Are you prepared for your financial failure?

Visualize Failure - 2020 Stock Market Crash

Visualize failure – the best way to prepare for anything.

Imagine this financial independence worst-case-scenario:

You have just reached FI. Your net worth has crossed your magic number and you are finally able to cover 25x your annual expenses.You are financially independent and you now plan to work one more year to pad your FI.

You celebrate by having a toast with your significant other that night, and you go to bed happy!

The next day you wake up, go about your business, and sometime throughout the day you hear that the market has crashed.

Down 20%.

You are no longer financially independent.

You are temporarily f*cked. But you know that if you do not panic sell. You’ll simply put your head down, stay the course, ride out this market crash, and come out stronger.

It’ll be another three years before you can even think about retirement plans.

You have just visualized your financial independence vanish before your eyes.

Here is the great news. You just visualized a market crash and you planned accordingly.

Now, if it was to actually happen, you already have prepared for the worst:

  • You would not panic sell if the market dipped 20% overnight.
  • You would not do anything.
  • You would stay the course.
  • You are prepared.

Of course we all had this opportunity nearly a year ago. Not only did we visualize the crash, we lived through it:

Photo Credit: RITHOLTZ Wealth

So every investor, even relatively new ones have seen the ups and downs of markets.

Hopefully you reacted positively and did nothing! Or even better, you put extra cash in and reaped the rewards.

So while visualizing a market crash should be relatively easy, are you mentally prepared for it to happen again?

But if you practice visualizing the crash in your head from time to time, you will be much better prepared to handle it mentally. You have already been through it. Again. And Again.

Visualize all of your failures

Negative visualizations clearly can be useful to help prepare for a market crash scenario, but how about everyday life?

How about a regular run of the mill conversation with our boss, friend, family or significant other?

If you have a difficult conversation you need to initiate, close your eyes and imagine it going horribly wrong. Visualize yourself saying the wrong thing. In your mind, see the other person responding callously. Watch the whole thing blow up. Don’t just think about it; try to feel it. Experience the adrenaline flow. Notice your heart beating. Sense the disappointment.

Okay. Now, open your eyes and realize that you’ve been through the worst of it. Chances are, the conversation won’t go as badly as you’ve just imagined. And if it does, you’ve just experienced what you’ll feel like, and you know what? You survived. It’s only uphill from here.

Visualize Failure – Harvard Business Review

By visualizing failure in advance of the failure, you have been through the worst of it. As the author, Peter Bregman states, “you survived. It’s only uphill from here.”

I wish that this was something that I had done prior to having a particularly hard discussion with my brother. I anticipated that the conversation would go well, but I hadn’t thought through the worst case scenario.

Because of that, I wasn’t prepared and I didn’t say the right things. I made the situation worse. In hindsight, proper preparation for the worst by thinking through could have made all the difference.

Visualizing failure to assist with goal setting

Organic Authority, has a great post on visualizing failure to properly ensure that you identify pitfalls in your plan and make adjustments before you start down the path towards a goal.

For example, Shilo the author says:

Visualize yourself living in the future, but having failed to follow through on your goal.

Ask yourself this: Why did you fail? Write down the specific reasons why you failed at your goal. Brainstorm the excuses you will tell yourself if you fail:

The Smart Goal Setting Trick You Have to Try: Visualize Failure

In the article, Shilo is talking about a goal of losing “20 pounds in six months”. But after visualizing failure, you can envision that “I didn’t have a healthy eating plan and thought that I could wing it.”

In this case, this negative visualization should prompt you to build the plan to support the goal.

There are endless visualizations to be made

We should all embrace visualizing failure in our everyday lives.

Doomsday preppers may not have it all wrong. They are prepared. We aren’t. If/when civilization was to collapse, they have a plan. I don’t.

Perhaps we’ll never need to have prepared for doomsday, but I certainly want to visualize failure more:

  • I want to visualize worst-case scenarios in my early retirement withdrawal plans.
  • I want to visualize failure in a hard conversation with my wife, so that I can better react.
  • I want to visualize failure in the next conversation with my brother, so that I can have a better outcome in the future.
  • I want to visualize Bitcoin and Ethereum tanking right after I invested in them.

Now, please give me a moment to go and update my personal financial plan

Visualizing failure of your business

Every business should visualize failure to ensure that you can face real-life market scenarios.

If you are a web business, you likely have a disaster recovery plan (DRP).

And every business should have a Business continuity planning (BCP).

Think through worst-case scenarios. The better you are prepared, the more likely it is for your company to weather the storm.

Final thoughts on visualizing failure

If the pandemic has taught us anything, it is that worst-case scenarios can and do happen.

But we live through them. We have survived.

In the end, we will come out stronger.

Sometimes the worst does happen and our best way to prepare for it, is to visualize it!

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