In my book, “The Art of Wealth” I talk about FIQ, the Financial Intelligence Quotient. It is an indicator that I have created, that allows you to understand your financial intelligence.
That has nothing to do with your Intelligence Quotient (IQ).
You might be super intelligent, but have very low financial intelligence and vice versa.
Because of the fact that financial intelligence is based on education, convictions, peer groups, experience, environment and other emotional and behavioral components.
If you have not already done it, you can now download my ebook on financial freedom and take your FIQ test.
But in this article I want to go more indepth and talk about the 5 types of financial intelligence.
Because financial intelligence is focused in 5 areas which are all equally important. None of them is predominant, but together they contribute to your financial freedom.
Maybe you are only strong in some of these areas, perhaps in all 5, maybe none. Let’s look at them together.
Money Makes You Happy, is the book that teaches you to overcome your psychological limits on money and think how they think the rich
Financial Intelligence Type 1: make money
Many people have this type of financial intelligence, even those that are not financially free. A professional or an overpaid managers who earns 100,000 Euros per month knows how to make money.
But this factor alone is not enough to be financially free. Especially if they have low # 2 and # 3 Financial Intelligence.
Financial Intelligence Type 2: Protect your money
Especially if you earn a good salary, you must know that you have hundreds of people who want your money. From the state with taxes, financial advisers to different salespeople of kinds. You have to actively protect your money because if you do not, these people will take it from you, in one way or another.
Financial Intelligence No 2 is very important and undervalued, but remember one thing: it is not important how much you earn, but how much is left in your hand after you pay all your expenses.
Financial Intelligence Type 3: manage your budget
Managing a budget requires a lot of financial intelligence. Many people, even if they earn large sums manage a budget like poor people … spend everything they earn!
So a person who earns € 30,000 a year and spends $ 25,000 has an No 3 type of financial intelligence greater than a person who earns 100,000 a year and spends $ 110,000. Saving is not easy, but it is essential to be able to invest (just saving without investing is not smart).
Financial Intelligence Type 4: Use leverage on your money
Here we are already at a university of financial intelligence. When you understand and put into practice the leverage mechanism, anything is possible.
If you leave your money in the bank and nothing else, you are not using leverage, worst, you might eat up all your money with expenses and inflation. But if you invest your money and make it grow, then you begin to have Financial Intelligence n.4.
Another example: If you buy a property in cash, you are not using leverage, and your Financial Intelligence n.4. is very low, but If you put some of your money into buying the house and get the rest It from financing, then your financial intelligence increases because you use leverage.
Financial Intelligence type 5: increase your financial intelligence
The problem with type 4 Financial Intelligence is that you do not have enough type 5 Financial Intelligence, and then you have wrong ideas about how to invest or where to invest.
I could say that Financial Intelligence type 5 is the most important one. But you cannot devote yourself to develop type 5 if you have not worked before, at least a little on the other types.
In other words: the first step is a little practice, then the grammar, as my primary school teacher used to say.
You can even start from my books or my audio video courses. It is important that you make the leap in quality related to information about money. Because believe me, what we learn through the media and what you have learnt from your parents is wrong.
Working on these 5 types of Financial Intelligence and putting them into practice I am absolutely sure that you can achieve, and also in a relatively short time, your financial freedom. Nurture your financial intelligence, because that, for better or worse, controls your life.
To your financial freedom,