There are six skills that you can work on with your sim - mechanical, cooking, charisma, logic, body, and creativity. You build up a given skill by doing activities that would promote it. For example, to learn how to cook, you read a book on cooking.

Your skills degrade over time, to encourage you to practice a bit. The higher your skill, the more slowly they degrade, so it's worth it to focus on one or two skills and get really good at them. Again, just like in real life.

The Sims 2 Tips, Techniques and Walkthroughs