Key Takeaways
- There is a big difference between having confidence in your knowledge of something, and having actual competence in it.
- To bridge the financial confidence to competence gap, you need to look at your dangers, opportunities, and strengths.
- Making good decisions about your money requires understanding your limitations, and sometimes seeking additional experienced help.
A few years ago, I started getting more in to social media, things like these blog posts, Facebook posts, etc. Going in to it, I thought it wasn’t going to be very difficult as I’ve got a lot of experience in communication, but after about a year, I started to realize I didn’t know as much as I thought I did. A year and a half later, I felt like I knew even less! It seems like I’ve bottomed out now and I’m finally starting up the other way.
But it reminds me of what’s happened throughout my life every time I go in to something new, where I tend to go in to something thinking I know more than I do, and it’s really a natural human tendency. We have lots of knowledge and we figure that knowledge applies everywhere, when in actuality, it doesn’t.
When you are looking at the financial world, you’re probably feeling very confident about your ability to deal with finances. In fact, there is a recent George Washington University study that found that Millennials are about 80% confident when it comes to money matters, but only 25% competent in those same money matters. This is not unusual, at least in my experience, of how we approach something new.
So how do you bridge the gap of confidence versus competence more quickly, and not take a year or two like it took me with social media? There are three things to look at:
- What are the dangers? – This is about really looking at the risks. When you are starting to make financial decisions, there’s dangers to be aware of, and you want to be able to identify those dangers. Things like overpaying for something, or buying something that has very expensive financing over time, or not buying things like life, car, or home insurance. This is an area you may want to seek help in, because again, your competence is probably not quite there yet. You are newer to the workplace and finances, so getting experienced advice could really help you avoid some of these dangers.
- What are the opportunities? – This is about seeking out good financial opportunities. Things like taking advantage of a 401(k) plan offered by your workplace, so you can have some pretax money and possibly even a match to your money. Or taking advantage of less expensive transportation options, and other areas where you can stretch your dollar to make it go farther, to do more of what you want to have done and reach your goals more quickly.
- What are your strengths? – Your strengths help you make good decisions, but we don’t all have the same strengths. In order to deal with the dangers and take advantage of the opportunities out there, use the strengths you know you have, and delegate or use mentors or others to take care of the strengths you don’t have.
Ultimately, it’s about making good decisions about your money. As you are dealing with the financial world and growing and developing it, looking at those dangers, opportunities, and dealing with your strengths, this is actually something from the Strategic Coach® Program called Dangers, Opportunities and Strengths, D.O.S.® and I am just applying it directly to the area of confidence versus competence.
Until next time, enjoy!
Gary
