We all know handling money the right way is no piece of cake. For most us of money does not come easy, and to ensure it is spent wisely we need to make smart choices and be prudent. Money management is what comes from one’s financial intelligence also referred to as financial IQ.
Understanding your Financial IQ
Simply put, financial IQ refers to one’s ability to grow their money by spending wisely and investing right. Having a high financial IQ does not mean one’s investment will outperform the market or that they will retire as a millionaire. It rather means that you are able to handle money responsibly.
People with a low financial IQ focus on spending money while those with a high financial IQ focus on creating multiple income streams.
Importance of Financial IQ
It might not be evident, but having a high financial IQ can bring great opportunities to an individual.
While everyone has some basic idea about their finances and how to manage them, not everyone is successful in ensuring that they are great at not just making money but also saving and multiplying it. This is where financial IQ becomes important.
Everyone has a different financial situation, there is no size fits all when it comes to money management. Of course we may have taken example from friends and family, however just because a particular way works for someone does not mean it will work for you as well. This is why it is important to have a high financial IQ to better manage your finances.
How to Improve your Financial IQ
We’ve established that having a good financial IQ helps with better managing money. Here are a few habits you can start in order to increase your financial IQ and work your way to financial success:
Spending- Ever felt that your spending is going out of control? Time to reevaluate your spending habits. Making a list of all your expenses is the first step towards a great habit. You can do this daily, weekly or monthly.
Purchasing- We all have things on our wishlist we want to buy and some of these purchases are more expensive than we can afford. Although you want to make the purchase right away, a sign of financial intelligence is planning purchases and making them after you have sufficient funds.
Investing- Saving money is a great habit but if you want to multiply it to fulfill your goals, be it for a luxury purchase or retirement then investing is a fantastic habit to pick up. There are various options to invest; from the stock market, to real estate to foreign currency. Be sure though to research the market you want to invest in as it may come with risks.
Feed your knowledge- It comes a time where you learn more from books than personal experiences. A great book to increase your financial intelligence is from Robert Kiyosaki ‘Rich Dad, Poor Dad’. Not only will books help you increase your financial IQ it will also clear some concerns regarding personal finance.
We may not have learnt financial literacy at school, but it is never too late to learn. All it take is time and effort!
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