RISK TAKING VERSUS SECURITY

I was jolted while sitting in church to hear the minister say:
“Youth is prepared to take risks – older people stick with security.”
As I look back over my life I could see the accuracy of that statement. I took risks in those early days that I wouldn’t dare to now. However there must be a reasonable balance in all things and I’d like to look at both sides of the coin to discover a pathway that is neither two rocky to negotiate nor two smooth to lack excitement.

When I was dishing out housing loans as a bank manager and a young couple was facing me keen to purchase their first house, the easiest thing to do was to grant the loan to make their dreams come true. But bitter experience always made me dig under the surface to determine their capacity to cope with the extra mortgage and interest repayments, rates and insurance , repairs and maintenance. Invariably this aspect hadn’t entered their young heads. The availability of mortgage monies to purchase the house property was their prime consideration. Nor would they have done their sums correctly and added on all the hidden costs of settlement.

So I would have to go through the tedious task of working out the budget forecasts, add up proposed income and expenditure to discover whether there would be sufficient surplus to cope with any subsequent aberrations. Often I would have to say that on the face of it they could just cope but the risk factor was extremely high. When asked if they still wanted to go ahead with the transaction invariably the young couple would say, yes we’ll have a go! But I noticed that older people would reconsider and plump for a lower price house to give them a safety margin.

With a reasonable predictable economy the risk factor is lessened but these days with interest and inflation going up and down like yo-yos, there certainly needs to be a larger safety margin.

Even though my banker’s instinct would want me to deny a young couple their mortgage money, after warning them of the risk I would say, “if you don’t have a go now, you probably will never own your own home.

Well what about security? Should we go through life always financially solvent, never using credit, only buying what we can afford and taking no risks whatsoever? Many would say that would be a humdrum existence

But in hindsight I believe financial freedom is the only way to go. If we plan our spending to achieve our financial goals neither using credit nor taking excessive risks we may never rise to any great heights financially but money worries will never be our lot.

Then we can take risks in other areas. Maybe we will volunteer for community work, learning how to be a good secretary or treasurer of some committee. Trying some sports like skydiving or skiing. Learning skills in mechanics, electronics or woodwork.

Life can be exciting or dull whichever way you want it.
However the tortoise only makes progress when he sticks his neck out!