10 Proven Ways to Improve Your Financial IQ

vemuda.com - Let’s be honest: it’s just a matter of time before the world crumbles down on the few who have never thought about dealing with their finances. However, with a few tweaks here and there, and knowledge on financial matters, you can prevent this from happening. Therefore, in this post, I’ll be talking about how you can improve your financial intelligence. So, without any further ado, let’s get into it.

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10. Read personal finance books

Knowledge is power and what better place to  acquire your knowledge from than books? Hit up the local library, buy them off of Amazon or download Audible. We live in a world where you can access information at the drop of a hat. Rich Dad, Poor Dad by Robert Kiyosaki, The Automated Millionaire by David Bach and The Total Money Makeover by David Ramsey are some starting points.

The list of books is endless. Economic magazines and newspapers filled with current affairs will also benefit you. The  current market is competitive, making it more necessary than ever to stand out. Building your knowledge day-by-day will help boost your career.

9. Track your net worth

‘Net worth’ almost feels like a buzzword that gets thrown around. What does it actually mean? When you add up your assets and subtract them from them your liabilities, you are left with your net worth.

This is one of the most important things you need to keep your eye on. Track it in journals or phone apps that can automatically do the maths for you. The end goal is to regularly know what your net worth is and how you can continuously grow it.

8. Track your spending

Spending your money has always been a  necessary evil. I'm sure you wish your  money would just stay the same and you'd have nothing to worry about. That’s impossible, but you can start by doing things differently by knowing how much you spent where.

Sometimes it might be hard to remember all the details of what you spent on. That’s why I’d suggest that you first get yourself a journal where you’ll write down how much you spent on food, clothes, your house rent, or anything else you spent  on.

The key is to note down what you spend on immediately. If you do this every day, you’ll  know how much you really spend monthly. Once you’re certain with this, it’s then that you can start cutting all the unnecessary spending so that you save more.

In fact, when you see what you have spent on paper, it’ll be easy to tell what wasn’t necessary at that moment, and you’ll probably do better next time. 

A great free app to track your spending on your phone, which I personally use is called Money Manager Expense & Budget. It’s free, and a great app to use.

7. Make an appointment with a financial advisor

Working on your financial planning when you know almost nothing is quite overwhelming. This is why I suggest contacting a financial advisor. When you’re an amateur, there’s only so much you can comprehend from books; a financial advisor will give you clear outline of what you should be doing to meet your goals. Think of them as your mentors and guides on the journey towards financial freedom.

6. Invest in yourself

There are many classes you can enrol into so you can improve your skills. Be it online or in person, free or paid, there are so many  options to pick from. Having a first-hand experience with financial skills backed up by a certificate can help boost your confidence as well as your financial IQ. 

This is also a great way to boost your CV. You can boast all you want about how many financial books you’ve read, but it will never compete with a physical certificate to prove your skills. This will subsequently help you land a higher-paying  job giving you more money to play around with.

5. Network

Your network is your net worth. This is a mantra I’d suggest you adopt. With how competitive today’s world is, the harsh truth is that knowing the right people will get you farther than your degrees alone.

Sign up to sites like Eventbrite and see what events are happening around you, buy a ticket and go mingle! This isn’t just about how others can benefit you, it’s also about how much you can learn.

I’m sure you’ve been told to learn from others’ mistakes – well, what better way than to  sit down and listen to them! Go to people who have your dream life, dream financial  situation, or desired job and ask them to teach you their ways. If you make a great  impression on them, chances are they’ll put in a good word for you.

Being connected to people in real life is just as (if not more) important as how many Instagram followers you have. So, talk to people and connect.

4. Take a loan only when absolutely necessary

While it’s amazing to see just how easy shopping has become these days, it’s also scary to think about how easily people can go into financial  ruin. This is all thanks to loans.

To have good financial health, one must avoid debt at all costs (no pun intended), and taking out loans is exactly the opposite of that. Only take out loans when absolutely necessary, such as for a house. It’s common knowledge that when you take loans, you’ll have to end up paying double, sometimes triple, the amount you originally took out. One needn’t be a rocket scientist to see that this isn’t financially healthy.

Remember: we are trying to make sure we have more assets than liabilities, and debt falls into the latter category. So, avoid it as much as you can, and only get into debt when you’re absolutely sure you can pay it back. This especially goes for credit cards.

3. Focus on what you can control

You can’t control the weather, you  can’t control the stock market, and you can’t control how much you get  paid (unless you get a promotion). So, don’t worry about things like that. You can, however, control when you invest. You can control the budgeting of however much you get paid, and how much you spend. So focus on that.

Cut back on impulsive buys, live below your means, and invest in your skills so you can get a  higher-paying job. Focus on what you can control, and you’ll start to notice how your bank balance  grows, and your mental health stays stable.

2. Invest

Budgeting is a great start for everyone wishing to save some amount for a rainy day. As much as it’s good to save, it’s unfortunate that it’s not all you need to boost your financial IQ.  

You also need to invest in different areas of  business. You can invest in the stock market, real estate, fixed deposits, currencies, you name it. The list is endless. When you do any of this, it’ll be easier to be familiar with the different financial aspects that you weren’t aware of.

But before you do all this, you also need to know the advantages and limitations of the market you’re about to be fixated on because you don’t want to lose all your investment if things go south. It’s common for the market to change abruptly, so the best way is to know what you’re  dealing with and how to counterattack it.

1. Put your knowledge to the test

Reading financial books, tracking your net worth and spending, or all the things I’ve just told you aren’t enough to get your financial IQ up. In fact, if I’m being perfectly honest, all of this is just theoretical.

You have to test what you know because it’s only then that you’ll know that you’ve elevated from your previous point or not. If you’ve decided to track your spending, then you'd better make sure that you put it down on paper every time you spend.

If you’ve decided to invest in yourself, then you have to make sure that you put that  knowledge to good use after reaching your goal.

Improving your financial IQ won’t work  if you put it all in your head and hope that it’ll work. You also have to be practical with it, and trust me, you will get your desired results.

If you’re doing any of these, it means you’re  on the right track, which you need to stick to. Finances sometimes appear intimidating. These include hesitating to seek clarification, skipping over essential measurements, or making choices without taking into account their potential financial ramifications. That’s normal for everyone, but you should try and view it from a different angle.

In reality, this can mean making clear the financial priorities associated with your job, taking an active interest in knowing the financial outcomes you produce, and using that  information to change your financial strategy  as necessary.

If you begin to take account of everything involving your finances, I bet you will have a better understanding of how things work.

That’s all we have for you today, I hope  you guys enjoyed the post. Don’t forget your free budgeting and savings guide. With that said, have a great day and I’ll see you in the next one.