If there’s one thing that 2020 has taught us – it’s that nothing is certain.

Sure, you might already have an emergency fund, or other protections in place for those big ‘what-if’ moments, but what about scenario-planning for those financial goals that you’re working towards?

Whether it’s dealing with ‘what-ifs’ or saving up for a home deposit or a car, planning for multiple scenarios may help you map out your plan of attack and stay the course – whatever gets thrown your way.

Creating your own scenario plan for the ‘what-ifs’ and goals

No one has a crystal ball to predict the future.  

Whatever the circumstances, building a scenario plan to consider what you would do in each situation can be as simple as five steps.

Step 1. Set and/or define your goals

If you haven’t already set your goals, do so. If you have, think about defining what they are. Each goal could be big or small, long-term or short-term.

Your goals might include:

• Saving for a home to live in
• Saving for a car
• Getting on top of your finances
• Saving for your children’s education

Whatever your goal, it helps to make it SMART. That is, Specific, Measurable, Achievable, Realistic and Timely.

Step 2. Imagine potential scenarios

It’s time to consider the possible scenarios that might affect your ability to achieve a goal – both positively and negatively. These different scenarios could also include personal financial changes such as getting a raise, or external impacts such as a recession (or, dare we say it, another pandemic).

Brainstorm the possible scenarios that might affect that goal and then write all of these down.

For example, let’s say one of your goals is to buy a house in the next 12 months.

Some scenarios could include things such as:

• Property prices falling
• Property prices rising
• You get a raise at work
• You, or your partner, become unemployed.

Step 3. Consider the likelihood and impacts of each scenario

Once you’ve thought about your potential scenarios, you can start to consider the likelihood and impact of each one. You might wish to use a simple scale of low, medium or high for both.

As a rule of thumb, the scenarios you consider to have a high likelihood and impact may be the ones you should pay attention to most.

Once you know which scenarios to focus on, you can then start to list what the potential impacts of each scenario might be.

If your goal is to buy a house, for example, you might consider ‘property prices rising’ as a scenario with a high likelihood and impact.

The impacts for this scenario might include:

• Having to save a larger deposit
• Reconsidering what you’re able to afford
• Expanding your property search to include other neighbourhoods

Step 4. Think through the steps you could take if the scenario occurs

Once you understand your potential scenarios, their likelihood and impacts, it’s time to make a plan.

This plan should help clarify the simple next steps you might be able to take if you find yourself in that particular situation.

What questions should you ask yourself

Think about the kinds of questions you might need to ask yourself in each scenario.

Using the above example of buying a house and property prices rising, the different questions you might ask yourself could include:

• Should I start looking now?
• Will mortgage rates go up or down?
• Will the market for buyers become more or less competitive?

What actions you should take as a result

From there, you can start to think about some steps to take.

This could include:

• Researching mortgage rates
• Researching property sales results
• Contacting your banker

Step 5. Make sure you’re ready

Once you’ve thought through your scenarios and your action-plans, the last step could be to review your savings plan and budget to see if you should make any adjustments to account for these possible situations.

Returning to our example of buying a house, one of your scenarios might be that you or your partner become unemployed. For this scenario, you might want to check in with your banker to ensure that you’re saving enough for both a house deposit and your emergency fund.

Use our Savings Calculator

Use our Budget Calculator

Going after your goals

After tackling these suggested steps, you may have a clearer idea of how you might achieve your goals, whatever life throws at you.

If you’d like more general guidance on how to achieve your goals, check out our free Financial Wellbeing Program. It may help you improve your financial behaviours in your own time, at your own pace.

Check out our Financial Wellbeing Program