Financial intelligence is the knowledge of how to handle money. It is the ability to make good decisions about investments, savings, and spendings; especially today that the value of money seems so misplaced. Financial intelligence is an important aspect of business intelligence and a necessary part of any business that deals with money. Since money is no longer physical or hard assets, but now digital. Having financial intelligence is necessary to help you survive every hurdle and obscurity in the financial world.
Financial intelligence is a skill that can be learned by anyone. It is an innate skill that can be developed through education and experience. Through understanding the history of money and the world of finance. It is this understanding that helps you differentiate between debt and credit, asset and liability, cash flow, dividends, wages and salaries as well as other sources of income. It can also help you identify the dichotomy between good debt and bad debt and helps manage your investments.
Financial intelligence skills are a key differentiator in determining who will be successful in today’s world as we transit to a new global system of finance. More than ever, people need to know how to manage their finances well to ensure their future success and security. The lack of financial intelligence skills might have a huge impact on an individual’s quality of life, financial well-being, and other areas of life strongly linked to finance. It is therefore important to be properly grounded with this skill. All in all, because financial intelligence strongly relies on deep knowledge about the financial system, it helps people make almost accurate decision about wealth related issues.
A lot of people have different opinions on what the most important life finance skills are. It is important to note that these skills are not just for future financial stability, but also for mental well-being. Because as human money affects so many aspects of your life, some people say: sometimes the only difference between a man and a monkey is money. It can break you or make you. Some people also believe that the most important financial skills are budgeting, saving money, and investing. Others are of the opinion that the most important financial skills are understanding how credit cards work, how to make a will, and how to manage student loans.
Majority of people overlook the power of understanding debt to purchase an asset that consistently generates cash flow. What they often do instead is to use debt to buy liability which is unhealthy for their financial health. Depending on individual perspective of life and what influences it (culture, religious doctrine, political factors, legal injunctions, etc.), financial priorities and preferences vary. Irrespective of one’s opinion, other arguments must not be ignored. Understanding a particular economy in question will help in determining what matters most to individuals or businesses.
Primarily, financial intelligence requires that everyone take charge of their own finances. This includes understanding how much you earn, what you spend money on, and what your financial goals are. It is also important that you understand how credit and debt work in the economy. To better understand your finances, it’s important to know where your money goes each month. Use a budgeting app or spreadsheet to track every purchase and income earned. This will help you monitor how much money is coming in and going out of your bank account.
It’s also important to set financial goals for yourself so that you can plan. Your goal might be saving $5,000 by the end of the year or paying off one of your credit cards completely. However, before you save, make sure you’re doing it to keep liquidity and after investing your surplus because you can’t control inflation but you can determine your cashflow. This should be included in your financial goals.
One of the most important things for anyone looking to better improve their financial intelligence is by setting financial goals. Without goals, there’s no way to know what direction you’re going in or how you’re progressing. Setting and meeting your goals gives you a sense of accomplishment that will make you want to work harder and progress. While it can be difficult at first, setting and achieving goals can be a very rewarding experience except for an individual with no financial intelligence.
Below are some indicators that are common with people who are not financially intelligent:
– They have debts that they cannot pay off.
– They spend more than they earn.
– They are not able to make a sound decision about the money.
– They do not have a financial plan or retirement.
– They do not know how to invest and save money.
– They waste funds on liability thinking it is an asset.
– They don’t know how to use debt to create cash flow.
To make the best financial decisions, you need financial intelligence. A good financial lifestyle necessitates financial intelligence. The truth is that if your objective is to be wealthy and financially independent, you must understand that money will never make you wealthy; nevertheless, financial intelligence can. If you’re financially savvy, you’ll be able to achieve financial independence.