The Certainty of Uncertainty

In response to PepsiCo announcing they will cut 8,700 jobs in 2012, PepsiCo CEO Indra Nooyi said the following, “When the only certainty is uncertainty the whole guidance thing becomes a challenge.” Nooyi continued, “This will be a transitional year…anything you do in short-term just to meet short-term guidance would be detrimental to the company in the long term.” Nooyi sounds like she would have been an exceptional financial planner.

The problem with certainty is it changes all the time. And this creates the greatest obstacle in financial planning. The best long-term financial planning happens when you get today right, and then tomorrow and next week. When this is done, you look up one day and you’ve taken care of the rest of your life. What Nooyi was really saying is all we know is what we know right now, right here, today, everything else is a guess and we will react as it happens.

This is a solid principle I use when advising clients as to their financial plans. The money in their account right now is exactly what we know is certain. We then make decisions based on what we know doing our best to minimize the risk of a “maybe” turning into a “maybe not.” That is why I titled my new book, You Should Only Have To Get Rich Once. Once is enough.