Sunday, June 17, 2007

Bang for buck education

Regardless of what one has acquired in terms of formal education, one has to acquire basic foundation in 1)personal finance 2)common laws 3)organization for personal productivity.

It's too bad that these areas are not addressed in formal education unless you specialize in finance or law. Organization for personal productivity is not addressed anywhere unless you master it by experience over the years or take some course or read some books.

Getting a good exposure to financial word is very important. Basic understanding of investment possibilities, risk/reward concept, ability to differentiate genuine financial opportunities from phony deals - can make or mar once financial situation. This will also mean millions of dollars made or lost. No exaggeration here. Don't underestimate the power of compounding. Over 40-50 years, even a small amount compounded even at a nominal rate can generate huge cash piles.

What is the best way to learn personal finance? Rather than focusing on personal finance alone, it makes sense to get foundation in finance and financial markets. Finance will explain the theory and practice. Financial markets will expose one to possibilities. Most of the basic stuff is better learnt in a classroom setting. Once you learn basics that way, there is no limit to the knowledge and expertise you can acquire on your own. You need to get a masters degree in finance to do that. Of course, if you can you will be very smart. Even otherwise, a lot colleges, community colleges offer courses which last over a semester or two, which can teach all these materials in a nice manner. You can check these out in your local area colleges and universities. Many do not have any prerequisites and also do not cost much. Once you learn the basics, you can read some classics from Ben Graham, Lynch, Buffet to learn how experts have applied the financial theory to make money in real world. Even if you want to delegate managing your money to a professional, the knowledge you acquire will help you find a suitable, competent and trustworthy financial adviser.

Second is law. Do we realize in how many places we put our signature without realizing what we are agreeing to? Signature we put at the pharmacy counter when we pick up our medicine, signature we put at the garage authorizing the work on our car, agreements we accept when we download the software. List goes on. Doesn't it help to know in advance about such situations we come across on daily basis. That way even if we do not and can not have time to read thru the entire agreement before signing, we at least know what we are getting ourselves into. The best way to do is to read such agreements on the Internet or buy some basic law books which will have cookie cutter templates for common scenarios. That way we only need to worry about situations we are not familiar with and use our basic knowledge to decide which law related situations should prompt us to seek more formal legal assistance.

Third thing is organization for personal productivity. Not many have learnt things such as how to organize files for quick and easy retrieval of information, what are the best time management practices, how should we divide our day so as to maximize our productivity, what are the effective ways to handle e-mail without getting overwhelmed by 100's of e-mails that flood our mail boxes, speed reading, effective note taking, effective writing  etc. These skills are so important as you take more responsibility that if you are not equipped with skills to enhance your personal productivity, you are going to feel overwhelmed when information exponentially grows with increase in responsibility. Best source is to start with David Allen's 'Getting things done' book which is available in paper and as audio book. If you read this book alone, you get great deal of benefit and see your productivity hit new heights.

It is not important to get better using the axe alone. You should sharpen the blade from time to time.

Cheers to  increased smartness and productivity.

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