Personal finance kata
Athletes, musicians, actors, artists, etc. become experts through practice. Contrary to common belief merely doing something everyday doesn’t qualify as practice. Practice is time set aside to focus on doing something in order to get better. For example, in my fulltime job, I manage projects and people everyday, but that doesn’t make me an expert.
This whole concept and distinction of doing something vs. practice came to my attention while reading a blog I’ve been reading for a while, Coding Horror. In that article, Jeff quotes an article from Scientific American called The Expert Mind that says:
what matters is not experience per se but “effortful study,” which entails continually tackling challenges that lie just beyond one’s competence. That is why it is possible for enthusiasts to spend tens of thousands of hours playing chess or golf or a musical instrument without ever advancing beyond the amateur level and why a properly trained student can overtake them in a relatively short time. It is interesting to note that time spent playing chess, even in tournaments, appears to contribute less than such study to a player’s progress; the main training value of such games is to point up weaknesses for future study.
Effortful study is a concept that involves challenging yourself to learn something that is just beyond your ability. These are things that you can’t do well now, but with practice and effort you can do.
This whole concept became very clear for me in two things I do in my personal life: playing banjo and Tae Kwon Do.
When I first bought my banjo the whole concept of playing it seemed impossible. The banjo is actually a very difficult instrument to play due to the “rolls” required. With a few months of daily practice, I did finally learn them. Had stayed there though I would have never been able to play a song. I then began learning chords, slides, hammer-ons, etc. Each was a challenge, but as I practiced these things eventually came together in the form of songs. Playing the banjo daily wasn’t enough to become an expert, I had to challenge myself and learn new things.
The second was Tae Kwon Do. Practice in Tae Kwon Do involves something called forms (or kata in Karate). Forms are a set of movements done in a particular sequence. For each belt, a pattern must be learned and performed correctly in front of judges. Learning patterns forces you to practice your Tae Kwon Do “moves”, not to mention they just look really cool.
Personal finance kata
So how does this apply to personal finance? Well, if you are looking to improve your personal finances, you’ll need to practice. As we learned, merely doing something doesn’t quality as practice, nor does it make you an expert. Here are just a few ideas I came up with that will allow you practice and hone your personal finance skills. We’ll call them personal finance kata:
- Read personal finance books and blogs. When you see a new concept you are doing, write it down and try it.
- Make a list of personal finance bloggers or authors you admire. Make some notes about things they do well or things you admire about them as it relates to personal finance. Focus on you would like to be better at.
- Pay attention to blog posts like my Ask me anything series or The Simple Dollar’s Reader Mailbag series. Come across a question you don’t know the answer to? Write it down and go find the answer yourself.
- Find a personal finance buddy and share tips and tricks for managing your finances better. Challenge each other with questions.
- Send someone that you consider an expert a question about something you don’t know or understand and ask them to explain it to you. For example, if you have an investing question take advantage of Moolanomy’s Ask The Expert With Larry Swedroe
- Pick a topic you’re interested in and familiar with. Think through how the experts in those areas practice and learn. How can you apply those concepts to your personal finances? That is exactly what I am doing here.
- Review other people’s Net worth statements and budgets. Many bloggers publish their financial details and if you pay attention, I am sure you can learn something.
- Start a blog or write a few guest articles. In order to write articles daily, you almost have to write about things you aren’t familiar with. I usual do this through research and actually trying the idea first, then writing about.
These of course are just a few ideas I came up with. There are plenty of others, but I hope these are enough to get your mind churning and thinking of ways you can better your finances and begin the journey of becoming an expert.
What ideas do you have? What do you do to become better at your personal finances? Share your Kata ideas. Add a comment!
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