Real estate, stocks, mutual funds, businesses, or money is not what makes a person rich. It is information, knowledge, wisdom, and know-how that makes one wealthy; that is what is referred to as financial intelligence. There are five things you need to work on to increase your financial IQ. They are as follows:
1. Make more money
You need to increase what you earn on a regular basis. To do this work is required. You can never make more money without working. Interestingly it is the process that helps you become rich and not the money. The more you make money the more money you can make. Each person goes through a different process so you can not compare yourself to another person. Your goals, dreams and ambitions are different. Just find your niche and determine how you want to get to your goals. Making more money has a lot to do with you being able to control your emotions. You need to learn to delay gratification. Never give up. It may seem tough but if you are positive you can solve problems. The more problems you solve the more money you make. Identify the problems preventing you from wealth, tackle them head-on, and the money will follow.
2. Protect your money
Once you’ve begun to make money, you need to keep it away it from “financial predators”. You can do this by ensuring the following:
– pay as little tax as possible legally
– protect your bank accounts against unnecessary bank fees
– buy only what you need and not what you want
– your spouse is as intelligent as you financially so you are on the same page when it comes to finances
– plan for your death so that your family is not stranded when you go
– protect yourself from legal difficulties
3. Budget your money
The ability to live well and still invest no matter your earnings can only happen with a high financial IQ. Financial IQ is a function of how much you have left and not how much you make. Decide on the budget you want to follow. Pay yourself first then spend what is left wisely. Spend more on information and education. Never live within your means rather increase your means. Remember that the way you treat time and money determines what your future will be like.
4. Leverage your money
How well is your surplus generating more money? Learn how to leverage to make more money. That is what the rich do. When you use leverage you only need to ensure that you have some form of control on what you are investing on. Do not gamble or speculate with money.
5. Improve the financial information you have
Whenever you want to make any investment decision always ensure you conduct extensive research. In doing that ensure you do the following:
– Separate fact from opinion. People are always giving their opinion of what is good or what makes sense. It is foolish to follow this. Ensure you work only with facts.
– Verify all information. Never trust just one source of information. Seek to corroborate from other parties as well.
– Know the rules. If you don’t understand how an investment works, don’t partake in it.
– Understand trends. Trends are historical facts. Always ensure you use trends to make informed decisions as trends are valuable sources of financial information.However, it’s important to note that trends do not project to future facts. It only gives you an opinion about possible futures.
When you do these things you have all the confidence required for you to invest.
Culled from: http://charlesezeh.me/2014/06/08/increase-your-financial-iq/
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