How the Concept of Alternative Plans Relates to Your Finances

How the Concept of Alternative Plans Relates to Your Finances

Never give yourself a Plan B, because if you have no back up, there is no possible way you can fail. – Ed Sheeran

I came across the above quote some days ago on WhatsApp and it got me thinking.

Is the quote absolutely true or false?Do you really need a Plan B? Does having a Plan B necessarily distract you from your Plan A? If not, under what circumstances does they above quote hold water?

As usual, I threw the question up to the members of my FINTEL Warriors WhatsApp group and I got a handful of insightful answers.

I am going to share some of those answers with you as I examine how the concept of alternative plans relates to and affects your personal finance.

What is Plan B?

Before we begin, let us understand what the concept of alternative plans means.

When I searched Google for the meaning of “Plan B”, the search results I got were filled with articles about a morning-after pill called Plan B®. It is an emergency contraceptive drug used to prevent pregnancy in a situation where other forms of go-to contraceptives (Plan A) fails or was neglected.

Although Plan B in this context is a brand name, the concept behind the function of this contraceptive is not very different from what we are going to consider in this article.

By definition, Alternative Plan is a concept relating to a choice between two or more possibilities. It is a situation which allows for a mutually exclusive choice between two or more possibilities.

It could also mean one of several mutually exclusive things which can be chosen; the remaining option; something available after other possibilities have been exhausted.

From the definitions above, you can deduce that supposing your original plan or approach is labeled Plan A, then your first alternative plan could be labeled Plan B. If that fails, it could be followed by Plan C, Plan D, Plan E and so on.

Therefore, Plan B is an alternative solution adopted when one’s original plan does not succeed.

In other to answer the questions I raised earlier on, let us consider both sides of the argument surrounding this quote.

Never give yourself a Plan B, because if you have no back up, there is no possible way you can fail. – Ed Sheeran

Arguments FOR the Quote

One of the FINTEL Warriors, Chijioke Nnabuenyi has this to say, “It’s true. And can be false. It depends on the motive of the writer. I also saw [the quote] sometime ago but the writer was explaining that you ‘stick to the main plan like there is no plan B’. When you place your hopes on alternatives, you then divert your attention or give up quicker on the main plan”.

Abasifreke Godwin said: “I think there is no blanket answer on this. This statement can be true or false. It all depends on the context. There are some businesses that require you don’t have a plan B. Personally, I will say that no matter what you are doing. You should give it your complete focus and don’t start with a plan B when you have not given your plan A the needed focus.”

“I do agree with the quote. It just buttresses the ‘burn your bridge’ saying. We always underperform when we know we have lots of options,” said Solomon David.

Abi-kalio Belema said: “I think it’s about where he was coming from. Your dream -that’s your plan A. So I want to be an entrepreneur, I won’t have a plan B and settle for something less than my dream….You have to live out your plan A because how else will you live? Don’t have a plan B in that regard. That’s my point of view.”

Another Warrior, Simon Akpan said: “It depends on the context in which it used…. If your original goal (Plan A) is antagonized by another goal (Plan B), then the quote is true! For instance, a Network Marketer building a team concurrently in Forever Living and GNLD, for fear of one company folding up!”

Didi Otong, one of the admins of the group has this to say: “To some extent it true and to another extent it’s false. It’s 50/50. When there are no options or plan B, we’ll always give our very best….

“….When we have options, we seldom give little or no efforts because we feel there are options. But when the options are not there, the willingness and effort will be put into it as though our plan A-Z is just one chance.”

How does this concept relate to your finances?

In my view, I think the crux of the arguments for the quote has to do with the fact that having a single Plan A will help you to be more determined and focused on accomplishing your goal.

There are many scenarios in your personal finance where this path of “no alternative plan” is the best.

Plan A only

One is in the industry of Network Marketing. You will not be able to do very well if you are involved in more than one company at the same time.

Experts advise that you build up your team in one company up to the stage that it can function independent of you before you contemplate joining another company.

Another scenario is in the area of investing in your personal development and financial intelligence.

If you have some money in your savings that you would like to invest but you don’t know much about which investment will work for you, it best to invest that money in yourself.

Your plan A should be to use that money to build your knowledge in the area of investing – buy books on personal finance, attend paid seminars, buy finance courses online, pay for mentorship, hire a coach, etc.

Your aim should be to focus solely on this plan A until you have the confidence to launch out fully into investing your money in other things. That is only when you can begin to explore alternative plans.

Plan A only
Plan A only

All in all, according to the quote, having no alternative plans makes you resolute and focused on your Plan A.

