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Ralphs. Fresh for everyone. ♪ Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less. My name is Joshua. I am your host.

And although I am your host, today, the outline of today's show does not come from my own head. Rather, it comes from a client of mine, who sent it on to me and said, "Joshua, I think you should do a show on my five possible scenarios of the future." And so, of course, I worked with him.

He'd shared with me the five shows before. But I had him send them over to me, and I said, "Yes, this is a useful concept." Now, this client is an experienced and effective businessman. Wealthy. Has built his businesses, starting with nothing, but basically nothing. Self-made man. Saved his money.

Built his business. Has done well. And he shared with me that this is the way that he categorizes information. This is the way that he categorizes the potential scenarios of the future. And I think it's really useful, because as humans, we need to categorize things. You can't face everything and assign the same importance to all things.

And there's a major problem when people do this. You can't assign the same probability to all things. I'll explain in a moment. First, let's go through the five possible scenarios. If you're thinking about the future, you can plan and predict that the future will fall into one of these five possible scenarios.

Number one, the future will be about the same as the present, or maybe a little better. Again, scenario number one. The future will be about the same as the present, or maybe a little bit better. Number two, the future will be similar to a recession. Again, similar to a recession.

Number three, similar to a depression. The future will be similar to a depression. Number four, the future's going to be about like Mad Max. Go watch the movie if you are uninitiated. Actually, I'll tell you a little secret. I've never been able to get through Mad Max. I'm aware of the allusion to Mad Max, but that's just not my deal, not my interest.

I've never actually watched Mad Max, so maybe you can skip it too. But just know that Mad Max means really bad people doing crazy stuff, driving around, crazy survivalist world. So number four, the future will be similar to Mad Max. Or number five, the future will be void of humans due to an asteroid hitting the earth or some other similar wipeout calamity.

I repeat, five possible scenarios. Things in the future will be about like they are now or better. Number one. Number two, similar to a recession. Number three, depression. Four, Mad Max, or five, void of humans. Now let's talk about these because all of these are absolutely reasonable scenarios. It is possible that the future will be about the same as things are now or better.

It's also possible to be recessions, depressions. Mad Max is possible. And it's possible that the asteroid will hit the earth. The long term, in the long, long term, the future of the earth, it ain't good. So this earth will be wiped out in the future. Now, will it be your lifetime, my lifetime?

Who knows? But the point is all of these are perfectly possible scenarios. And what's more, all of these have been experienced at some point in the history of the earth. So what do you do? Well, first, I think it's good to look at probabilities and recognize that some of these scenarios are more probable than others.

For example, is it very probable that things in the future will be about the same as they are now or perhaps a little better? I would say so. It's very probable that the future will be at least about how it is now, maybe better. That's the most probable of these five scenarios.

Is it also very probable that in the future we'll face something like a recession? Absolutely. I would be happy to guarantee it if my money were on the line. I would guarantee the future contains a recession. It's very probable that the future will have a recession in it. What about a depression?

Well, a depression is less probable than a recession, just like a recession is less probable than the future being about like things are now or better. But it's very still probable. It's still very probable that at some point in your life we'll go through depression. What about Mad Max?

Less probable. But throughout the history of the world, even, sorry, throughout the history of the last few decades, the last half century, we could point to again and again and again situations in which things are Mad Max. Even if you're in the United States or Australia or the United Kingdom, you can find circumstances in the last 50 years that have been Mad Max.

Hurricane Katrina was Mad Max. Pretty hardcore stuff. Even if you start to go, you know, Bosnia, Syria today, all kinds of places, you can go all kinds of places around the world and find today Mad Max. Now it's less probable for those of us who live in fairly stable countries, but it's not impossible.

And then number five, void of humans due to asteroid hitting the earth. Fairly probable in the long run. We just all hope and trust and believe that it's going to be the very long run. Now think first on scale of probability. Think next on scale of preparability. Is it preparable for you?

Can you prepare for a future that's about the same as now or better? And should you? My answer is yes. You should spend the majority of your time, based upon the probabilities of the future, you should spend the majority of your time preparing for a future that is about like things are now or better.

You should not spend the majority of your time preparing for a future that looks like Mad Max. You should spend the majority of your time preparing for a future that looks about the same as things are now or better. And make sure that you're prepared and positioned to thrive.

You should spend some time, some significant time, preparing for a future that has a recession. Because it's fairly certain that the future will have a recession. But don't spend so much time preparing for a recession that you don't prepare for something that's better. Let me give you an example.

You have a job offer. You're excited about the job offer. It's a change into something new and exciting, but you don't have any money. Should you sit around worrying about a recession, about the fact that you don't have enough money to break your lease and go take the new job?

No! Prepare for things to be about the same or better and go get after it. Go get after the future being better. But think about the recession. So think about the probabilities and go with them. But prepare for a recession because it's very likely that you will face a coming recession.

What about depression? Depression is still pretty probable. Very probable. You should spend less time preparing for a depression than preparing for a future that's like now or better. But you should still prepare for a depression. Mad Max? Mad Max is possible, if not probable, over a long period of time.

The challenge we face is figuring out what that appropriate timeline is. The toughest thing that I face? Given my age bracket, things have always been pretty good in my life. I can ask my parents and grandparents about World War II and what things were like. I can ask them about Vietnam.

I can ask them about the 1970s. But I wasn't there for those things. So it's just all history. You might be similar, have many young listeners, or you might not be. But the point is, think about it, but don't spend all your time preparing for Mad Max. Mad Max is not certain.

Possible? Yes. Probable? Maybe. Depending on how we use the word probability. But not certain. Don't spend all your time preparing for Mad Max. Thus missing out on preparing for a great future. Think about Mad Max. Prepare for Mad Max. But don't dwell on Mad Max. Number five. Scenario five where the Earth is void of humans due to an asteroid hitting the Earth.

You can't prepare for that with storing food and water. Your only preparedness in that situation is spiritual preparedness. That's it. That's all you can do. If there's an asteroid coming in on top of you, ask the Lord to see you through. That's all you can do. So don't spend any time thinking about asteroids hitting the Earth.

You can't do anything about it. Now, when looking at these scenarios, categorize the advice that you're getting and the actions that you're getting. Make sure you're not ignoring any of them, but make sure you're not giving equal weight to all of them. Recognize the probability varies. I beg of you, if you're sitting in a cabin in the middle of the woods waiting for the zombie apocalypse and ignoring the goals and the dreams that you have in your life because you're scared of the zombie apocalypse, leave now while you still have a chance of living your life.

Keep the cabin, but don't live there if the only reason for living there is a zombie apocalypse, because a zombie apocalypse, Mad Max, is not very likely. I think it's wise to prepare, but it's not likely. So please assign an accurate probability to the different scenarios that you face in your life.

Try it out. See if it works for you. It's worked for my client. I like this particular framework to think through. The future will be one of the following. Number one, same as now or better. Number two, similar to a recession. Number three, similar to depression. Four, similar to Mad Max.

Or five, void of humans. Think about the scenario and plan rationally. Don't react emotionally.