Financial Intelligence: How to Develop and Master
Financial intelligence refers to the skills one possesses to achieve sustained and continuous improvement of finances. How you improve your financial intelligence depends on your success in both your personal and business finances.
In this article, you will find some of the most effective ways to strengthen your finances and achieve effective financial planning in the various areas of your life.
Take care of small expenses: a small hole sinks a boat. – Benjamin Franklin
Below, we will explain how to improve your financial intelligence through a full understanding of the characteristics of your relationship with money. That is, how to know when you are positively increasing your relationship with money, the common mistakes that prevent you from improving your finances, the keys to knowing how to improve your financial intelligence and some valuable tips.
As Benjamin Franklin’s phrase says, debt can literally drown you. That’s because of poor financial decisions. Hence the importance of deeply understanding how to improve your financial intelligence.
What does it depend on that there are people who find it easy to manage their finances, while others find it extremely difficult?
If we start from the premise that there are two people with similar income and needs, the answer between being on one side or the other may lie in the so-called financial intelligence.
Have you ever thought what can happen, if you don’t know how to manage your finances accurately, what can happen if you don’t learn how to improve your financial intelligence?
As in many other areas in personal or business life, the problem has to do with decisions we need to be aware of. Knowing how to improve your financial intelligence is fundamental today. You may be surprised with the excellent benefits you can obtain, not only material, but also spiritual.
In this way, creating an income system that works for you and managing it intelligently has additional benefits such as the freedom to make decisions, spend more time with your family, your friends and more time to continue thinking that you can invest in other businesses, etc. how to improve your financial intelligence.
What is financial intelligence?
Financial intelligence can be defined as the ability to reach out and develop new sources of income, seeking financial stability or growth. Some experts claim that it is a part of the human intellect used to solve economic problems. On the other hand, every entrepreneur should know that the word finance is the management of money and it is what we all do, every day.
A very simple way to see, if our brain is in tune with the mind of a person who is used to solving financial problems in an intelligent way, is to answer the questions:
- What do you do when you have a financial problem?
- What goes through your mind?
- How do you improve your financial intelligence?
Being aware of the path we take when we go through financial problems is a first step to understanding how your relationship with money works and how to improve your financial intelligence.
In this process of rationalizing your relationship with money, you transcend the feelings of despair, fear, doubt, etc., that can be experienced as part of economic problems. In this sense, financial intelligence is also about taking advantage of negative circumstances to learn.
How do you know when your financial intelligence is growing?
When your financial intelligence grows, you will be able to:
- Have expenses that are less than your income
- Seek other sources of income
- Grow the amount you want to invest in a profitable way
- Learn more and more about business, how to create and invest
- Thinking about the financial future, planning and projecting
- Keep a secure financial life, keeping in mind that you must have the right finances for the retirement stage
- Invest in assets and not in liabilities
Without a doubt, learning these important requirements means avoiding wasting money on liabilities that will eventually lead to more debt. Being aware of this also contributes to your emotional well-being, because you will understand how to solve and improve your financial situation, through the understanding of these and other tools (knowing how to use them).
Common mistakes that prevent you from improving your finances
There are two common mistakes that prevent you from knowing how to improve your financial intelligence:
Having someone else do what you need to do: If you are a business owner and have employees to solve your problems, everything may be fine. However, hiring a person to manage your own money is a big mistake, because it prevents you from learning and improving your finances. It’s still a risk.
Dodging: Not facing your financial problems is a very common mistake. In several of Robert Kiyosaki’s books, he criticizes people who, even when working for others’ finances, don’t know how to solve their own. In this sense, these people avoid solving their problems consciously or unconsciously.
If you are one of these people, you should know that you are avoiding the possibility of going deeper into how to improve your financial intelligence. Coming home after working for others and not being able to solve your own business is a bad sign.
Likewise, it’s negative when you can’t see problems as a great opportunity to get smarter. It’s not that there aren’t people who want to keep solving others’ problems and making them richer, but that they can see their financial status and solve it anyway.
Here we see that improving your financial intelligence, undoubtedly represents a strength, since you can generate money to attract even more money and above all know how to use it to have an economic abundance.
Keys to know how to improve your financial intelligence
Knowing how to improve your financial intelligence involves thinking about everything from how you can organize your income and cover your expenses to how you can generate surpluses to improve savings and investment
This does not mean that you have to save a percentage of your income to have a better life, but multiply it by one hundred and make it bigger. Not that there is a list that is intended to be successful or a magic recipe for success, but it is likely to attract more money and know how to manage it.
You are probably asking yourself, how you can improve your financial intelligence.
Here are the key strategies that will help you to obtain good benefits to your personal and economic life.
Transform your mentality:
This process is very important and relevant, since reaching this type of intelligence is not because you have made a complete transformation in your spending habits, or because you stopped buying something that is higher than what you earn.
It is about when:
- Instead of thinking about earning much more, you think about doubling.
- When you don’t just think about saving and continuing to save… but about investing in something productive that will bear fruit in the short, medium, or long term.
- When you think about having other incomes besides the one you have in your current job.
- When you keep thinking and denying that things are still the same.
Changing the mentality in this way, produces in yourself and in others, a change of mentality to be able to undertake and generate different sources of income, in an intelligent way to achieve your goals.
Tips to improve your financial intelligence
Learn to be balanced: You must be very clear about how much your total income and total expenses add up to, so that your expenses never exceed what you produce. You also have to take into account what is an asset and a liability, the rich accumulate only assets to have financial freedom.
Income: You must create a list where you have to write down all the money you get per month, to establish the amount of money you receive per month.
Savings and investments: In another list, you write down the money outflows that are for savings or investments. This step helps to keep the habit of saving.
Payments and debts: In another list, you will write the money out where it corresponds to the debts, such as credit cards, mortgages, among others. A serious mistake that often happens is to make a budget fixed expenses of the month are monitored and forget the expenses that happen with less continuity.
Study and observe a financial problem that is happening at the same time: It does not mean that you have to study the problems that are happening in your country. It is about examining and determining your own financial situation. A friend may be going through a tough time and you may start looking at some options to help him or her out a bit.
Don’t stop learning every day: There are many ways to receive financial training for the improvement of your business and personal life, both in terms of support material and research on different topics that help you enrich your financial intelligence.
Hi, I am Nikesh Mehta owner and writer of this site.
I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business.