Looking into a crystal ball is a fool’s game. The things that will really mess up your life, money or otherwise, are the things you never see coming.
2020 is going to be a year of uncertainty. We’re heading into an election year, which means politicians could at any point decide they need some new, grand promise to win over voters.
Of course the best way to grab your attention is by grabbing for your wallet. So expect plenty of talk about jobs, pay rates, housing, the cost of living.
But who knows what they’ll be promising on those. And considering our political system means parties have to band together to create a government, who knows if they’ll team up with someone who lets them deliver.
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So as you try to start the new decade on a good financial footing the biggest risk is you - because people are really quite terrible at handling uncertainty.
When you try to guess what’s coming you’re at risk of two different but equally bad courses of action.
One is that it’s too easy to slip into a state of limbo, without even thinking about it.
Scroll down to listen to Frances Cook's podcast series Cooking the Books
You don’t know what’s coming, so you imitate a possum in the headlights, and just do nothing.
You don’t need me to tell you how that works out for the possum.
The other is that you try to guess what’s coming, and take action on “maybe”s. Maybes that are more likely to not happen than happen, but you’re convinced you can get ahead of the game by going early.
Ever startled a deer while driving? They leap out of the perfectly safe forest, and dash in front of the car.
Don’t be the possum or the deer.
This time last year, everyone was totally convinced that a capital gains tax was coming in. Plenty got their knickers in a knot over it, with some landlords talking about selling up early to avoid it.
Personally, I’m a fan of a capital gains tax. But that doesn’t matter now – Prime Minister Jacinda Ardern has staked her career on never allowing one to be brought in.
Caught plenty of us on the hop, that one.
Or frankly, what about this stage last time in the electoral cycle? When John Key had just resigned, and Jacinda Ardern hadn’t yet swept in as the new leader of the Labour Party?
Nobody saw those coming either.
Plenty could happen this year, and plenty will. You’ll see some smart predictions pointing out what areas look likely to bubble over, and it’s useful knowing where change is looking likely.
But until it actually happens, it’s foolish to make financial decisions by trying to jump ahead and guess.
A good financial strategy always means thinking in decades, not months.
The rules are the rules, until the rules change.
When things do change, for certain, then go ahead and adapt. But don’t play clever games on what kinda maybe might happen.
- Frances Cook is the host of the personal finance podcast Cooking the Books. She is not a financial adviser, and all information is general in nature. For individual advice, see a financial adviser.
Listen to Cooking the Books podcasts below:
Housing is now a different game from the beginning of 2019
Should you buy a house with your friends?
How to make more money by being lazy
After an investment property? Time to think commercial
How to budget for a house deposit without depriving yourself
How first-home buyers can build their own unique solution
Could the rule of 100 turn around your fortunes?
Is NZ ready for first-home buyer landlords?
The tough talk you need to have when saving for a house
How to house hack your way to smaller household bills
Is now the time to get nervous about your KiwiSaver?
How to solve land headaches
Renovate or detonate?
Apartment v house
How to crush the debt
Tricks for paying off the mortgage faster
The power of location
Negotiating a mortgage
Saving for a deposit
Buy v rent
