You might think you make really good money
decisions. But is it skill or luck?
Did you choose when to be born, for instance? Or
where, or to which family?
These factors alone play monumental roles in what your
finances look like. Along with your family situation, there are a myriad
of macroeconomic trends that you did not have much to do
with, that play into your net worth.
Learning how to deal with random factors you cannot
control, and maybe turn them to your advantage, fascinated author Karla Starr, who came up with a few
solutions in her new book, "Can You Learn To Be Lucky? Why Some People
Seem to Win More Often Than Others."
Think of it like a card counter in Las Vegas. The cards you
are dealt may be pure luck, but if you study patterns, you can do subtle things
to tilt the odds in your favor. You cannot guarantee wins, but you can
make them more likely.
Develop
strong social networks.
Most people would consider it “lucky” to bump into a new
contact, or an old friend who is hiring for a fantastic and lucrative job.
But that happenstance meeting is more likely to happen to
someone who makes a concerted effort to get out and interact with people rather
than staying home and eating tubs of ice cream alone.
“One of the most important factors in career success is
maintaining a diverse set of social ties, both inside and outside of the
company,” said Starr. “That will affect your trajectory of job luck,
if you have larger networks and socialize in a number of different avenues.
Your odds of success go up.”
Be
financially agile.
If an opportunity comes along, are you able to pounce on
it? Or do you have to let it pass because you are locked into your current life
situation?
Being as “agile as possible” is important, said Starr.
Minimize financial overhead, save for a rainy day, constantly invest in new
skills and be willing to explore fresh career avenues or move to a booming
location.
Reduce
your exposure to bad luck.
Luck with money is not just about a big financial
score, like a lottery win or a surprise inheritance from a long-lost
uncle. It is also about minimizing your potential bad luck.
That means always having emergency savings on hand to help
you weather a surprise car repair or medical bill.
Another way to avoid bad luck is Warren Buffett’s
oft-cited principle: Stay within your circle of competence.
This becomes a challenge when a particular industry,
sector, or asset class becomes very hot.
“The temptation is to get involved after seeing others do
well. But that decision often doesn’t work out well,” said Michael Mauboussin,
research director at BlueMountain Capital Management and author of “The Success
Equation: Untangling Skill and Luck in Business, Sports, and Investing.”
Cryptocurrency is a recent example. If you do
not understand the emerging asset class, it is safer to just stay away
instead of trying to hit it big like your cousin who is now a bitcoin
millionaire.
Do
not give up.
“So many people don’t get lucky because they give up too
quickly,” said Starr. “Persistence is a skill of its own that leads to
luck.”
That principle applies to everything from job hunting to
finding the right romantic partner to saving and investing through the worst
economic downturns.
In particular, when you are starting your career, keeping
an eye on the long game is a choice that could reverberate financially for
decades, said Starr.
Like a football team looking for a win, the key is to stay
on the field and keep playing. If you give up and go home, then you are
guaranteeing a loss.
“Look at the patterns that keep coming up in your life.
Often we are the source of luck – or lack of luck – in our own lives,” said
Starr.
Click
here for the original article from Reuters.