What Flying a Plane Teaches Us About Financial Risk

What Is Threat and Error Management?

In aviation, “threat and error management” is a critical framework for identifying risks, preparing for them in advance, and responding appropriately when unexpected situations arise. The same mindset applies to your financial life, where planning for both expected and unexpected events is key to long-term stability and success.

Proactive Planning: Expect the Unexpected

Pilots map out their flight paths, account for weather, and prepare backup plans for various scenarios. Similarly, financial planning involves creating strategies for life events and long-term goals. This includes:

• Saving for a child’s education
• Planning for retirement
• Building emergency reserves
• Purchasing the right amount of life or disability insurance
• Creating a plan for long-term care or healthcare costs

Being proactive helps prevent future stress and ensures you’re financially ready when these life events arrive.

Reactive Planning: Staying Calm During Financial Turbulence

In aviation, unexpected events like sudden weather changes or equipment issues require a calm, calculated response. In personal finance, emergencies such as job loss, medical expenses, or sudden repairs can have a similar effect. The key is having the financial flexibility to adapt without derailing your entire plan.

This is where emergency savings or a “rainy day fund” play a vital role. It may not offer high returns, but it provides essential peace of mind. This safety net helps prevent the need to take on high-interest debt or withdraw retirement funds early.

Communication: Everyone Should Know the Plan

Pilots rely on a shared mental model where everyone on the flight crew knows what to expect, what to do, and how to react in different scenarios. The same should apply to your financial life. Whether you’re managing money as a couple, with aging parents, or with your children, communication is key. Being open and honest about goals, responsibilities, and expectations is essential for success.

The Power of a Financial Team

Just as a pilot doesn’t fly solo on a commercial flight, you don’t have to tackle financial planning alone. Working with a financial professional can help you identify blind spots, make informed decisions, and create a plan that reflects your unique situation. They can also assist with evaluating insurance needs, optimizing your investment strategy, or preparing for major life transitions.

Use the Opportunity Bucket Wisely

Beyond emergency reserves and essential savings, there’s the “opportunity bucket”, extra money that can be used for building a legacy or creating life experiences. This could include investing in real estate, taking meaningful trips with family, starting a business, or funding a child’s future. A smart financial strategy helps you grow this bucket intentionally and tax efficiently.

Flying a Plane vs Financial Planning

Aviation teaches us the importance of preparation, flexibility, teamwork, and decision-making under pressure. Applying these same lessons to your financial life can help you weather unexpected events, pursue new opportunities, and feel more confident about the future. Just like a well-executed flight, a strong financial plan requires thought, discipline, and the right team to help you navigate the journey.

If you’re ready to build or refine your financial plan, consider scheduling a consultation with one of our fiduciary financial advisors. It’s a great first step toward creating a strategy that keeps you on course, no matter what life throws your way.