Dealing With The Cone Of Financial Uncertainty – Agile Financial Roadmap

Have you ever gotten stuck in the cone of financial uncertainty? Or perhaps knocked around by it?

Let me explain.

When I was in my late teens and early 20’s, I was absolutely obsessed with personal finance and investing. I read every book I could get my hands on. I lurked on financial forums once those became a thing (I’m old). Money magazines from the library were good friends. And I opened accounts at Vanguard, invested in my 401k, and opened a 529 for my toddler before I turned 25.

But when it came to figuring out what I would save for college and retirement, I was hit upside the head with the cone of financial uncertainty.

The only thing we know for sure is what our reality is today. When we look at tomorrow, we don’t know what will happen. Will I be hit by a bus and break my leg? Get into a car accident? Have a kid get sick? Will the market go up, crash, or something in between?

When you go farther into the future, the cone becomes larger and larger. The chance of something unexpected happening increases exponentially. Even if something like your husband almost dying of sepsis doesn’t happen to you, something else might.

But we can use some tactics I’ve picked up in my day job, around agile planning, to help.

Let’s explore.

Cone Of Uncertainty Factors

When it comes to planning financially for events far in the future, you need to consider things you can’t possibly know today. Things like:

  • Inflation: What will happen to the cost of living, or the cost of college, in 10, 20, 30+ years? You don’t know. Some folks may only have known our modern time of very low inflation. Just take a look at the past sixty years of inflation data from the Bureau of Labor and Statistics

  • Health – Will you be one of those folks who sail into old age with no issues? Or will you get brain cancer in your early 30’s, like one of my old friends from high school? There is some control here, but you can never entirely control your health. Genetics, accidents, and unexpected issues (like, say, pregnancy complications) can crop up on you even if you’re extremely health conscious.


  • Life – You could get married, get divorced, have kids, and/or have kids grow up and leave the house. As much as we love to think that our current life setup is the way things will always be, life has a way of changing in ways you don’t expect.


  • Income – Making a good income today is no guarantee of tomorrow. There are layoffs. Your company may go out of business. You might decide that you don’t want to work long hours for a lot of money, and swap to a position that offers better work-life balance but less pay. You don’t know what will happen to your income.


  • Investment Return – Although we all know the market return over time, the more important factor is the rate of return immediately before you need your money. If you save and invest during a flat market, you might make some money, but not as much as your calculations might have shown. Unfortunately many calculators anticipate a steady rate of return every year, making them totally unrelated to real life.  Just check out this article on rates of return for some year-by-year data.


  • Taxes – They say the only certainties are death and taxes. But the only certainty with taxes are that they’ll change. Old ways of saving on taxes will be phased out, new ones introduced, tax rates will change – so on and so on.

When I was in my early 20’s and trying to do planning, this was extremely frustrating to me. I couldn’t know what I would need when I was 40 – that was twenty years away! I could never have predicted the things that did end up happening. Having two more kids, buying a house, my husbands illness, the financial crisis, starting and finishing my MBA, and many more things totally change the trajectory of what I thought my life would be like.

Over the past nearly twenty years, much about the financial world has changed as well. I used to get over 5% rates on my savings accounts (not in the last decade), I didn’t know the market wouldn’t make anything from 2000-2010 (aka the lost decade), and then go crazy these past ten years. I couldn’t have predicted smartphones and how much they would change our lives, or the rise of artificial intelligence.

And you know what? Even though it used to frustrate me, trying to plan into the cone of uncertainty, today I accept it as normal and inevitable. I re-framed the way I approach financial planning to embrace the unknowable and re-plan constantly.

Overcoming Analysis Paralysis

Staring down the cone of uncertainty can result in analysis paralysis – where you don’t accomplish anything because you get too caught up in analysis.

What’s the ideal strategy for saving for retirement? Should you use real estate for passive income? Or invest in the stock market? Will a traditional or a ROTH account be most tax advantageous in retirement? What investment will give you the most return with the least risk of not being able to cover college? Etc. etc.

You can get so caught up in seeking an ideal, and with all the unknowns, that you don’t take any action. You throw up your hands and just give up.

Instead of doing that, I wanted to share a strategy I’ve picked up from work on planning into uncertainty.

Agile Financial Roadmap – Constant Planning

In my day job, I’m essentially an IT project manager. I do nothing but plan into uncertainty.

And I’ve encountered so many people that hate creating any kind of plan when things are uncertain. They’re hesitant about putting down goals, milestones, and dates because they may change. There are too many factors that are unknown. And so they drift with no plan at all. That is, until someone like me comes along and makes them put together a plan – or what we call a “roadmap”. And we have built-in times to re-evaluate and make adjustments – typically every ten weeks.

