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October 2011

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While saving money, reducing expenses, and earning income all help improve your net worth, these tactics often ignore the larger picture. Improving your personal human capital is like a form of insurance; you’re protecting your ability to increase your net worth over a long period of time. Boosting your human capital through gaining education, adding variety to your experiences, and cultivating your network can help to ensure you’re in a better financial position in the future.

I’m what Carl Jung would call an Introvert. To be more specific, in the variety of corporate psychological analyses I’ve participated in over the past fifteen years, my result is generally halfway between Introvert and Extravert, though I identify more with the Introvert qualities. This doesn’t mean I always prefer to work by myself or spend time alone; it means that I can draw energy from independent thinking. I am comfortable in social situations with large groups of people as well as working in teams, but rather than drawing energy from this type of socialization, it draws energy from me.

PeopleAs a result of this energy drain, I haven’t put as much effort into networking as an independent business owner like myself should have. I’ve been building online communities of various types since at least 1990, but I haven’t done a great job with maintaining relationships over time. From a social perspective, I prefer to have a few close contacts than a large number of acquaintances. Not only does this make it difficult for people to get close to me, but it has perhaps damaged my personal human capital.

When to say yes

The overworked and overscheduled business owner receives standard advice: “Know when to say no.” One person cannot do everything, and those who have shown themselves to be experts are often faced with ceaseless requests for assistance. Focusing effort on the 20 percent of requests that have 80 percent of the most relevance to the expert’s own needs, an approach that borrows from the Pareto principle, might benefit from lighter schedules but might miss the opportunity to have a significant effect on someone’s life.

Keeping in mind that it could be damaging to over-promise and under-deliver, I take the approach of responding to as many requests as possible, looking at each as an opportunity to connect with someone I may not know about.

Both depth and breadth are important

I mentioned above that I’m more comfortable with fewer close relationships than more superficial connections. This limits my capacity for improving my overall human capital. The most beneficial network contains both deep relationships and a wide network.

An individual beginning a new business as a landlord or real estate investor is a good example of someone whose human capital increases significantly with a wide network. In order for an investment to be profitable, unless the investor intends to spend all of his time and effort handling every detail regarding the property, he or she needs to know a variety of people in positions to help. While one can find plumbers, contractors, painters, property managers, and real estate agents by searching online, the best help — and the better deals — would come from people the investor knows personally. Recommendations from friends or other investors could fill in some holes in the network, and every interaction through a recommendation can grow this network.

For someone building a photography business, initial help could come from the deeper relationships in the individual’s inner circle, those who would trust the photographer enough to help build an initial portfolio and be willing to recommend the photographer to friends in the early stages of the business.

The value of online networking tools

LinkedIn has become the one location for the best business-focused networking. Despite this, I am not convinced that online-only networking — or just having a massive contact list — is valuable. I receive connection requests every day from people I’ve never communicated with, whether in person or through email. I don’t see the benefit of growing the list just to have a high connection count, just like the purpose of earning more money or reducing expenses is not just to have a larger bank balance.

As LinkedIn has grown, more features seem to invite unwanted messages and self-aggrandizement. I see LinkedIn as an effective contact management system, where you can be sure your most important contacts also offer their latest information. This is much more efficient than maintaining a Little Black Book when contacts frequently change jobs, positions, email addresses, and phone numbers.

Professional organizations

Starting in college, you can join professional organizations that provide opportunities to expand your network and open opportunities that might not have been available otherwise. As a music education major, I re-established the university’s collegiate chapter of a major national organization related to the field. Had I remained in this field, I would have been able to draw upon the contacts I established at this organization for professional opportunities. (You never know what path your life might take, but it doesn’t hurt to prepare for the path you intend to take at any particular time.)

In my career as an independent financial blogger, it was rewarding to establish an informal association of like-minded writers. As a small, tightly-knit group, we could easily share ideas and best practices to help our budding businesses grow.

Mentoring relationships

Focusing on the depth rather than breadth of connections, the relationship between a mentor and protege can be a helpful for building personal human capital. Seeking a respected individual in your field to play the role of a mentor can help you have an avenue for asking direct questions where the answers will help you reach your goals. No matter where you are in life, there is always someone from whom you can learn. Even the most successful individuals in the world find time to speak to people they respect to come away from a discussion with more ideas or tools.

At the same time, being a mentor can be very rewarding. Often, a protege asks a question that forces you to solidify your thoughts and opinions. By talking through your approach to any particular issue helps you think about details that may seem self-explanatory. In the variety of relationships in which I’ve served as a mentor, I’ve found that I’ve learned more about myself and my life and business have both improved as a result.

One danger in this relationship is being defined by the role in nominal terms. Mentors can learn from proteges. Everyone has something to offer.

Five tips for building an effective human network

  • Be authentic. Don’t present yourself as someone you’re not.
  • Reciprocate. Don’t take more from a relationship than you’re prepared to give. Say yes often.
  • Focus on depth and breadth. Don’t just be a contact collector. Add depth to the relationships that matter most.
  • Facilitate connections. Rather than focusing solely on the relationships that will help you, note where your contacts will benefit from building a relationship with your other connections.
  • Follow meetings with a message. Responding or connecting quickly after a meeting will help build relationships faster.

