When we talk about financial success, most people immediately think of “hard” skills—technical knowledge like understanding balance sheets, investment strategies, or market trends.
Yet, experts argue that soft skills, such as emotional intelligence, adaptability, and mindset, are just as crucial—if not more important—when it comes to managing your financial well-being.
Morgan Housel, in his 2020 book on The Psychology of Money, makes a compelling case for this, emphasising that financial success is less about technical knowledge and more about how you behave and think about money.
In this post, we explore why soft skills matter in financial success, how they integrate with technical knowledge, and how you can cultivate a mindset that leads to sustainable financial well-being.
The Importance of Soft Skills: More Than Just Numbers
Morgan Housel states that “financial success is a soft skill, where how you behave is more important than what you know.”
He emphasises that traditional financial education often focuses too much on formulas and logic, assuming that once people know what to do, they will automatically do it. The reality, however, is quite different. Human behavior is full of biases, emotions, and irrational tendencies, and it’s often these that make or break someone’s financial success.
For example, even if you know the importance of saving a portion of your income, the emotional response (excitement) to seeing your savings account grow—or the temptation to spend—can significantly impact your ability to stick to that plan. Similarly, understanding the math behind compound interest is one thing, but the patience required to let your investments grow over time is a behavioural trait that many struggle with.
This behavioural aspect is why soft skills like emotional regulation, patience, and resilience are key to financial success. These skills enable you to navigate financial decisions with a steady hand, even when emotions run high. They also help you stay committed to long-term financial goals, manage stress, and make decisions that align with your values rather than reacting impulsively to market changes or financial challenges.
Integrating Soft Skills with Technical Knowledge
Rather than viewing soft skills and hard skills as separate entities, I advocate for an integrated mindset approach. In my article for RoleModel Rebels (March 2024), I discussed how a well-rounded mindset requires both a solid backbone of technical knowledge and the soft skills to apply that knowledge effectively in real-world situations.
Consider the example of finance & risk management. Technical knowledge might help you understand the different types of risks in investing—market risk, credit risk, liquidity risk, etc. However, your ability to assess your risk tolerance, stay calm during market volatility, and make decisions without panicking is where soft skills come into play. These skills allow you to use your technical knowledge in a way that aligns with your long-term financial goals and personal values.
Cultivating a Financial Mindset for Success
The journey toward financial success starts with cultivating the right mindset. As Housel notes, “ordinary folks with no financial education can be wealthy if they have a handful of behavioural skills that have nothing to do with formal measures of intelligence.” The key is to focus on developing those skills that will help you manage your financial life with confidence and clarity.
Here are some strategies to help you integrate soft skills into your financial mindset:
- Emotional Intelligence: Understand and manage your emotions when making financial decisions. Recognise when fear, greed, or stress might be influencing your choices, and learn to respond rather than react.
- Resilience: Build the ability to bounce back from financial setbacks. Whether it’s a market downturn or a personal financial crisis, resilience will help you stay on course.
- Patience: Cultivate patience, especially with long-term investments. Understand that building wealth is a marathon, not a sprint.
- Mindfulness: Stay present and aware of your financial decisions. Mindfulness helps you align your actions with your values and long-term goals.
Join Our Community: Flourish Financially Together
At Flourish Financially, we believe that financial success is best achieved when you have a supportive community around you. Our events are designed to help women feel comfortable talking about money, share their experiences, and grow together.
Join us for our next event on September 19, 2024, at 5:00 PM CET where we’ll explore the connection between money and emotions. This session will provide valuable insights on how to manage the emotional aspects of money, allowing you to make more informed and confident financial decisions.
For more details and to stay up to date with our upcoming events, join our community.
Conclusion
Soft skills are not just an add-on to financial knowledge; they are the foundation upon which true financial success is built. By integrating these skills with your technical knowledge, you create a mindset that supports your financial goals and helps you navigate the complexities of money with confidence.
Sincerely yours,
Dr. Sophie
+++++++++++
Inspired by:
Housel, M. (2020). The psychology of money: Timeless lessons on wealth, greed, and happiness. Harriman House.
Jablonski, S. (2024, February 28). Coaching for Success: Unlocking Potential through Integrated Skill Development. RoleModel Rebels. Available at https://www.rolemodelrebels.com/drsophiejablonski (Accessed 02 September 2024).
Introducing the Financial Flourishing Scale: A Path to Thriving Financial Well-Being
Introduction: Financial Flourishing as a Core Aspect of Well-Being Financial well-being is an integral part of leading a fulfilling life, yet it often remains underexplored in mainstream conversations about personal growth and flourishing. At Flourish Financially, we...
Flourish Financially: Redefining Financial Health and Well-Being
Introduction In reflecting on the upcoming opportunity to join The Lisa Burke Show alongside my esteemed business partner, Minna Schmidt, I find myself revisiting the core mission of Flourish Financially. This initiative is about more than budgets, investments, or...
Flourish Financially : Where It All began
Introduction In a world that often separates finances from personal well-being, Flourish Financially offers a different path. Co-founded with my friend & business partner Minna Schmidt, Flourish Financially bridges the gap between financial know-how and emotional...
