start to work, intelligently at least”

–Dwight Eisenhower

The country observed National Pearl Harbor Remembrance Day, so I thought it was appropriate to use a quote from a man who played a large role in ending the war that was brought to America’s doorstep 74 years ago. Of course, Eisenhower was talking about military strategy where the stakes are a very far cry from those of financial planning. Nevertheless, the global lessons the general was speaking of are still applicable to each individual situation.

“Plans are worthless, but planning is everything”

Things change. The assumptions we make today, no matter how much effort we put into making them accurate, will almost certainly change. This doesn’t just mean projections for portfolio returns or inflation, but rather your goals themselves. My vision of my future is not the same now as it was five years ago. A static plan, in this sense, is worthless almost immediately. The ongoing act of planning, however, allows you to be nimble and adjust to your changing circumstances.

“The very definition of ‘emergency’ is that it is unexpected”

Emergency is probably too strong of a word to describe changes to your financial situation or goals, but those changes are definitely unexpected. Planning accounts for the various probabilities of changing circumstances so that you are prepared in how to react. How exactly your situation changes will be unexpected, but the simple fact that it will change should be expected.

“If you haven’t been planning, you can’t start to work, intelligently at least”

If you’ve been planning, you know what factors matter for your long-term vision and which ones don’t. If you’ve been planning, you know what factors you have control over and which ones you don’t. Those who haven’t been planning end up reacting. And when that reaction is in response to something that is both out of one’s control and irrelevant (think making drastic changes based on recent short-term volatility), disaster strikes. Planning will not necessarily guarantee the absence of adversity or help you avoid difficult decisions, but it will prepare you to properly navigate the situation.