10 Reasons Why Financial Intelligence is a Key to Success
Financial intelligence sounds like something that only a few chosen people possess, but actually, it’s a little bit in all of us. The difference is that not all of us are aware of it and even those that are might not know how to use it to its full advantage. Some people have it more than others and have a keener insight into how to use their money to generate more money. Experts on the topic will tell you there are no top secrets or quick schemes to get rich. That doesn’t mean you have to overwork yourself either. You just need to understand it better and start making changes in how you deal with money.
Chances are you won’t find someone successful who is also not aware of financial intelligence. This is regardless of how you want to define success. You might not have a lot of cash on you, but you’re happy and happy with what you work and make do with what comes out of it; this can be considered success. By the same token, you can have loads of money, but be spendthrift and waste it on nothing till it runs out, and that could be classified as unsuccessful.
So, let’s break it down for you to know exactly what financial intelligence is and why it’s so important to have it, and how it can turn your life around.
What Is Financial Intelligence?
The good news is this type of intelligence is a skill to be learned. It’s basically about knowing the ins and outs of a financial situation, be it your personal finances, your company’s finances or a company you work for. It is basically understanding and gaining knowledge and skills in finance in the business world. It’s a relatively new term that has gained increasing popularity to help increase financial results, lessen employee turnovers by including employees in financial decisions within companies.
Actually, many companies offer courses to their employees about it as a leadership skill. Financial understanding has to do with understanding numbers of budgets, payrolls, sheets, profits, interest and more. Because it’s a very technical science, we want to show how it can apply to you and why you would need it.
1. Increases Your Wealth
Is there anyone who doesn’t want to increase their wealth? For business minded people, the most important thing to know is your cash flow. Whether you own a business or not, you need to know where your money is going. One of the reasons rich people get rich and richer is because they have their eye on the cash flow and control it all the time. You don’t have to own a business to keep track of where your money is going, neither do you have to be making a lot of money to keep watch. Once you know your cash flow, you will spot where the money is going that can be modified, lessened or cut out altogether. This will automatically increase your money.
2. How You Relate to Money
You might not believe it, but how you think about money has a lot to do with financial intelligence and how successful you can be. We all know the old adage, ‘money is the root of all evil.’ Some of us were brought up to believe that, while others were brought up with an ‘easy come, easy go’ attitude. While still others were brought up to believe you have to work hard for your money and ‘money doesn’t grow on trees.’ Whichever your belief is in, the one thing we should all believe and be convinced of is that money can be controlled.
Successful people control money, not the other way around. They decide where it’s going, what it’s going into or who it’s going to. Your relationship with money needs to be expanded and not limited to what you learned about it when you were young. Formal education doesn’t really address the issue of money in this way, and unless you majored in finance, neither does college. So don’t take anything you’ve learned about money at face value.
3. What Your Knowledge About Money Is
There’s a difference between your belief about money and what you know about money. Now, for many of us, we only know about the purchasing power of money, and that’s where our knowledge ends. To make use of financial intelligence, we need to know more. We need to understand how money works or what are assets are versus our liabilities. Many of us don’t know the difference between a credit card and a debit card. A lack of knowledge is what often forces us into making financial mistakes that get us into debt or enter into a poor financial investment, which can also lead us into debt.
There are many tools out there to help us increase our knowledge about finances, and it’s just a matter of using them. If you’re a bookworm, read more about finances. There is more than plenty of books, articles, and blogs about increasing your financial intelligence. If you’re more of an audio/visual learner, watch shows and interviews with experts explaining the nooks and crannies you don’t know about. There are even apps that will make your financial learning easier by tracking your spending habits.
4. What You Do With Money
Raise your hand if you think you make too little. Most of us do think we make too little money and that’s why we always find ourselves in financial predicaments. Yet, it’s sort of true that no matter how much we make, we never think it’s enough. This is because the more you make, the more you begin to spend. Then it becomes a race between what you make and what you spend, and we know that what we spend always gets the better of us and wins. But what are you spending on is that one question you most definitely need to ask yourself.
