{"id":513,"date":"2013-05-27T15:28:05","date_gmt":"2013-05-27T15:28:05","guid":{"rendered":"http:\/\/prosolution.echimpsandbox.com\/?p=513"},"modified":"2018-03-08T17:17:26","modified_gmt":"2018-03-08T07:17:26","slug":"what-you-need-to-learn-to-make-wise-money-decisions","status":"publish","type":"post","link":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/","title":{"rendered":"What you need to learn to make wise money decisions"},"content":{"rendered":"

I received an email from a client (dentist, Dr Michael – surname withheld) approximately a month ago suggesting that I write an article about how much financial knowledge you need. Should you endeavour to know as much as you can so you don\u2019t need any advisors or should you have a little bit of knowledge and rely on the experts?<\/p>\n

Here\u2019s his question:<\/p>\n

I suspect that you’re on the lookout for new ideas for articles\/blogs, and I have one you might want to write about, and certainly one I think that your clients will be interested in. Specialisation is very important in society. As a dentist I have a special skill and interest in teeth. You have a special interest and skill base in financial management. But my question to you (which you might want to expand on for a blog or article) is how much knowledge should we have of our financial situation, and how much should we “have faith” in specialists such as yourself? How much is too much, and how much is not enough? Obviously we need some knowledge, but at the same time if we knew as much as our financial advisers, then we would have no need for them. So where to draw the line on how much interest\/knowledge we should have on our financial situation and the options available to us, and how much should we leave it to specialists and advisers such as yourself to handle this on our behalf, in the same way as a patient will leave me to specialise in the treatment of his\/her teeth.<\/p>\n

I think it\u2019s a great question and one (of course) I\u2019m happy to share my thoughts on. By the way, if you have an article idea, I\u2019d love to hear from you \u2013 just drop me an\u00a0email<\/a>.<\/p>\n

Information versus experience<\/h3>\n

The first distinction I would like to make is that we need to be careful with what we mean when we refer to \u201cknowledge\u201d. Albert Einstein was quoted saying \u201cinformation is not knowledge\u201d. Information is usually acquired via studying, training and education whereas knowledge is typically only acquired via experience. Information is relatively easy to acquire (particularly today) but there are no shortcuts or substitutes for experience. There\u2019s a saying that most people learn from their own mistakes, smart people learn from other people\u2019s mistakes and stupid people never learn! I heard a short anecdote that makes this point really well:<\/p>\n

A man\u2019s car breaks down and he calls a mechanic as he his stuck on a busy highway and causing traffic problems. The man begs the mechanic to come to his rescue quickly as he has no idea what is wrong with his car. The mechanic drives to the man immediately \u2013 only taking 15 minutes to get there. He spends 5 minutes inspecting the car and asking a few questions. The mechanic then grabs a hammer from his tool box, leans over the engine and hits the engine with the hammer. The car starts immediately. The mechanic then hands the guy a bill for $500. The guy immediately says; \u201c$500!!! What for? You took less than 30 minutes including travel?\u201d. The mechanic answers \u201cYes, I am charging you $50 for my time and $450 for knowing what part of the engine to hit with the hammer\u201d.<\/p>\n

Having advised clients every single day for the past decade I have been fortunate to experience both good and bad decisions and the consequences thereof. I have undertaken a lot of study to become a qualified and licensed financial planner, accountant and mortgage broker. However, by far, I have learnt significantly move through experience.<\/p>\n

10,000 hour Rule<\/h3>\n

The 10,000-Hour Rule was cited in Malcolm Gladwell\u2019s book,\u00a0Outliers. It proposes that you need to practise a task for at least 10,000 hours before you can become an expert at it. For example, Bill Gates met the 10,000-Hour Rule when he gained access to a high school computer in 1968 at the age of 13, and spent 10,000 hours programming on it. Therefore, if you want to become an expert in financial services it will take you about 10 years (assuming you provide advice to people at least 4 hours each business day).<\/p>\n

Information without experience\u2026 proceed with caution<\/h3>\n

You\u2019ve probably heard people say that a little bit of knowledge can be dangerous. It becomes dangerous when amateurs (people that haven\u2019t clocked up 10,000 hours) think they are just as good as experts. The problem is that you don\u2019t know what you don\u2019t know until you know it.<\/p>\n

But have I answered the question?<\/h3>\n

Ok, so far I have made the point that whilst you (a non-financial services professional) can theoretically acquire the amount of information I have, its unlikely that you\u2019ll acquire the same amount of experience and there\u2019s no substitute for experience (arguably its more important than information). However, I probably still haven\u2019t answered Dr Michael\u2019s question \u2013 which is how much knowledge do you need.<\/p>\n

You just need enough to make sense of it<\/h3>\n

Albert Einstein was quoted as saying: \u201cif you can’t explain it simply, you don’t understand it well enough.\u201d Our focus at ProSolution is for simple advice. That is, keep our (advice) solutions as simple as possible. Simple solutions are easier to understand, they are often less risky, less costly and safer. The solution to the \u201chow much knowledge\u201d question is to find an advisor that explains things simply and do enough reading (if any) to ensure that you fully understand your advisor’s simple explanations. Nothing in financial services is that complex that it can\u2019t be simplified. If you don\u2019t understand it, don\u2019t do it.<\/p>\n

