The fear of the guess

We all have a fear of uncertainty and some traditional forms of financial planning can heighten that fear. As scary as the words “I don’t know” sound, we have to accept that we just don’t know what the future will look like. It is impossible to know for sure how much money we will be able to save in ten years’ time or how much we will need to spend when we retire.

Once we can recognize this unknowability we realise that the only way to get anywhere is to make a best guess and throw in some assumptions. We have to make the best guess that we can about what we want our future to look like. And then we accept that this will probably not be “right” and we will veer off course. That’s fine – the process of financially planning means that we continually check-in with our goals. If they have changed, a few tweaks to the plan and we bring ourselves back on course.

The problem is that we are so afraid of making the wrong guess, that we don’t make a guess at all. It’s a bit like the conversation between Alice and the Cheshire Cat:

“Would you tell me, please, which way I ought to go from here?”

“That depends a good deal on where you want to get to, “said the Cat.

“I don’t much care where,” said Alice.

“then it doesn’t matter which way you go,” said the Cat.

“ – so long as I get somewhere,” Alice added as an explanation.

“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”

We all want to get somewhere, just like Alice. Carl Richards writes, “we increase our chances of getting to a place that we actually want to be, by making a choice”. It’s the process of guessing that is the key, not the guess itself.