Unfortunately, financial planning is often seen as something relatively scientific. Set aside X funds every year and you will be Y rich by Z time — or something like that. Unfortunately, the traditional make and save philosophy presupposes a few things, namely that the economy will always fare just fine, without any major recessions. Unfortunately, we have some volatile times ahead of us, and nothing is certain. The world is a changing place, and we are about to see some major economic shifts in the next few decades — shifts that your financial planning should factor.
This article is an introduction to 6 future “crises” that your financial planning should consider. Any financial planning that doesn’t consider these crises is simply heading in the wrong direction. So far, we’ve known about most major recessions and even the great depression before they occurred. It makes sense to watch for economic bumps on the road to success.
Note: I am not an alarmist; I am a realist. Regardless of how much we want financial security, the future does hold some speed-bumps. It simply makes sense for us to recognize the problems before they happen. We don’t want to lose our shirts just because we didn’t keep an open eye and an open mind.
The Future Crises
The micro-bubbles of credit cards, instant purchasing power, instant global outsourcing and cheap oil are about to burst. By 2030 there will be one person living on social security for every two people paying in, which is like every married couple in the nation forced into having an extra dependent. India and China are pumping out millions of workers who will work for pennies on the dollar, causing vast outsourcing.
The list below will be modified in the next two weeks with links to articles explaining each problem in detail. Make sure to subscribe so you’ll understand what’s going to happen to your money, your job and our economy.
- The Financial Crisis – We’re already seeing the results of the crisis. The government forced large financial institutions to give mortgages to people who couldn’t afford them, saying it was compassionate. Now the entire financial industry of the world is trembling, with thousands of homes being taken back, hundreds of thousands of jobs destroyed and untold billions lost.
- The Inflation Crisis – With US debt somewhere along the lines of $40,000,000,000,000 (forty trillion dollars), meaning major inflation in the future. At some point the dollar is simply going to be almost worthless. The impact is that middle class and lower class populations will be severely harmed — already inflation is rising at a higher rate than pay increases, meaning it’s like you are getting an invisible pay-cut every year.
- The Restriction Crisis – With more and more government restrictions, we’re seeing a more and more strained economy, even though technology has given us a short term boost. An economy is primarily money flow; the more political restrictions, the less money flow. Read more about How to Start a Financial Crisis.
- The Competition Crisis – India and China are exploding their college-educated worker population, meaning the US cornerstone of high-tech jobs will be obliterated. If you work in a field where your education/resume is important, you need to become either more specialized or extinct. Better yet, figure out a way to start your own business using your skills.
- The Social Security Crisis – By 2030 there will be one person on Social Security for every two people paying in. Like it or not, Social Security is literally a Ponzi-Scheme. The implications of this are severe, meaning you could lose at least $300,000 over your lifetime that you won’t be getting back.
This doesn’t mean it’s the end of the world, but our financial planning must simply be done in a manner that adequately reflects the coming recessions and market disruptions.
How to Survive and Thrive
You don’t have to lose money during a recession, or even a depression. If your financial planning is well done, a time of crises can actually play in your favor. Just remember, when the money flow leaves one region of the economy, it migrates to the another region; the only trick is to know what to do during a recession.
This is the key to the success of JP Morgan, Warren Buffet and other billionaire investors. During the great depression, some men became incredibly rich. We’ll discuss what they did in another article – just keep in mind that the following pieces of bad news don’t have to be bad for you, unless you choose for them to be.
In the next few weeks, I’ll be detailing the specifics of the crises, and why the traditional financial planning methods will fall flat on their face. Make sure to subscribe below!