Increase Your Financial IQ
Time and again, we’ve been told this age-old financial advice: work hard, get out of debt, save more money, live below your means, and invest in a well-diversified portfolio of mutual funds. But this advice is outdated.
Nowadays, this type of financial pattern that we tend to gravitate back over time is not anymore enough.
In these times of instability in the financial markets, financial gurus say it’s not anymore about real estate, stocks, mutual funds, businesses, or money that make a person rich. It is now more about financial information, knowledge, wisdom, and know-how, otherwise known as financial intelligence.
Financial intelligence is what will get you money and improve your money “game”. You don’t anymore just buy a new set of golf clubs to improve your game, but paying for lessons will.
In order to increase your financial IQ and improve your money game, you need to shift and expand your financial comfort zone. And embrace and explore these five aspects of financial intelligence to improve your money “game” and survive in these shaky financial times:
The Intelligence of Making More Money. This is measured by your earning capacity: how much money you earn. People earning more, say $80,000 yearly, have a higher Financial IQ than those earning $30,000 a year. As for each person have different set of goals, dreams, and ambitions, the process each person will undergo to make money will be different. The important thing is to find the best way for you to make more money, and then to build your goals around this.
Many people fail to realize is that it’s the process of making money (the work you’ve done) that is making them rich, not the money. It’s by learning to how to make money (financial intelligence) that you can continue to make money.
You must also understand that the key to making money is the learning to solve problems. You must learn to come to terms with the fact that problems will never go away. In order to grow wealthy, you must keep your eyes on your goal and find a way to reach it, identify the problems preventing you from making money, tackle them head-on, and the money will follow.
The Intelligence of Protecting Your Money. This is measured by how well you protect the money you’ve earned. Once you’ve begun to earn your money, you need to hold onto it and protect it, especially from “financial predators” like taxes, bank fess and broker fees. You must make sure to pay as little as possible (within legal means) and protect yourself from legal difficulties.
The Intelligence of Budgeting Your Money. This is measured by how much money you have left after expenses. It requires a high level of financial intelligence to be able to live well and still invest no matter how much you make.
The key to budgeting your money is to know how to spend your time and money wisely. Though it’s wise to cut back on your spending, but it is much wiser and smarter to simply prioritize spending, say spend less on beer or ice cream, but increase your means, spend more on continued education and self-promotion.
The Intelligence of Leveraging Your Money. This is measured by your return on investment, how well you make your budget surplus generate more money.
Borrowing money to increase the power of your own cash (a.k.a. leveraging) is good if you know how to control the investment. Money exports advice to use leverage to make low-risk investments in which you, as the investor, have control.
The Intelligence of Improving Your Financial Information. Financial information is not only about knowledge of basic financial concepts, but also means detailed knowledge of the investments you make. Base your financial decisions on facts.
Before investing, make sure to know everything. Conduct extensive research for every financial decision you make. Verify information by seeking confirmation from other parties. Know and understand how an investment works and trends. In this way, you can gain valuable source of information about how the money game is played as well as use trends, which are historical facts, to make informed decisions with confidence.
Ultimately, according to a financial guru, it is information that makes you rich, not the asset.