Sometimes there just isn’t a right answer, or at least not without a crystal ball. This simple fact is one many people struggle to grasp. My focus is financial, but this impacts all elements of life including relationships, work and health. The Government is looking to try and boost our happiness, perhaps ensuring the understanding of uncertainty would contribute to that.
It seems to me that society focuses too much on right and wrong, solving problems and definitive’s. Teachers in schools, do you ever teach, ‘there’s no right answer’?
It’s a common problem in my game. I’m often stopped by people asking such questions (as happened yesterday, which prompted this blog).
"Will fixing my mortgage for five years be the cheapest deal?".
"Are house prices in my area going to rise?".
or "Should I sell my shares?" (even though I don’t cover investments).
When I explain that these questions rely on unpredictable factors that no one truly knows and all you can do is examine the risks – I’m often given a shirty look. They seem a little perturbed, as if I’m hiding from them a hidden truth I must know. I sometimes think they’d prefer to think I’m just not telling them, rather than that I just don’t know.
Would you borrow money for a new car if you couldn’t get a job without it?
So, perhaps it’s time we tackled this issue. Regular blog readers will know I’ve been campaigning to get financial education in schools for a long time.
As part of this, we have our free Teen Cash Class guide to help parents and kids get a grasp on financial realities. Within it there is a ‘good debt, bad debt’ test with a series of questions and I often talk about it when making speeches to adults – but there’s one element of the test that always stumps people.
After a few black and white examples of when you should or shouldn’t borrow – leading to a jovial attitude as everyone follows my request to shout out "good debt" or "bad debt" on cue – I throw the following in…
I work in a big city, but lost my job a few months ago. The only job I’ve been able to find is in the countryside – I’ve managed to find somewhere affordable to live – but my kids school is six miles in one direction and my work is seven miles in the other and there’s no public transport.
"I’ve never had a car, but I have checked and the cheapest one I can afford that’ll be reliable is £1,500. Yet I’ve no savings left and after being unemployed my credit score is poor, so I can only get it at 20% APR. That’ll push me right to the brink, but without it I can’t get the job."
At this point I reiterate, "If I get the car and I don’t pass my probation at work, it’s a nightmare. Yet if I don’t get the car, I can’t get the job."
When I ask if it’s good debt or bad debt, I’m usually met with a stony silence – gone are the easy cat calls of the answer. So, I ask everyone to put their hands up for either good debt or bad debt and the room is usually split down the middle.
Occasionally there are a few smart-alecs out there trying to find a way round this deliberately constructed, hypothetical question, leading me to reply, "the kids are too young to cycle and I’ve got a dodgy leg"
My answer is that it’s grey debt – without a crystal ball it’s impossible to answer. In fact, this is less of a question about risk and far more about learning to evaluate a situation. Do a risk-benefit analysis and think about the key decision making criteria.
What’s taught in schools?
For me this is a key lesson we all need to learn in life, so I think it’s important to ensure we’re all prepared to understand that there are circumstances when you can’t always get it right.
My own education was a long time ago, and I’m not sure if Dr. Allday’s class on Heisenberg’s Uncertainty Principle, where using us as guinea pigs to see if quantum mechanics was suitable as an option for A Level students, really counts. But I’d love to know from teachers where this type of grey answer thinking is taught in schools. I hope that with a more progressive curriculum and with PSHE these days there is more of it, but I just don’t know.
It’s important for everyone to understand that sometimes we get a bad outcome having made the right decision, and life can be tough on the back of it, yet we shouldn’t berate ourselves for it afterwards if there was no way of doing better.
I’ve met psychologists who tell me one common reason people are in therapy is because they’re looking for certainty where there can never be any – maybe we all need to learn is that sometimes it’s just not available.
I’d love your thoughts on this, as well as some other examples of similar uncertain financial decisions you’ve needed to make.