Understanding The Five Basic Financial IQs

This is simply means understanding our five basic financial intelligent quotients. The subject of money has been neglected for a long time in our educational system, and it seems like being ignorant of it has been a simple way for most people to ignore the subject. Most people play it safe in the real world just maintaining their day job without investing on their financial education. They only interested with the token paycheck they received from their employers and plan their lives with only just that. They believed that nothing could be done to raise their financial IQs to make more money from other sources because the entire society has been brainwashed believing that financial education are not important. How’s such analogy about money helping you reach your financial goal lately? 

One of the reasons why our school systems do not teach students much about money is because most schoolteachers operate from entitlement mentality and however, our schools prepare people for such entitlement mentality throughout their lives. Graduating from the high institutions with any information on how money works, but only interested to make money through gaining opportunity either to work for the government or the private sector. People lives in default mindset about the subject of money from generation to generation, and will still pay it to the next generation if nothing is been done about it.

Money alone cannot solve our financial problems, but educating ourselves about the subject of money does. That is why giving poor people much money cannot solve their money problems. In many cases, it only prolongs the problem and creates more people in our society. For example, have you seen someone who won big money from lottery ticket if the person doesn’t have a good financial education, after three to five years, the person will turn out to become poorer compared to his or her standards before winning the lottery. Also, hard work alone doesn’t solve our money problems. Come to think of it, the world is filled with hard-working people who have no money to show for it. Most hard-working people who earn much money, yet they still grow deeper in debt, needing to work even harder to make more money to get by each day. On the other hand, Formal education cannot solve our money problems, because the world is filled with highly educated poor people who only use big grammars to create more problems for others.

The root of our problems is poor or lack of financial education, and the problem caused by a lack of financial education is our inability to solve simple financial problems. Rather than addressing the root of this problem through our educational system to educate people about the subject of money. But many people ignore the problems and enjoy living in ignorant of it. They never pay attention to their spending habits. If we don’t pull a weed up by the root, and only cut off the top, it will come back quicker and bigger in the long run. The same principle applies to our financial problems.

 There are those who depend on the government to solve their money problems, but I do not know how the government can solve their money problems when the government itself can’t solve its own financial problem. Our government keeps growing in debt day by day because those in government who handles our money are financially illiterate. In my opinion, it is up to individuals to resolve and look for ways to solve their own money financial problems. And the good news is that if you can solve your own money problems, it will make you smarter and richer as you perfect your financial problems solving skills.

The Five Financial IQs

Our financial intelligent is that part of our mental intelligent we use to assimilate or solve our financial problems. And financial quotients (Financial IQ) are the measurement of that intelligence. It is how you quantify your financial intelligence. For instance, if you make N100, 000 and pay 20% in taxes, you have a higher financial IQ than someone who makes same amount and pays 5o% in taxes. The person who keeps a lot of money after taxes has a higher financial IQ than the one kept lesser money.

The five basic Financial IQS are:

  • Making more money financial IQ
  • Protecting your money financial IQ
  • Budgeting your money financial IQ
  • Leveraging your money financial IQ
  • Improving your financial information financial IQ

Making More Money Financial IQ

There are those who are very smart when it comes to making more money than others. They are always open to adopt new methods of making money. They are going in learning and trying what they have learnt about making money and when they do, they become smarter and make more money on a daily basis. The more money they make, the higher their financial IQ grows. Simply put, someone who makes a six figure income (a million and above) annually has a higher financial IQ than someone who only make five figure income (below a million). We have seen those who have high academic IQ, those we called genus of our time in the classroom but they were unable to make much money in the real world because there are a lot of differences between academic IQ and financial IQ. Making more money shows how strong is your financial IQ. Look around you, there were those who were doing greatly in academic during your school days, but today, they are not the richest ones among your equals.

Protecting Your Money Financial IQ

Here, if two people make same amount in a year, for example, they make N1,000,000 each and one of them pays less in taxes than the other, the person that pays lesser taxes has learned how to protect his money because he or she is closer to achieving financial integrity by learning how to keep what he makes. The simple truth is that the world is out to take your money and make you lose all you’ve gotten. Even your relatives, friends and government are targeting your money, but your ability to protect your money is what will determine how far you grow financially in the real world. Note, and please don’t miss quote me, not all who took your money are crooks or wants to bring you down. But I’m just saying, the more money you make, people will come close to you for one help or the other. Also one of the biggest financial predators of your money is taxes you pay to the government. The government takes your money legally.

