Are You Really Capable Of Managing Your Own Finances?

If you knew how to use a hammer, would you be closer to building a house?

If you know how to buy property, take out a loan or trade shares, would you be closer to becoming financially successful?

Would knowing any of that actually make you a good investor or successfully plan your financial future?

As humans, we can sometimes over estimate our ability to do things based on our perceptions of ourselves.

This is called the "over-confidence bias" and the academic field of behaviourial finance rates this bias as one of the most common reason for financial mistakes, which prevent people from achieving their financial goals.

There are things you can do yourself such as painting your house, cutting your own hair and changing a light globe.

If you get it wrong, the cost in terms of time and money (or embarrassment) are not devastating.

However, there are things you wouldn't do yourself even though Google could probably teach you how to do it.

Performing surgery on yourself, pulling out your own teeth and managing your own finances probably fall in that category.

It is good to be aware of your own personal biases. Know your limitations and consider seeking assistance, especially if you don't have a track record of success.

For every one individual who is able to successfully manage their finances, there is nine that probably fail. Statistically, less than 3% of people in the world actually become millionaires.

As humans we can't be good at everything. Become the best at your chosen vocation and consider outsourcing the things that are costing you time and opportunities.

That is what the wealthy do!

- Ron Malhotra

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