But as we will get to learn in the next subheading, having only one Plan A does not necessarily mean “there is no possible way you can fail”. Implying so is a bit of an overstatement.

Arguments AGAINST the Quote

On the other side of the argument, there are valid points to convince you that you really need a plan B in life and in deed your finances.

 

Alternative Plan B
You need alternative plans

 

Here are some of them:

“I think it’s false because in life there’s no such thing as a ‘perfect plan'”, said Chinanza Chinyere.

Wisdom Shobowale said: “False, because I have had up to plan D but everything failed that I have to start all over. Relying on a source of income is like sitting on a three legged chair. Having insurance is like having a plan B and having a plan B is like having insurance.”

“It is false. If you have a plan B, you won’t feel depressed of your plan A fails. It’s not everyone that has that conviction to keep going of one plan fails”, wrote Jubreel Faranas.

From my perspective, there are several situations where neglecting to have a plan B could either be a sign of fear or overconfidence.

A sign of fear because you are so committed and emotionally attached to your Plan A that you are too scared to even think that it may fail. Hence, you tend to avoid alternative plans for fear that “your fear” (that the plan A may fail) will come true.

It could be a sign of overconfidence because you have this feeling of certainty or firm trust that your plan A will succeed. As a result, you are too arrogant to even consider an alternative plan.

In both cases, lack of alternative plans could severely hurt your finances.

How does this concept relate to your finances?

I am going to examine this “argument for the quote” under two scenarios.

First, from the perspective of a salary earning employee.

When you see a salary earning employee who is so devoted to his job that he has refused to explore other streams of income, you can tell that either he is afraid of having an alternative plan or too overconfident to need one.

Such people prefer to live paycheck to paycheck without tangible savings, emergency funds or investments because they have so much trust in their Plan A.

This is actually a faulty way of thinking and one that you should avoid by all means.

No job is 100 percent secure. You can be fired at anytime. You can become disabled by an accident. You can kick the bucket at any time. And when you do, your salary is not inheritable whereas your stock dividends, insurance policies, bonds and shares are.

No matter how much you love your job as Plan A and believe in it’s security, you definitely need to invest in alternative plans B, C, D and as many as you can.

That is the surest way to create financial independence for yourself and your family.

You need multiple streams of income

The second way this concept applies to one’s finances is from the perspective of an investor.

You may have heard of the popular saying, “never put all your eggs in one basket”. While this is true both literally and figuratively, it is more true when it comes to investments.

“Diversification of your investments” is a very important principle taught and practiced by sophisticated investors. Ignore it at your own peril.

Diversification of investment
Never put all your eggs in one basket

When it comes to investing your money, you need as many reliable and alternative plans as possible. You can’t afford to put all your hard-earned money is a single investment that you hear is “guaranteed” to make you 300% ROI.

You should always remember that the higher the returns, the higher the risks. So you need to split it up.

Moreover, Robert Kiyosaki has taught that true diversification is not in spreading your money over stocks, mutual funds, bonds and Treasury Bills only.

No! These options all belong to one class of investment called Paper Assets.

Diversification of investment
Diversify into other categories of investment

If you want to be well balanced and truly diversified, your investment Plan B should be in a different category such as Real Estate, Commodities, Small Business or Intellectual Property. That way, you can be truly secure financially despite the ups and downs of the economy and its effects on paper assets.

These are just two of the ways the concept of alternative plans can help you become more financially intelligent.

Time for Plan B
What are your alternative plans?

 

Bringing It All Together

In summary, the quote above by Ed Sheeran can be either true or false depending on the context.

It is now on you to know when to focus on your plan A to the exclusion of any other plan and when to apply the powerful concept of alternative plans.

Do you have any questions or suggestions? Please feel free to drop your comments in the box below. I want to hear your thoughts.

You may also like: How to Save Like A PRO

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Obot Essiet Jr.

I am an Architect, Entrepreneur and a Financial Intelligence Coach. I help set people on the right path to Financial Freedom by internalising financial literacy. I love cycling, reading and playing chess.

This Post Has 2 Comments

  1. You have said it all, I actually wanted to contradict your view at the initial stage of the write up, but I had to digest the gist down the page. I am of the opinion that depending on one stream of income is sure way to fail. So with this fact even when I’m holding tenaciously to my PLAN A, but I refuse to be comfortable with it.

    1. Hello Joe.
      You’re right, depending on one stream of income is the recipé for failure. Financial security lies in having alternative plans.
      Thanks for your contribution.

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