Do you have any additional tips for networking? What has worked well for you?

Photo: TheBigTouffe


Consumer outrage and backlash does work, apparently. Wells Fargo Bank and Chase Bank have been testing debit card fees in a small number of locations within the United States, but due to the anger unleashed after the largest bank, Bank of America, announced it would add a $5 debit card fee in 2012, the two smaller (but still very large) banks backpedaled. Wells Fargo and Chase are unwinding their test plans, and the bank executives have decided not to continue charging more customers for the benefit of accessing their own funds on deposit.

Chase BankA customer who deposits cash in a checking or savings account has been traditionally doing the banks a favor by allowing them to initiate loans based on the funds held in deposit. In return of this favor, banks paid depositors interest. With banks not lending as much as they have in the past, banks are in no rush to acquire depositors. Thus, they can pay much less interest and increase fees. They’re happy to drive customers away.

Bank spokespeople also cite new regulations as rationalization for new fees. Particularly, the interchange fees banks charge retailers for accepting debit cards at the point of sale are now limited. In effect, banks are switching revenue-generation from retailers to depositors. With this new swipe fee regulation, retailers are now more protected than consumers.

Bank of America’s new debit card fee policy stirred public unrest, and from a public relations standpoint, Chase and Wells Fargo would do well to avoid more public outrage. That won’t be the end of this story for Wells Fargo and Chase. Corporations need to answer to their shareholders, and investors will not want to see a bank willingly part with revenue potential. While the banks are still making great profits in a “post-bailout” environment, expect the executives to tap another source. Be on the look-out for new fees now that certain banks are avoiding debit card fees.

Related: See my article, “The Bank-Fee Wake-Up Call,” on US News & World Report’s “My Money” blog.

Update: In response to the announcements from Wells Fargo and Chase, Bank of America offers a response. The bank will revamp its debit card fees, presumably by lowering the $20,000 minimum to avoid the monthly debit card fee. The bank has not made a decision, though, and unless the bank sees a mass exodus, expect the $5 debit card fee in 2012.

Second update: The finance industry, minus Bank of America, is continuing to listen to customers. SunTrust and Regions Bank have announced that their customers will no longer be subject to the new debit card fees. This leaves Bank of America on its own. Will the largest bank buckle?

Photo: neoliminal


This article is written by Consumerism Commentary’s columnist, Ellen Cooper-Davis. Ellen’s column looks at the role of spirituality within the context of personal finance. For an introduction to this column, see Ellen’s first article, The Pastor and the Purse. Your feedback is welcome.

It’s time for a little geography lesson.

Look at the tag in your pants. Right there, below the strict instructions not to put them in the drier, which you, like me, probably ignore, it tells you where your pants were born. “Made in Mauritius,” my pants tell me. The magic Interwebs let me know that this is a tiny island nation off the southeast coast of Africa.

PantsNow I am curious. Because in my experience, small island nations don’t necessarily fare well where clothing manufacturing is concerned. So even though a part of me doesn’t really want to know…I check on the labor practices of the manufacturer. The results are not encouraging.

This means I will have to find a different source of pants. And since I’ve raised the question of ethics in manufacturing, it also means I’m more likely to intentionally seek out brands of clothing that have higher standards. Oh, sure, I could shrug and try to forget I ever looked that up, or pretend that sweatshop labor does not clash with my values at all… but it does. And I did. And that’s the problem. Once you know something, you can’t un-know it.

Most of us move through our consumer lives in blissful ignorance. We don’t know where our clothing, gadgets, trinkets come from, and frankly, we don’t care. We just want them to look good, work well, and entertain us. We don’t want to know about child labor or sweatshop labor or toxins. Because if we knew — if we really allowed ourselves to open our eyes and see the truth, and to notice the places where this truth grates against our most deeply-held truths — then we would have to change.

Ignorance isn’t really bliss. It’s just ignorance. As a society, we would never tolerate knowing nothing about where our food comes from. We want some reasonable assurance that it is safe to eat, that it will nourish us, that it is what it says it is. Why would we deliberately embrace ignorance when it comes to materials, labor conditions and sources of other consumer goods? After all, those are real human beings on the other end of our supply chain. To pretend otherwise is not only ignorance, but dangerous.

In some ways, this is the essence of any spiritual path. It is about taking the teachings and values of that path, and aligning your real, everyday life with them. This includes what we do, what we say, how we treat people, and what and how we consume. It isn’t easy, and no one does it perfectly, but we can all start where we are. I can start with my next grocery trip, or the next time I need new socks. I can start with rearranging my investment portfolio, or I can start by exploring fair trade gifts for this holiday season. Here, at the intersection of soul and money, there are hard questions to be asked. If I am who I say I am, what must I do?

What consumer goods do you research from a values perspective? What do you wish you could evaluate from that perspective, but don’t know how? What would you prefer to remain totally ignorant about? Are there any “lines in the sand” for you, issues or practices that you absolutely do not tolerate in your consumer choices?


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Your personal human capital is an essential part of evaluating your overall worth. Human capital has a number of definitions, but in this case, it refers to a measurement of who you are, particularly in relation to how you might be seen as valuable to an employer or a client. This isn’t the only way […]

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