Budgeting Your Money Financial IQ

After making more money and protecting it, the next thing is to budget the money. And this requires a lot of financial intelligence. Someone who makes N1,000, 000 in a year but can’t be accountable on how he or she spends the money has problems in budgeting. Many people budget money like poor person rather than like a rich person. They allowed their emotions to control their spending and do like or nothing on reinvesting their money. Most people make a lot of money but fail to keep much, simply because they budget poorly. For instance, a person who makes and spends N700,000 a year has a lower budgeting financial IQ than a person you only makes N50, 000 and was able to live well on N40,000 and invest back the remaining N10,000. Being able to live well and still invest no matter the amount requires a high level of financial intelligence. Also having a surplus at times, is something you must actively learn how to budget for. This is where maturity comes to play, because you having a lot does not mean you’ve to spend all. You’ve to budget your learn how to control your emotions because it’s what controls your spending. Before you spend, ask yourself how much have I kept for investment and make sure hold yourself accountable on every dime you spent. Do not be carried away due to impulse purchase or instant gratifications.

Leveraging Your Money Financial IQ

Most people only think that the only way to leverage their money is through saving their money in the bank. That’s an old and outdated form of investment. By doing this, you’re just making the owner of the banks to become richer without gaining anything from their riches. They will be trading and investing with your money and little or no interest. After the budgets of the surplus money you made, the next financial challenge is to leverage the surplus. But the problem here is that millions of people all over the world don’t know what to invest in after making the money. Most of them give what they called financial experts their money to invest for them, hoping that the experts will be truthful enough to returns their dividend to them after investment. But entrusting your money to someone is very risky; some of them are real crooks who may run away with your money.

I suggest you start learning about investment; starts small and build from there. Invest on your skills first on how to make money online. Investment could be starting a part-time business you run at home after work. It could be opening laminating and photocopying stand that do not requires much skills to begin with. It could be supporting ideas by turning it to business that generates money for you. Just try something, don’t worry about failure because without trying, you can’t know far and well you could go.

Improving Your Financial Information Financial IQ

There is a bit of wisdom that goes like this, “You need to learn how to walk before you can run”. This is true with financial intelligence. Before you can learn how to make exceptionally high returns by leveraging your money, you need to learn to walk, that is, to learn the basics and the fundamentals of financial intelligence. One of the benefits of being dedicated to your financial education is that over time you will be better able to grasp more sophisticated financial information just as mathematicians are able to solve complex equations after years of practicing math problems. The point here is that we all have to start from somewhere and build up from there.

I started blogging because I’ve spent time trying to understand the basic fundamentals of blogging and it’s working out for me. The basic level of information required to set up a good blog has been assimilated in my brain, and each day, I’m becoming better on what I do. Projecting into the future doing this may be 5 to 8 years from today, who knows how strong I will become doing this?  What I do know is that whatever problems or challenges the future holds, I will look at them as simply as an opportunity to get smarter and increase my five basics financial intelligence. Rather than panic, I believe I can learn to adjust and prosper because of my financial intelligence has become stronger.

On the other hand, I believed most of us have been in a class, lecture, or conversation where the information went right over our heads. Or we have been in a class where the information was so complex, attempting to grasp what was being said hurt our heads. This means either the teacher is a lousy teacher, or the student needs a little bit more basic information.

Money is not the most important thing in life, but money does affect everything that is important to life. When you think of it, money affects our standard of living, health, and education. Everyone is aware that poor people have poorer health, poorer education, and poorer standard of living. Also not, you can be a successful doctor and still be poor. You can be a successful schoolteacher and still be poor. But you cannot be a successful entrepreneur or investor and be poor. This is why understanding the five basics of financial intelligence is very important.  

Using old ideas to solve new problems only creates bigger and newer problems. This is why I believe that five basics financial intelligence are important. If you develop these five financial intelligence, you will have a better chance of doing well in the rapidly changing world. You will be better able to solve your own financial problems and also increase your financial intelligence.

Until Next Time, Live Exceptionally!!

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