Keep your approach to managing your money simple \u2013 don\u2019t unnecessarily over think\/complicate it. For example, spending less than you earn is a simple (time-tested) concept. Invest in quality assets \u2013 i.e. the quality of your investments will determine 90% of the outcomes \u2013 just like the quality of a car\u2019s engine will determine its performance. These concepts are logical and simple to understand. It doesn\u2019t need to be complicated. Simple concepts need to be the foundation of every investment strategy.<\/p>\n

It\u2019s your money and it\u2019s your responsibility<\/h3>\n

You have to take an interest in your money. It is your money, you probably worked hard for it and no one will look after your money like you do. Therefore, I believe that you can\u2019t delegate the responsibility to look after your own money. You can delegate a lot of the work, take advice from trusted advisors and so on. The only thing you need to do is understand the advice. This might involve asking questions, studying the advice, reading and learning or whatever. You don\u2019t need to know as much as your advisor or spend as many hours reading and studying (of course you can if you want to). You just need to take enough of an interest that you understand what you\u2019re doing with your money.<\/p>\n

Comments?<\/h3>\n

If you have any comments or questions about this article, you can post them below. Maybe share your experiences?<\/p>\n

Any other article ideas?<\/h4>\n

I enjoyed writing my answer to this question. If you have any other article ideas, I\u2019d love to hear from you \u2013 just drop me an\u00a0email<\/a>.<\/p>\n ","protected":false},"excerpt":{"rendered":"