We’ve at least heard about a ‘rags to riches’ story. We’ve read factual stories about people who made it from nothing to something big. And we’ve read about the complete opposite of people who blew all their money and wound up as the poor pauper. These stories aren’t just for entertainment purposes; they’re lessons to learn from. They’re meant to show you that success doesn’t depend on how much you make or earn, but rather on what you do with those earnings. A simple example of what many financially intelligent people do is save at least 10% of their earnings automatically. They never see that 10%. They use that percentage for future investment purposes or keep it for long-term gains.
5. What’s The Best Thing To Invest In?
That’s a popular question for people. Should you invest in real estate? Stocks? Bonds? These and more can be good investments, but not before you invest in yourself. This is the best investment you can make during any time of your life. When you do that, you’re much more likely to achieve the success you want. This is why people take courses in a multitude of subjects, for example. The person who is going to grow your wealth is you, so developing yourself is something worth the time and effort.
When you focus on self-development, you will know what you’re good at and what you can be successful in. For many people, self-development changed their entire life and lifestyle. People have left their careers to other types of work or investments and totally succeeded in areas they might have never thought they’d be in. This can happen because the mindset has shifted, making people more enlightened.
6. Control What You Can
There are lots of things that are not in our hands. It’s not in our hands how the stock market is acting. It’s not in our hands if real estate goes down or up. Your salary, though it reaches your hands, is not in your hands. With so many things not in our control, it’s easy to despair. But you need to focus on what you can control. What you want to invest in is in your control. How you spend your salary is also in your control.
These days, we live in a world of very rapid changes and the future will always be full of uncertainties. But financially intelligent people know that what they do today will affect their tomorrow. Try to tune up your foresight and realize that every financial step you take today will have either a positive or negative impact in the future. If you have outstanding debts, pay them off now! You should have a goal to pay off debts like car title loans or other loan payments you may have.
7. Hire Financially Intelligent People
Without the intelligence, not only will your money not last, but you won’t even be able to make it in the first place. It’s easy to believe that you don’t have it in you to be financially intelligent. You’re not alone in this. Actually, it’s part of intelligence to know that you don’t know everything. And though most of us have it within us, we still don’t know how to utilize that intelligence to make it work for us.
If you really are at a loss, there is no harm in paying someone to help you understand and shed some light on the subject. Yes, you would rather have free advice, but that free advice from someone you know might lead you to pay a heavy price later on if that advice is wrong.
8. Short and Long Term Goals
You probably have short term goals you want to reach, we all do. You need to differentiate them from your long term goals as that will keep you focused and balanced. They are both money goals. Yet, we usually get caught up in the short-term and forget about the long-term. For a long time. It cannot be stated enough that so many people are better at blowing money than doing well with it. And this is because we don’t have a plan of action set. You need to protect your future self and wealth and use or invest your money in things that will also serve your long-term goals.
There are insurance blogs available such as this one that will go over the Pros and Cons of Guaranteed Universal Life Insurance. This might be one investment you want to look into to help your long-term goal. At one point, after a lifetime of working, you will want to rest or retire and enjoy your time and live well and make sure everything is being taken care of by professionals in the business of life insurance.
9. Mingle More
When you expand your network of people to include people who are financially intelligent, this will help you even more. When people want advice on financial matters, they tend to talk with someone they trust, but might not know much more than you, or even less on money matters. It’s a sort of the blind leading the blind scenario which will definitely not help you reach future success. You need people who are in the field, who manage and understand money well. The wider your network becomes, the bigger the edge you’ll get by learning new things and picking up good money habits.
10. The Blame Game
The last point to mention is our love of playing the blame game. We blame our work, our boss, our family, our circumstances, the weather and our dogs and cats for why our money just seems to disappear. A big part of financial intelligence is to man up and be accountable for our own mistakes with money. We cannot be successful if we don’t admit our faults and limitations and do something about them.
Intelligence Solves Problems, Not Money
This is a good thing because it is in your hands to boost your financial intelligence. When you boost it by the means we’ve talked about, then the money will also increase. This is the time to think like a businessperson even if you’re not. Track yourself, your money spending and change your mindset or at least expand it, understand more about money and ask the right people and the right questions to put you on the right track for success.
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