What personal skills, talents or traits do you feel are most important in order to achieve financial success in life?
What are the best ways to learn, develop and hone those things?
I think that the best skills, talents or traits to financial success are:
- Understanding interest earned
- Understanding interest paid
- Understanding compounding (as in interest)
- Being able to evaluate scenerios and their costs (i.e. the length of a mortgage vrs paying a higher interest rate)
- Along with #4, ability to perform a risk analysis of options
- Understanding stocks, bonds, mutual funds and other financial instruments
- Being able to save money by putting it away or accepting price over quality (also understanding that lower quality MAY last a shorter period (included with risk analysis)
- Look for hidden fees or restrictions.
- Always get things in writing. Verbal contracts may not be enforceable.
- People you met only online and ask for money… shun them! (This is not from personal experience, but I watch a lot of court shows and daytime TV). You could lose your life savings.
I think many of the ones listed above SHOULD be taught in grade and high school, if even in a simple way. Then more intense financial classes as time goes by.
As an aside: Also knowing how to ‘work the system’ helps. COSTCO will not replace one tire on your vehicle, they want to replace all 4. HOWEVER, if you bring in a tire on a rim, they will sell you one tire and mount it. You have to put it back on your vehicle yourself. So two days running I brought in a bad tire on its rim and they ended up replacing 2 tires of my 4. Although they had a special where you buy 4 and get a discount, I didn’t need 4 and by doing the ‘install’ myself I saved hundreds by not buying all 4 tires.
There is a phrase used especially in electronics and software that a product is NOT SUPPORTED. That does not necessarily mean that the product stopps working. It means that ‘if it breaks in two, you own both halves’ so to speak. The company will not continue to fix it or offer support for it. My Windows 7 computers still run but are out of support. By understanding how these things work, I have not run out to replace perfectly good items.
It also helps to understand a bit of law, some of which is just common sense.
Keep receipts.
Document phone calls to support organizations.
Read before you sign and understand what your obligations are.
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Speaking for myself, extensive knowledge of Excel has been highly beneficial.
Like most, I have used it for years but only at a baseline level. Taking the position of Project Manager, I took advanced Excel courses at a local JC.
In no time, realized my Excel skills were at the kindergarten level. Eventually I learned how to write bat files, macros, and create Pivot Tables. At home, used these skills to monitor investments, gains/losses, percentages, charting, etc.
I download CVS files from Vanguard, TRPrice, etc, and plug them into various Excel files / tabs. I can monitor every stock, fund, etc, and easily spot winners and losers.
I’ve adapted these lessons into household budgeting, expenses, and projections.
I retired 15 years ago, so could not create them again, but luckily, my old ones still function.
I often use Excel or its cousin. There are many uses besides just number crunching too.
You can create a todo list with priorities or dates (as you add the entries) then sort them.
When I laid out the farm for my coffee and fruit trees, I used Excels rows and columns.
With thousands of coffee trees, I can send someone to do a leaf analysis on row 12, tree 22.
I am doing a running tab of money in and out in Excel.
I think I used Visacalc originally. My bosses computer mainframe kept crashing. I entered the dates and times and created a bar chart. Turns out the crashes followed a certain number of hours after he answered a prompt and we narrowed it down to the data in the prompt causing the problem. The techniciand and the boss could not figure out the cause because without the bar chart it just seemed like random crashes, but when I plotted things, the pattern became obvious.
While I believe all the skills related to managing and holding onto money are important, I feel the more important skills come into play in earning that money.
In the end, you are not the person deciding when and how much money you receive, other people make that decision, you only have control of the reasons for them to do so.
The better you are at convincing the payor of the worth of your contribution to the things they are willing to pay for, the more they will pay you. That skill set falls within the area of social skills, human relations and sales.
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I had a friend who worked a few jobs and he always had gripes about what the company was doing wrong. At the end of each job when he decided to move on, he would always say that he should write a letter explaining how the company was so wrong.
I was the opposite. I worked extra hours, made suggestions along the way and tried to make my boss look good.
H200h is correct. Knowing how to make and hold money are important. There is a story where a teacher supplied young kids with suits and ties, acting I guess as a surrogate Father figure. Knowing how to investigate a compay you want to work for, knowing how to be interviewed are also important. I am afraid that ‘kids’ now-a-days will just rely upon AI or some social media to tell them how to fix their resume.
I didn’t think about it earlier but also having a fallback career helps. A friend has a Real Estate license, but when the pandemic hit, she had no other way to make money. She always had the desire to sell some things online but was not ready when the real estate market plummetted. A backup plan!
What Skills Are Most Important for Financial Success?
There has been considerable research in the area of behavioral finance. Brad and Ted Klontz are psychologists who describe four distinct money scripts or patterns that we grow up with and that factor into our financial behaviors. They use the terms money status, money vigilance, money vigilance and money avoidance. The money vigilance individuals are those who tend to build wealth.
The link is to a 4 minute video done by Brad Klontz describing the money scripts.
Achieving financial success requires a combination of important personal skills, talents, and traits. These include financial literacy, discipline, resilience, goal-setting, adaptability, and continuous learning. To develop and hone these skills, you can read books on personal finance, take courses or workshops, seek guidance from financial advisors, practice budgeting and goal-setting, and surround yourself with a supportive and knowledgeable community that encourages your financial growth.
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You need to understand how to compound and discount cash flows, and the difference between real and nominal returns. If you don’t have these basic math skills you’re just guessing, even if you have excellent habits, your guess will lead you astray at someday.