If you’ve ever found yourself in a financial rut and staring down the barrel of debt, you know how important it is to be financially intelligent. But what does financial intelligence even mean? It’s not about having a high IQ or being able to balance your checkbook—it’s about understanding how money works and using that knowledge to make smart decisions. Here are some tips for how to become more financially intelligent:
Financial intelligence requires you to pay attention to details.
In order to develop financial intelligence, you must learn to pay attention to the details. This can be as simple as listening more carefully when someone is speaking with you, or looking at every word in a book or article. It’s also important that you ask yourself questions about what you are seeing, hearing and feeling—and then take steps toward answering those questions accordingly.
The following are some ways that you can improve your ability to pay attention:
Financial goals are important for financial intelligence.
Financial goals are important for financial intelligence. They help you to plan your finances, and they can be used as a benchmark for measuring your progress. Goals should be realistic, measurable, time-bound, attainable and specific under your control.
Financial intelligence needs accurate information.
The first step in building financial intelligence is to get accurate information. You need reliable figures to make good decisions about your money, so you can’t afford to ignore facts that could help you save or make more. That means reviewing all the financial data you have at your disposal and making sure it’s accurate and up-to-date.
First, it’s important to review your credit report (you get one free from each of the three credit agencies every year). You can check for errors or problems like late payments or unpaid bills; if there are any, correcting those issues will help ensure that any future lenders see an accurate picture of how well you manage money.
Next, take a look at your credit score—the number based on information from these reports used by lenders when deciding whether or not they want to do business with us. A high number tells potential creditors that we’re financially responsible; a low one means we might be less likely
to pay back loans on time—or even close accounts without paying off what’s owed first!
Financial intelligence means saving for the future.
Saving for the future is an important part of financial intelligence. You can’t plan for retirement, save for a rainy day, or save for education if you don’t have any money to work with. Saving money is also important because it means that you can buy things in the future without having to borrow or wait until your next salary check comes through.
Here’s how much money you should start saving at different ages:
- At 20 years old: $20/month
- At 25 years old: $50/month
- At 30 years old: $100/month
- At 35 years old: $200/month
The first step toward financial independence is knowing what you own and what you owe.
The first step toward financial independence is knowing what you own and what you owe. In order to get a handle on your finances, start tracking them in an Excel or Google Docs spreadsheet. Tracking your expenses will help identify spending habits that can be modified to save money. And tracking investments will show how much money is coming in through interest, dividends and capital gains (or losses).
Once you have a better understanding of where all of your money goes each month, it becomes easier to make changes that put more cash into savings accounts or investment portfolios. The key is patience: the sooner you start saving, the more time compound interest has to work its magic on behalf of your future self.
Financial intelligence is about balance.
Financial intelligence is about balance.
It’s about your ability to understand and manage the trade-offs between short-term goals and long-term ones, between risk and reward, between immediate rewards and long-term consequences. It’s also about knowing when you are in control of a situation, as opposed to being controlled by it (as most of us are).
Financial intelligence requires self-discipline.
A core component of financial intelligence is self-discipline. It is the ability to stick with a plan and stay focused on your goals in the face of temptation or distraction. Saying no to yourself is not easy, but it’s necessary if you want to achieve your financial goals.
Self-discipline means saying no when others ask you for money or favors—even when those requests come from close friends and family members. It means sticking to your budget even when there are unplanned expenses like car repairs, an illness in the family, or an unexpected property tax bill that comes due at tax time, according to Crypto Boom.
Self-discipline means being able to say no even though it might be easier just to spend more than what’s already been budgeted for that month on entertainment expenses (like going out for dinner), clothing purchases (like new boots), or other temptations that may lead down dangerous paths leading away from success in saving and investing money wisely
Conclusion
In the end, financial intelligence is about making smart decisions about your money. It requires you to pay attention to details, set realistic goals and make plans for their attainment, and balance short-term needs with long-term aspirations. The more you know about what you own and owe, the better positioned you will be to achieve these ends. Financial intelligence is like any other kind of intelligence: it takes practice!