Do you have it? And if not, how can you get it?
Cultivating financial intelligence is the best way to transform one’s situation in terms of money. I decided to introduce this very important topic with an example illustrating how to understand financial intelligence.
Understanding financial intelligence
The aim of this example is to help you understand how financial intelligence skills operate the same throughout time. Let’s travel back to England in the 1800s when the Industrial Revolution brought the first concentrations of capital into the hands of private individuals. This is when industrial capitalism began and the first economic studies began. At that time, it was a doctrine that was connected more with philosophy than with mathematics.
Slowly, those “laws” that show how the accumulation of capital happens were studied and, in this context, Vilfredo Pareto, an economist put forward his celebrated law, which is:
“Let’s divide wealth in equal parts and distribute it amongst all citizens, and see how in a short amount of time, the money will return to the hands of the people who have it now”.
Following up on this economic theory in the present day, if we distribute 10.000 euro to 1.000 individuals according to the Pareto law, it is probable that in one year the following situation will occur:
- 80% will possess an amount equal to zero or lower than the initial capital;
- 16% will cover inflation and will be able to refund about 10.300 euro;
- 4% will have made the capital work for them and will have earned more than 100.000 euro
- 0.8% will have more than one million euro.
Why do people who are placed in the same situation achieve such different results? What causes this difference in success? The difference between these results is due to the ability to utilize financial intelligence.
Financial intelligence: obtain it or lose
I have given you different examples both of the past and of the present to make you understand how determining economic factors don’t have a time frame, they do not derive from a particular historical or political context. In certain aspects, things have not changed much since England in the 1800s to the Silicon Valley in the 1990s!
The winning factor when we speak about financial freedom is to develop an education concerning money, that allows you to learn to create, manage and protect your capital.
Financial intelligence puts into play every one of the things that I have cited: every one of them, from the necessity of new strategies to the knowledge of new abilities.
Where does financial intelligence start from?
A good way to build and develop your financial intelligence is to begin with understanding at which point you are at now. In my book, The Art Of Wealth, I have created a specific quiz to help you. You can download it below, filling in the form with your personal information.