These days, people are looking to save money where they can rather than blindly paying someone in industry to do things for them. Conversely, time is money, so we obviously can’t outsource everything. Here are a few different facets of everyday expenses and some thoughts on each:
- Investing - Whether to pay someone or manage your own finances is probably one of the most impactful decisions you’ll make in a lifetime. In a world of low interest rates, low returns and potential high future inflation, FEES MATTER. I can’t tell you the number of people I know that use a “financial advisor” or even a “broker” and they have no idea what they’re being charged. If you’re getting sound advice which is compelling you to save more and you’re getting better returns than you would have otherwise, then obviously, you were better off with professional advice. However, I suspect the vast majority of Americans would be better served with most of their funds in low cost index ETFs or mutual funds with no paid advice or perhaps a once per decade fee-only advisor meeting. But to pay someone 1% or more to do the same thing with your money you could do yourself doesn’t make a lot of sense to me.
- Legal - Legal advice is a tough one. Stories abound about people getting the short end of the stick years down the road because they didn’t follow the right legal procedure. There are some DIY legal-type services out there that offer wills and other documents that are legally binding in general, but may not have all the nuances and considerations that you would have covered with an actual attorney. My wife and I used an attorney for all our will, power of attorney and general estate planning needs and got everything done for under $1000. We feel adequately covered in the event something unanticipated happens. At the same time, I have a side outsourcing business where clients often want confidentiality or non-disclosure agreements, operating agreements and other documents. We don’t have the funds to have an in-house attorney or even a contract firm on hand to drop a thousand dollars reviewing a document for a $1200 deal, so I just review the documents and make adjustments myself. It’s a trade-off in risk-benefit.
- Construction/Renovation - For home remodeling projects and the like, I’ve tried to do some things myself like rebuild a deck and Pergo flooring, and it’s worked out OK. But for other things that are a little higher on the complexity scale like tile or electrician work, I’ve paid a professional. Many people I know are much more handy and do pretty much everything themselves. One person I know who bought a new place with a lot of land and had to do a lot of work to alter the landscape. He looked into paying a company to modify the yard versus just doing it himself. He ended up going in with his uncle and just buying one of those Hitachi mini excavators and just doing it himself when he looked at the costs involved and the amount of time it would take. Evidently his uncle had a landscaping business and felt he could use it afterward.
The examples abound but these days, I’m starting to lean more heavily toward outsourcing some of the virtual/online activities like accounting and bookkeeping for our outsourcing business and even using staff writers for some of the blogs. It just depends on where your core competencies lie and whether you’re helping or hurting your bottom line by doing so.