Personal finance DIY

Personal Finance DIY

Because nobody cares more about your money than you do

When last did you see an advertisement from a financial institution encouraging you to compare the fees charged on their unit trust platform with that of a competitor? Or to question the value their offshore equity fund offers you as compensation for the 3.4% annual fee they charge?

The assumption is that one does not need to interrogate these details, as the belief is either that whatever is charged is fair (if you’re even aware what fee is charged or what fair might mean) or that your financial advisor is on top of your investments. Some people choose not to care, but unfortunately you cannot afford that kind of ignorance. You owe it to yourself to be on top of your personal finance affairs!

It’s your money after all

To truly build a financial future you need to educate yourself, set personal finance goals, accept accountability and learn how to budget, save and invest. Nobody will do that for you – it’s not their business to, and ultimately, nobody is going to care more about your money than you do.

If you don’t design your own life plan, chances are you’ll fall into someone else’s plan. And guess what they have planned for you? Not much.

Jim Rohn

You need to have the guts to embrace the personal finance DIY ethos.

Personal finance DIY is like most DIY. You don’t just throw yourself into re-plumbing your kitchen after a morning of watching the Home Channel. You need to read and you need to practice. Sometimes knowing too little with an exuberance of self-confidence can be costly.

To accept the personal finance DIY ethos is to not be naïve. There will be times when you need to and should consult with a professional. There is, however, no reason why you can not and should not handle the routine stuff yourself. An important part of finance DIY is knowing when to do what.

The personal finance personalities

Those who choose to embrace personal finance DIY generally fall into three categories:

The ‘Sensibles’. Like a blacksmith, a winter coat or a mature Labrador retriever, the ‘Sensibles’ embraces finance DIY by committing time and energy into reading and educating themselves. They ask questions and they work hard.

The ‘Evasives’. Think of an ostrich with its head in the sand. The evasive people generally tried to avoid the topic of personal finance and believe that things will all be okay in the end.

Lastly, the ‘Naïve’. They simply think that they’re smarter than everyone else and refuse to ask or pay for advice.

Consider the case of Tom, who sets up an appointment with a financial planner. Tom introduces himself: “I’ve generally taken responsibility for all the financial planning for my family. I research options presented to me and read up on things I don’t understand. I make sure that I figure out the best solution for my family. I’d like to retire in five years’ time and wanted to consult to obtain an independent view on things.”

Tom sounds super boring, right? Well, he’s not. Tom takes two months off every year to go wingsuit-flying in the Himalayas, he lived in Vietnam for three years, and he’s got a tattoo that he’s never explained to anyone.

He just happens to also be a sensible finance DIY guy. Tom kicks calm, collected ass by recognising possible faults in his analysis and valuing an objective view on his situation, given the big decision he needs to make around retirement.

The evasive prefer to remain willfully ignorant of one of the most important skills in our life. The naïve guy doesn’t believe that he would miss something important to begin with. He doesn’t possess the ability to be objective about his situation, being under the impression that everything will be okay, so why would it occur to him that anything could be wrong in the first place?

In Tom’s case, his retirement and the wellbeing of his family mean enough to him for him to want to learn about the things he can do, and seek professional advice about the things he can’t.

Taking charge of your financial life means more than just contributing to your employer pension fund or squirrelling away your monthly contribution into a retirement annuity. Following industry norms or rules of thumb can be comforting, but can be equally inappropriate for your circumstances.

Where to start

When it comes to taking charge of your financial life and accepting the personal finance DIY ethos, ask yourself: “What if-? What if I’ve missed something? What if my assumptions are wrong?”

Your financial wellbeing, and that of your family, is too important to take unnecessary risks. So as you decide to enter the finance DIY journey, place yourself as closely as you can in the camp of the ‘Sensibles’. You’ll find yourself more confident to tackle the bigger financial decisions in life like buying a new car, committing a large amount of money to a goal or buying a home. You’ll live a life of less worry and give yourself the best chance you have of meeting your financial goals.

Buy books, read blogs and look for articles that you feel you’ll disagree with. That’s good. It will make you think about the topic again.

Calculate your financial health

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  1. Great post! What is your view on people giving online webinar courses on how to save and invest money? They offer a free webinar on saving and making money then reel you into taking a paid course for investing money. Is it worthwhile doing these courses, or to do it yourself, reading financial books?

    1. That’s a great question. I have attended some courses and seminars that I had to pay for, Most of them were very valuable, but not all.
      I’d suggest to first read financial books and get as much knowledge as you can as that will help you assess whether specific courses might be worth your while.
      And don’t be afraid to ask questions about the courses upfront.

      But, investing in yourself is highly valuable.

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