I received an email from a client (dentist, Dr Michael – surname withheld) approximately a month ago suggesting that I write an article about how much financial knowledge you need….<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"__cvm_playback_settings":[],"__cvm_video_id":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"footnotes":""},"categories":[18],"tags":[],"yoast_head":"\nWhat you need to learn to make wise money decisions - Prosolution Private Clients<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What you need to learn to make wise money decisions\" \/>\n<meta property=\"og:description\" content=\"I received an email from a client (dentist, Dr Michael – surname withheld) approximately a month ago suggesting that I write an article about how much financial knowledge you need....\" \/>\n<meta property=\"og:url\" content=\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/\" \/>\n<meta property=\"og:site_name\" content=\"Prosolution Private Clients\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ProSolutionPrivateClients\/\" \/>\n<meta property=\"article:published_time\" content=\"2013-05-27T15:28:05+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2018-03-08T07:17:26+00:00\" \/>\n<meta name=\"author\" content=\"Stuart Wemyss\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@StuartWemyss\" \/>\n<meta name=\"twitter:site\" content=\"@StuartWemyss\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Stuart Wemyss\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/\"},\"author\":{\"name\":\"Stuart Wemyss\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/person\/c3aa63480e5d77a56fbd3f70e41b9ce8\"},\"headline\":\"What you need to learn to make wise money decisions\",\"datePublished\":\"2013-05-27T15:28:05+00:00\",\"dateModified\":\"2018-03-08T07:17:26+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/\"},\"wordCount\":1232,\"publisher\":{\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#organization\"},\"articleSection\":[\"Property Investing\"],\"inLanguage\":\"en-AU\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/\",\"url\":\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/\",\"name\":\"What you need to learn to make wise money decisions - Prosolution Private Clients\",\"isPartOf\":{\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#website\"},\"datePublished\":\"2013-05-27T15:28:05+00:00\",\"dateModified\":\"2018-03-08T07:17:26+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/#breadcrumb\"},\"inLanguage\":\"en-AU\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/wealthcoach.com.au\/stage\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"What you need to learn to make wise money decisions\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#website\",\"url\":\"https:\/\/wealthcoach.com.au\/stage\/\",\"name\":\"ProSolution Private Clients\",\"description\":\"Holistic Financial Services\",\"publisher\":{\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#organization\"},\"alternateName\":\"ProSolution\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/wealthcoach.com.au\/stage\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-AU\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#organization\",\"name\":\"ProSolution Private Clients\",\"url\":\"https:\/\/wealthcoach.com.au\/stage\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-AU\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/i0.wp.com\/www.prosolution.com.au\/wp-content\/uploads\/2016\/02\/ProSolution-logo-new-1-580x160-300x83.png?fit=300%2C83&ssl=1\",\"contentUrl\":\"https:\/\/i0.wp.com\/www.prosolution.com.au\/wp-content\/uploads\/2016\/02\/ProSolution-logo-new-1-580x160-300x83.png?fit=300%2C83&ssl=1\",\"width\":300,\"height\":83,\"caption\":\"ProSolution Private Clients\"},\"image\":{\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/ProSolutionPrivateClients\/\",\"https:\/\/twitter.com\/StuartWemyss\",\"https:\/\/www.linkedin.com\/in\/stuartwemyss\/\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/person\/c3aa63480e5d77a56fbd3f70e41b9ce8\",\"name\":\"Stuart Wemyss\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-AU\",\"@id\":\"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/ae5c5d8e27329e215a9779262143f501?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/ae5c5d8e27329e215a9779262143f501?s=96&d=mm&r=g\",\"caption\":\"Stuart Wemyss\"},\"sameAs\":[\"http:\/\/www.prosolution.com.au\"],\"url\":\"https:\/\/wealthcoach.com.au\/stage\/author\/swemyss\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"What you need to learn to make wise money decisions - Prosolution Private Clients","robots":{"index":"noindex","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"og_locale":"en_US","og_type":"article","og_title":"What you need to learn to make wise money decisions","og_description":"I received an email from a client (dentist, Dr Michael – surname withheld) approximately a month ago suggesting that I write an article about how much financial knowledge you need....","og_url":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/","og_site_name":"Prosolution Private Clients","article_publisher":"https:\/\/www.facebook.com\/ProSolutionPrivateClients\/","article_published_time":"2013-05-27T15:28:05+00:00","article_modified_time":"2018-03-08T07:17:26+00:00","author":"Stuart Wemyss","twitter_card":"summary_large_image","twitter_creator":"@StuartWemyss","twitter_site":"@StuartWemyss","twitter_misc":{"Written by":"Stuart Wemyss","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/#article","isPartOf":{"@id":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/"},"author":{"name":"Stuart Wemyss","@id":"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/person\/c3aa63480e5d77a56fbd3f70e41b9ce8"},"headline":"What you need to learn to make wise money decisions","datePublished":"2013-05-27T15:28:05+00:00","dateModified":"2018-03-08T07:17:26+00:00","mainEntityOfPage":{"@id":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/"},"wordCount":1232,"publisher":{"@id":"https:\/\/wealthcoach.com.au\/stage\/#organization"},"articleSection":["Property Investing"],"inLanguage":"en-AU"},{"@type":"WebPage","@id":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/","url":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/","name":"What you need to learn to make wise money decisions - Prosolution Private Clients","isPartOf":{"@id":"https:\/\/wealthcoach.com.au\/stage\/#website"},"datePublished":"2013-05-27T15:28:05+00:00","dateModified":"2018-03-08T07:17:26+00:00","breadcrumb":{"@id":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/#breadcrumb"},"inLanguage":"en-AU","potentialAction":[{"@type":"ReadAction","target":["https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/wealthcoach.com.au\/stage\/what-you-need-to-learn-to-make-wise-money-decisions\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/wealthcoach.com.au\/stage\/"},{"@type":"ListItem","position":2,"name":"What you need to learn to make wise money decisions"}]},{"@type":"WebSite","@id":"https:\/\/wealthcoach.com.au\/stage\/#website","url":"https:\/\/wealthcoach.com.au\/stage\/","name":"ProSolution Private Clients","description":"Holistic Financial Services","publisher":{"@id":"https:\/\/wealthcoach.com.au\/stage\/#organization"},"alternateName":"ProSolution","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/wealthcoach.com.au\/stage\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-AU"},{"@type":"Organization","@id":"https:\/\/wealthcoach.com.au\/stage\/#organization","name":"ProSolution Private Clients","url":"https:\/\/wealthcoach.com.au\/stage\/","logo":{"@type":"ImageObject","inLanguage":"en-AU","@id":"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/logo\/image\/","url":"https:\/\/i0.wp.com\/www.prosolution.com.au\/wp-content\/uploads\/2016\/02\/ProSolution-logo-new-1-580x160-300x83.png?fit=300%2C83&ssl=1","contentUrl":"https:\/\/i0.wp.com\/www.prosolution.com.au\/wp-content\/uploads\/2016\/02\/ProSolution-logo-new-1-580x160-300x83.png?fit=300%2C83&ssl=1","width":300,"height":83,"caption":"ProSolution Private Clients"},"image":{"@id":"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/ProSolutionPrivateClients\/","https:\/\/twitter.com\/StuartWemyss","https:\/\/www.linkedin.com\/in\/stuartwemyss\/"]},{"@type":"Person","@id":"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/person\/c3aa63480e5d77a56fbd3f70e41b9ce8","name":"Stuart Wemyss","image":{"@type":"ImageObject","inLanguage":"en-AU","@id":"https:\/\/wealthcoach.com.au\/stage\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/ae5c5d8e27329e215a9779262143f501?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/ae5c5d8e27329e215a9779262143f501?s=96&d=mm&r=g","caption":"Stuart Wemyss"},"sameAs":["http:\/\/www.prosolution.com.au"],"url":"https:\/\/wealthcoach.com.au\/stage\/author\/swemyss\/"}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p7FPzp-8h","jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/posts\/513"}],"collection":[{"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/comments?post=513"}],"version-history":[{"count":0,"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/posts\/513\/revisions"}],"wp:attachment":[{"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/media?parent=513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/categories?post=513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wealthcoach.com.au\/stage\/wp-json\/wp\/v2\/tags?post=513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}