Why you need to develop social capital

Social Capital

One of the new blogs I enjoy reading is called The Simple Dollar. It’s a personal finance blog. Recently, they posted an article about social capital, what it is, how to get it, and why you should engage in it.

This issue became very real to me today as I talked with our new financial guy today. We had a financial guy for thirteen years who retired back in the Spring. He handed us off to someone else in the firm who contacted us both via letter and a phone call. The new guy seemed like a nice guy. About a month later, I set up an appointment with him on the phone as we live in a different state. He was to call me; fifteen minutes after the appointed call time I still had not heard from him. So I called the office and asked for him. When he came on the phone he acted like it was a surprise that we had a scheduled meeting, like he didn’t know where I lived, and he certainly didn’t know anything about our accounts.

After talking with him for a few minutes he told me that he would keep an eye on some investments and give me a call. Three months later, as the market had picked up, I had never heard from him. One of the accounts was a SEP IRA under my name alone, so I began looking for other companies that could offer what I needed. After making a few calls, I was able to sign up for an account online, schedule a transfer from the old firm, and have that money available to invest in less than four business days.

My wife is visiting this week in the state where that financial guy has an office so she scheduled a meeting and they called me on the phone as well. It was the first time he had attempted to talk to my wife about her retirement fund as well, which really did disturb me. I shared with him my experience, that I had moved an account (which got his attention) and noted that he managed my in-laws and parents accounts as well. He lost his social capital. Now, to maintain that relationship with us far into the future, he will have to expend social capital to continue to receive our business.

Let’s get into The Simple Dollar’s post. According to the post, social capital:

is built whenever you give in a relationship without expecting anything directly in return. Let’s say, for example, that one a community groups you are involved with wants to have a banquet, but no one is willing to step up and organize. You raise your hand and volunteer to do it. This earns you a bit of social capital within the club. Additionally:

• If a friend’s computer is fried and you spend a couple hours at his house disassembling it, replacing the motherboard, and getting things back up and running, you earn a bit of social capital with him.
• If a friend needs a job and you able to call someone up and help that person get a job, you earn a bit more social capital.
• When you’re kind to people, listen to their problems, and are supportive, you earn a bit of social capital.

What does social capital do for you?

1. Social capital earns dividends.If you have a lot of social capital, people will recognize you on the street and greet you. They’ll tell others positive things about you when you’re not around. These (among many other things) are the dividends earned by a solid supply of social capital.
2. Social capital can be spent.If you’ve spent a lot of time helping others and then you need help, you can cash in some of that social capital and ask for help. Your efforts in building up that social capital will pay off when the support comes through.
3. Social capital can be reinvested.If someone calls you up and offers you something of use to you (because of the social capital you already have), you can take it (spending some of yours) and pass on that offer to someone else (building up some more).

How do you grow social capital?
The best way to build social capital is to help others without expecting anything in return. Help people you know. Volunteer for the tough tasks. Be there for your friends and family.

Do it consistently and you’ll begin to build up social capital. People will think – and talk – differently about you. You’ll slowly find more and more good things coming your way.

Tags: Social Capital