Why investing in skills pays off and how to do it right

Why investing in skills pays off and how to do it right (Photo: iStock)

Investing in skills rarely delivers instant results, but over time, the benefits can be significant. Financial literacy expert Patrick Wameyo says there is no single way to invest in a skill that works for everybody.

While the typical view is that learning happens during school years, he notes that you may be lacking a specific practical skill that you can pursue later in life. Some skills can be gained through short-term or long-term training, some require physical attendance, while others can be learnt online. These can significantly improve your ability to do what you were previously unable to do and, in turn, change your earnings.

Before choosing which skills to learn, Patrick advises understanding your strengths, which include your personal traits and soft skills. From there, you can identify what you need to work on. Choosing a skill that improves you makes you employable, which, he explains, means having skills that are in demand, whether in an office setting or in your own business. If you know where to apply them, they can increase your earning potential.

“Skills increase your demand in the market. For university students, it is important to understand what skills are needed in the market and to acquire them while still on campus,” he says.

Patrick points out that social scientists describe enrolling in training as an investment, while financial practitioners view an investment as something that delivers returns in the short, medium or long term.

“Skills only produce returns when they are used, and that is when they become an investment,” he says.

He adds that some skills consistently offer high financial returns because of strong demand, such as data analytics, financial modelling and green energy.

Global trends, he observes, also influence the demand for different skill sets. For instance, the World Economic Forum released a list of in-demand skills last year, with analytical thinking ranked highest. Other top skills included resilience, flexibility and agility in second place; leadership and social influence third; creativity and critical thinking fourth; followed by motivation and self-awareness, technological literacy, empathy and active listening, curiosity, and finally lifelong learning.

He cautions against investing in skills that the environment no longer needs. Economic trends influence which skills are worth learning, and some skills become saturated as time goes on. To avoid investing in skills that offer little value, he suggests identifying what adds value to you.

“Many people are unaware of market demand because such information is not readily available,” he says, adding that attending specific workshops can help.

He believes there is no perfect time to invest in a new skill. However, it is important to recognise changes in your industry and invest accordingly. Assess which skills are most relevant to your career or business growth by building on your current strengths. For example, human resource professionals can expand into career coaching as a formal service.

He also explains that balancing technical and soft skills is essential. While technical skills are important, he notes that they rely heavily on soft skills. Understanding why you do things a certain way helps in applying technical skills effectively.

When budgeting for skill development, he advises allocating 10 per cent of your income when you are younger and around two per cent when you are older.

Monetising a newly acquired skill depends greatly on networks, he adds. Networks provide access to opportunities, many of which are shared through social platforms.