Throughout the course of our lives, many of us have experienced unpleasant economic periods. These are characterized by times when money the budget seems to cut short or when money seems to run low. Experiencing these periods every once in a while is acceptable. However, you have to take action if you are constantly living from pay check to paycheck. Boosting your financial intelligence is one way to improve your current circumstance.
Online resources define financial intelligence as the collection of knowledge and skills reaped from understanding personal finance and accounting principles. Why is this important? For starters, applying your financial intelligence to money management will help you reach your monetary goals.
On that note, here are 4 Expert-Approved Ways To Increase Your Financial Intelligence:
BY MAXIMIZING YOUR BUDGET
Managing your finances starts with building a realistic budget. To strengthen said budget, you can either decrease your monthly spending or grow your streams of income. Both of these methods can solve the budget crunch. However, the latter provides longer lasting effects according to bestselling author Robert Kiyosaki. Kiyosaki’s arsenal of financial books includes the “Increase Your Financial IQ” book. The title says it all!
When it comes to budgeting, he stresses that time and money are very crucial assets. He believes that people who are going through rough times should spend less money on unnecessary purchases and more money on productive matters (e.g., self-promotion or continued education). Maximize your budget by prioritizing the important categories.
BY MODIFYING YOUR THINKING
Sometimes, the only person who keeps you from becoming financially successful is you! Your thoughts and beliefs dictate your money decisions. Imagine what will happen to your finances if all your thoughts are clouded by irrational beliefs and negative thoughts. Conquer the darkness by shifting your mindset.
Focus your thoughts on stretching your means and you may eventually find ways to earn more money. As financial coach Cindy Brochu once said: “Getting smarter means thinking smarter!” Let your money-savvy mindset guide you to the decisions that you need to take.
BY IDENTIFYING ESSENTIALS FROM NON-ESSENTIALS
People who are low in financial intelligence experience difficulty in distinguishing between their necessities and momentary “cravings”. For instance, you may see many impulse buyers during the Great Singapore Sale. These shoppers will simply purchase items for the sake of it or for the sake of flashy discounts. Trouble boils when these shoppers use credit cards as their only means of purchase. Piles of debts may rain on their finances for years. If only they had the ability to identify the essentials from the non-essentials!
So, ask yourself whether you could do without it in the future. Do you really need to buy a Prada bag and a humidifier?
BY EXPANDING YOUR KNOWLEDGE
Knowledge fuels your financial power. Robert Kiyosaki believes that the wealth of the person does not purely rely on real estate and other tangible assets. He says that it depends on the information and knowledge you have about money. Simply, financial intelligence makes one rich. Let us put his ideals into perspective. Purchasing a new set of golf clubs will not improve your game, but paying for golf lessons will.
Other ways to expand your knowledge on money include attending local finance seminars, reading informative books (e.g., Intelligent Investor), and downloading financial add-ons (e.g., Mint.com app). These methods are all recommended by Mark Riddix. Mark Riddix is the author of “Your Financial Playbook” and the president of an investment consulting firm.
I have to be honest! Following the above strategies for a few days will not make you financially intelligent. It does not happen overnight. You need to work on these for the next few years in order to build healthy habits. Doing so will add more order and discipline to your financial life.