You pull together a plan based on whatever you know, and make assumptions on whatever you don’t know right now. So you would make assumptions based on average market returns, average inflation, current tax strategy, and so on. You decide on a fixed time period to make adjustments to your financial roadmap – perhaps every quarter – and set a reminder to sit down and make adjustments.

I do this during my quarterly net worth check in. I have an annual and a long term plan, and I adjust based on what I’ve actually accomplished versus my plan. My assumptions are checked and changed as needed. And then I update my road-map, accelerating or decelerating my milestone goal dates (milestones) as needed.

Taking an agile approach means accepting that only your short-term goals and plan set in stone. You recognize that farther out something is, the more uncertain it is. So everything beyond the very short-term is a tentative plan. It’s based on the assumptions you’ve made, and assuming you accomplish your very short-term goals.

Things outside of your control are called “dependencies”, because the success of your plan depends on those things becoming reality. If those dependencies don’t pan out the way they should, you adjust your plan and goals. And you then regularly assess how those changes, and what you actually accomplished, change your financial roadmap

I Want To Hear From You!

Have you ever been sucked into the cone of uncertainty – or analysis paralysis? Do you have a financial roadmap, or will you create one now? Let me know in the comments!

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11 thoughts on “Dealing With The Cone Of Financial Uncertainty – Agile Financial Roadmap”

  1. Very creative analogy as a hurricane hits the coastal area where I was born. Financial planning certainly does involve a cone of uncertainty. You need conservative assumptions to plan for the worst case scenario. If you can live with that amount then it is ok to FIRE.

    1. Totally agree-I prefer to err on the side of conservatism. Especially because I’ve seen for myself so many different changes in finance over the years

  2. I think fortunately most people who are involved with concepts of FIRE and doing something from the norm are very adaptable. They also tend to be super conservative and have concepts of FAT FIRE and MORBIDLY OBESE FIRE.

    I am sure if something comes along their way that is unexpected there will be a creative solution. Plus just because you want to withdraw $x/year in retirement doesn’t mean you have to (as long as that number was not so lean that your yearly withdrawal just covers basic necessities).

    When things dip, I can withdraw less and maybe not take as fancy a vacation as I had in past. And when markets surge can reward myself some. The key is adaptability.

  3. This post made me think about how my life has turned out (so far). I’m in a pretty good place, but years ago I was horribly scared that I wouldn’t be. I like the idea of agile planning – my road map was 1. Emergency Fund. 2. Pay off the house. 3. Invest. 4. Geoarbitrage. (That was the ‘agile’ part – I didn’t see that one coming but it was crucial. )

  4. Love this post. I see similar things like this at work, where often people do not want to pull together or pay attention to engineering project schedules because “the plans will always need to change.” True, but my experience as a project manager is that having a plan is still very valuable since it forces you to shake out and deal with the “known unknowns” that exist in any project. This, in turn, helps minimize surprises and gives you more mental energy & flexibility to respond to the true “unknown unknowns” that exist in any project. The key thing is that, with planning, there are often less of those true “unknown unknowns ” than one may think.

    I agree that the same concepts can translate over to financial planning, where there are many “known unknowns” like market returns, etc for which one can plan ahead and prepare contingency plans (ie saving more, having an emergency fund, etc). And, just like an engineering project, steps like this make it a lot easier to deal with those “unknown unknowns” that inevitably come along. And as time goes on and the risk profile changes, you can more easily course correct and remain in a good spot. Like they say, failing to plan is just planning to fail….!

    1. It’s so true! I see so many people that just get paralyzed by all the known unknowns and refuse to plan because of them. Well, that’s not helpful, because then you don’t know if you’re on track or not. And if you’re off track, without a plan or roadmap you’ll never be able to figure out a way to get back on track. Glad someone else sees the similarities!

  5. I plan very conservatively using a bad investment return (read lost decade) but still being employed at current pay with no raises. Worse is possible but unlikely by odds.

    I do reevaluate like you noted and I favor near term plans but I do make long term ones too. They are just really fuzzy. I guess kind of like the initiative level in agile.

  6. Most of my life I was in that cone of uncertainty. But now, semi-retired and working towards FIRE, I watch the income and expenses more diligently and feel better about our finances.

  7. i am definitely in the cone of uncertainty mixed with analysis paralysis in terms of working and home ownership… i loved where i lived when i first moved here in 2011…for about 2 years everything was going my way…then in 2014… a few things didn’t go my way and i tried to leave…but ended up back here for job in 2015 (2 months after moving all my crap to jersey)…now i’m stuck on whether to just stick it out and buy a house or try somewhere new…:/

  8. I have never heard the term cone of uncertainty but I like it. I wonder when the next recession strikes how many people who thought they were ready for FIRE are going to have to lace up their boots and keep working. But you are right, illness, job loss and so many other uncertainties make having the perfect plan nearly impossible. I have a road map and I’m ready to start drawing alternate routes if life throws me a curve ball. The journey is the fun for me. Thanks Liz.

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