Financial Intelligence - Part I
1. What is the essence of Financial Intelligence?
Simply put, FI is about living within your means. Sounds simple, doesn’t it? Unfortunately, something that is common sense seems quite uncommon these days.
FI is a prerequisite before you start deciding to invest. Why? Put simply, if you don’t have any money, what are you going to use to start to invest? You could borrow money from the bank or loan sharks to do so. However, I wouldn’t call that investing. That’s more like gambling.
2. Why should I learn it? How do I begin?
Let me ask you some questions first:
· Are you living in debt?
· Are you spending more than you are earning?
· Are you just barely making enough to eke out a living?
· Do you have nightmares when it comes to looking at your finances?
· Can you afford to retire when you reach retirement age? And if you can’t, have you decided what you are going to do about it?
· Do you come to work in a job that you hate but can’t afford to quit because of all your commitments?
If your answers to any of the above if YES, you better start thinking NOW! Money is not going to drop out of the sky. And how are you going to improve your finances? Well, by using Financial Intelligence!
How do you begin? Simple… read on. There are a lot of good books out there. Unfortunately, most of us have neither the patience nor time to read them all. So, I’ll distill the principles from these books. The main obstacle in practicing Financial Intelligence will be SELF DISCIPLINE. It’s either enjoy now and suffer later. Or discipline yourself now and enjoy later. You decide!
3. How much time do I need to spend?
I have a simple answer. Every MINUTE of your life! That’s right, you are going to have to spend every minute of your life being financially intelligent.
4. How is it going to help me achieve my goals in life?
You heard the adage “Money Makes the World Go Round!” Money can also help you achieve your goals, whether it’s to be financially independent, go travelling or saving enough for your retirement fund.
5. What’s the best book on Financial Intelligence?
IMHO, it’s “Your Money or Your Life” by Joe Dominguez and Vicky Robin. If you have time, please buy the book and read it. Trust me; it’s one of the best investments you can make.
Simply put, FI is about living within your means. Sounds simple, doesn’t it? Unfortunately, something that is common sense seems quite uncommon these days.
FI is a prerequisite before you start deciding to invest. Why? Put simply, if you don’t have any money, what are you going to use to start to invest? You could borrow money from the bank or loan sharks to do so. However, I wouldn’t call that investing. That’s more like gambling.
2. Why should I learn it? How do I begin?
Let me ask you some questions first:
· Are you living in debt?
· Are you spending more than you are earning?
· Are you just barely making enough to eke out a living?
· Do you have nightmares when it comes to looking at your finances?
· Can you afford to retire when you reach retirement age? And if you can’t, have you decided what you are going to do about it?
· Do you come to work in a job that you hate but can’t afford to quit because of all your commitments?
If your answers to any of the above if YES, you better start thinking NOW! Money is not going to drop out of the sky. And how are you going to improve your finances? Well, by using Financial Intelligence!
How do you begin? Simple… read on. There are a lot of good books out there. Unfortunately, most of us have neither the patience nor time to read them all. So, I’ll distill the principles from these books. The main obstacle in practicing Financial Intelligence will be SELF DISCIPLINE. It’s either enjoy now and suffer later. Or discipline yourself now and enjoy later. You decide!
3. How much time do I need to spend?
I have a simple answer. Every MINUTE of your life! That’s right, you are going to have to spend every minute of your life being financially intelligent.
4. How is it going to help me achieve my goals in life?
You heard the adage “Money Makes the World Go Round!” Money can also help you achieve your goals, whether it’s to be financially independent, go travelling or saving enough for your retirement fund.
5. What’s the best book on Financial Intelligence?
IMHO, it’s “Your Money or Your Life” by Joe Dominguez and Vicky Robin. If you have time, please buy the book and read it. Trust me; it’s one of the best investments you can make.
AH SHUCKS! I DON'T WANT TO BE A MISER [OR A SCROOGE!]
I know what some of you are thinking [see above]. So let me make one thing clear. Financial Intelligence is not about looking at one side of the equation (i.e. scrimping and saving money and being a scrooge generally!)
There are always two sides to the equation:
1. Cash Inflow
2. Cash Outflow
Most of the time, Financial Intelligence seems to be very limiting in the sense that FI is telling you that you can’t spend on the things you want or on the things your wife, children or family want. Well, don’t look at it that way.
FI is only telling you – live within your means. If going on a trip to Europe is so important to you, think about how you can earn more money. Whether it’s getting a part-time job or selling insurance, you decide!
After all, someone wise once told me
“It’s good to have an employee that can help me save a couple of cents, but I would rather have one that can help me earn the dollar!”
Same goes for your personal life. It’s good to save a thousand bucks by buying a less sexy handphone! But it’s better to be earning an extra five thousand bucks a month doing a part time job. Hey, then you can afford those gadgets you want to buy! But don't spend more than what you can earn! [i.e. like buying a Ferrari just because you are making five thousand bucks more a month!]
So are you ready to begin your life-long course on Financial Intelligence? If so, wait for my next post.
I have a great fairy tale that I must share with you (shh…I heard from my fairy god mother, so it must be true). And what has a fairy tale got to do with Financial Intelligence, you ask? Well, stay tuned and find out!
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