Intelligence has always been at the forefront of attributes most desired in humans by society. This is simply because acquiring knowledge and utilizing it is an ultimate tool useful in solving all kinds of problems.
Therefore, it should be no surprise that financial intelligence is also considered with appropriate significance. But what does the term 'financial intelligence' actually mean, and why is it so crucial these days?
Financial intelligence vs. financial literacy
There are two general concepts that tend to reappear in discussions related to managing personal finance: financial intelligence and financial literacy. Both of these names sound quite similar and appear to be extremely important. However, they differ from each other.
Literacy is generally defined as the ability to read and write. Thus, we can define financial literacy as the skills necessary to 'read and write' the numbers and letters related to the broad financial world. However, to become significantly well-rounded in today's economy, we need something more… and here comes financial intelligence.
This concept describes the ability to translate 'letters and numbers' related to money in order to fully understand and feel ready to join the world of finance.
So, of course, you have to indulge in financial literacy to build up your financial intelligence, but both of them are the skills we all can learn.
Why is financial intelligence that important?
It is always important to do things with a purpose. So, let's find our reason by responding to that question.
The answer is pretty trivial: no matter what type of job people decide to choose, as employed individuals, they will receive money in exchange for their hard work. When people become the owners of a particular amount of money, they have to decide what to do with it. And this is the place where all of the difficulties can appear.
Unluckily, the vast majority of people have problems related to money.
A recent survey conducted by the Financial Health Network has proved that 7 in 10 Americans struggle financially. Meanwhile, the MNP Ltd. research revealed that "nearly half of Canadians are on the brink of financial insolvency."
Apparently, the most significant reason people struggle with money is the lack of financial literacy and financial intelligence. The inability to fully understand the critical concepts like inflation, risk diversification, compound interest, assets, or liabilities can lead to numerous troublesome decisions. Most people don't know why budget planning, spending control, or saving money are extraordinarily crucial to achieving financial stability.
Another argument speaking in favor of financial literacy and financial intelligence is the overall accessibility to the wide range of various complicated financial products and services. Banks and governments focus on creating newer and more innovative opportunities for people to get involved in the financial market; however, this can severely harm confused customers who may not thoroughly understand what they are signing up for.
So, what should we do?
Just like in other social problems, the best move is to start with yourself!
There is a prevalent myth that to dive into the definitions, laws, and formulas filling the world of finance, you have to be a truly passionate aspiring economist. But have you ever felt severe pain in your back and not tried to dive into information from various sources explaining your ailments' potential reasons?
For the sake of your 'financial health' and the basic feeling of security, you should try to fully understand various processes taking place in the economy, the fundamental mechanisms behind the fiscal and monetary policy, the structure of the banking system, and the importance of investing.
But don't worry! There are some absorbing ways to gain that knowledge without spending hours reading extended definitions bursting with economic jargon. The best ways to truly engage in the financial world's secrets are videos and podcasts specially designed for developing financial intelligence among people.
Suppose you are looking for a fun and active way to acquire and retain that knowledge.
In that case, I could personally recommend the game "Cashflow" designed by Robert T. Kiyosaki; it can help you not only understand the process of managing your assets and liabilities but can be also helpful in building the ability to control your emotions.
Of course, we shall not forget about the systemic solutions that could be the cornerstone of the new financial knowledge era.
Introducing mandatory financial education lessons in schools across the globe could help thousands, if not millions, of people to avoid common mistakes related to managing their budgets properly or staying away from faulty decisions, which could lead them straight into the debt spiral.
Enriching the common knowledge of financial terms and processes can not only help to build wealth and financial security, but also improve the decision-making skills, long-term planning, and discipline, which is a necessity to achieve goals in all spheres of life.
If you already feel the desire to upgrade your financial literacy and financial intelligence, I would strongly recommend you to grab some of the classics related to its various aspects.
I especially recommend the works of Robert T. Kiyosaki, Napoleon Hill, T. Harv Eker, or Ramit Sethi.
Remember, in today's world, knowledge is our superpower! :)
Comments