Planning in a Changing World¶

Why We Plan Despite Uncertainty¶

Tax laws will change. Interest rates will fluctuate. Legislation will evolve. Life will surprise you.

So why plan at all? Because:

• Having ANY plan beats having NO plan
• Understanding your direction matters more than precision
• Good financial habits compound over time
• Informed decisions today create better outcomes tomorrow

Your Living Financial Plan¶

Think of your financial plan like a GPS navigation system. It shows you the route based on current conditions, but it's ready to recalculate when things change.

What We Know vs What We Plan With¶

What we know for certain:

• Projections will never be 100% accurate
• Tax laws and regulations will change
• Markets will fluctuate unpredictably
• Life will bring unexpected events

What we can still do:

• Plan with approximations
• Build sustainable financial behaviours
• Make informed trade-offs
• Adapt as the world changes

The Power of Direction Over Precision¶

Example: Tax Law Changes¶

When tax rates change (and they will), your plan adapts:

• Before change: Plan shows retirement at 55 with your estimated effective tax rate
• Tax increase: You update your effective rate approximation
• Your response: Adjust savings rate or timeline based on new reality
• Result: Still on track, just with updated approximations

Building Resilient Plans¶

1. Start Simple, Iterate Often¶

Don't try to model every possible scenario. Start with basics:

• Current income and expenses
• Major assets and debts
• Primary financial goals

Review and refine quarterly as you learn more.

2. Focus on What You Can Control¶

You can control:

• Your savings rate
• Your spending habits
• Your investment strategy
• How often you review and adjust

You can't control:

• Market returns
• Tax law changes
• Interest rates
• Economic conditions

3. Use Conservative Assumptions¶

Better to be pleasantly surprised than disappointed:

• Model moderate growth rates
• Include inflation in projections
• Don't count on windfalls
• Plan for longer life expectancy

The Power of Smart Simplifications¶

What We Don't Model (On Purpose)¶

Complex Tax Brackets

• No progressive tax band calculations
• No detailed deduction tracking
• No state-by-state variations

Why? Tax codes change constantly. A simple effective rate you control is more adaptable than complex rules that break.

Detailed Investment Taxes

• No capital gains vs income differentiation
• No tax loss harvesting calculations
• No dividend tax optimisation

Why? Focus on total returns after your estimated tax drag, not optimising details that might not matter.

What You Can Do Instead¶

Work with After-Tax Amounts

• Enter take-home pay in your budget
• Use net investment returns
• Focus on money you can actually spend

Adjust Growth Rates for Tax Drag

• Include tax effects in your growth assumptions
• Use conservative rates that account for taxes
• Update based on actual after-tax returns

Use Multipliers for Withdrawals

• Apply transfer multipliers for pension withdrawals
• E.g., 0.75 multiplier = 25% tax on withdrawal
• Simple to adjust when tax rates change

Apply Withholding for Self-Employment

• Set percentage-based tax reserves
• Automatically separate tax from spending money
• Keep it understandable and adjustable

Why This Approach Works Better¶

1. Forced Clarity: You must understand your actual tax situation, not rely on software magic
2. Easy Adaptation: When tax laws change, update one number, not complex formulas
3. Prevents Paralysis: Can't model every scenario? Good. Model the big picture instead.
4. Maintains Control: You decide the approximations, you understand the trade-offs

Practical Examples¶

Instead of: Entering gross income and modeling tax brackets
Do this: Enter your take-home pay directly

Instead of: Complex retirement account tax calculations
Do this: Set a withdrawal multiplier (e.g., 0.75 for 25% tax)

Instead of: Detailed investment tax optimisation
Do this: Use growth rates that already include tax drag

Instead of: Calculating tax on each transaction
Do this: Use withholding percentages for self-employment income

Remember: The goal isn't perfect tax modeling—it's understanding your financial direction well enough to make confident decisions.

The Iteration Mindset¶

Your financial plan should evolve with:

• Life changes: Marriage, children, career moves
• Legislative changes: New tax laws, regulation updates
• Economic shifts: Interest rate changes, inflation adjustments
• Personal growth: Changing priorities and values

Quarterly Review Checklist¶

Every three months, ask yourself:

• Has my income or expense situation changed?
• Have any major life events occurred?
• Are my goals still the same?
• Have tax laws or regulations changed?
• Do my assumptions still feel reasonable?

Embracing Uncertainty as Strength¶

The Weather Forecast Analogy¶

Financial projections are like weather forecasts:

• Tomorrow's forecast: Pretty reliable
• Next week: Generally accurate
• Next month: Broad patterns
• Next year: Seasonal trends

You still check the weather and plan accordingly, even knowing long-range forecasts will change.

Making Decisions with Imperfect Information¶

The 80% Rule¶

You'll never have perfect information. If you have 80% confidence in your data and assumptions, that's enough to make a decision. You can always adjust later.

Decision Framework¶

When facing financial decisions:

1. Model it: Use your current best estimates
2. Test scenarios: Try optimistic and pessimistic versions
3. Make the call: Choose based on your risk tolerance
4. Monitor: Track actual vs projected
5. Adjust: Update your plan based on results

Common Changes to Plan For¶

Tax Changes¶

• Rate adjustments
• Deduction modifications
• New credits or penalties
• Retirement account rule changes

Life Events¶

• Job changes
• Family additions
• Health issues
• Inheritance or windfalls

Economic Shifts¶

• Inflation spikes
• Recession impacts
• Interest rate swings
• Currency fluctuations

Your Financial GPS¶

Just like a GPS, Doughsense helps you:

✓ Know where you are: Current financial position
✓ Set your destination: Financial goals
✓ See the route: Projected path
✓ Recalculate as needed: Adjust when things change
✓ Arrive successfully: Achieve goals despite detours

Key Takeaways¶

• Plans are meant to change—that's not failure, it's adaptation
• Direction matters more than precision—know which way you're heading
• Today's decisions with today's information—you can't wait for perfect data
• Regular reviews keep you on track—quarterly check-ins prevent drift
• Confidence comes from clarity—not from false certainty

Remember: The goal isn't to predict the future perfectly. It's to make better decisions today that move you toward your goals, then adjust as the world changes around you.