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Financial Planning for Life

by Mark Fischer
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How Are Your Financial Skills?

If you are as busy as most of the people I know, you are constantly juggling a number of work and personal responsibilities. There is not enough time to do everything you want to do. Some of the responsibilities you have you may not be particularly interested in doing because you have priorities and interests more important to you. Yet if the responsibility is an important one (e.g. paying taxes, managing your financial affairs, keeping your family ties meaningful), it could be critical that you do things right.

You need three ingredients to manage your affairs effectively over a long period of time: time, interest, and skills. It is clear how the first two of these work, less so for the third.

Skill has two key components, the first of which is knowledge. Knowledge can come from a book or from discussions with other people. At its best, knowledge means not just knowing how things work, but also why they work the way they do. In that way you can better apply what you know to new situations. Knowledge is necessary to have skill, but by itself it is not sufficient.

Experience is the second component necessary for skills to develop. Without the opportunity to apply what you know, you have just "book knowledge." Wouldn't you rather hire a surgeon who has done your required surgery many, many times before, rather than a surgeon who says, "That's interesting. I have never done one of those before, but I have read about it and have always wanted to do the procedure. Let's give it a try."

Carefully weigh your skill level - especially in regard to your finances. In which areas do you have both knowledge and experience? Those areas are good candidates for you to handle on your own if you wish. Which areas are you lacking either knowledge or experience? Consider finding a professional to help you in those areas. When hiring a professional, be sure to look into that person's expertise and experience. In other words, hire them for their skill.

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