Financial intelligence: what is it and how to develop it?

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Financial intelligence: what is it and how to develop it?

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Making good decisions in personal finances is what makes the difference between living in the red and taking control of what you earn and what you spend. However, for this to happen it is essential to have financial intelligence.

Acting intelligently with your own money it is possible to organize yourself thinking about a more prosperous future. This means that with financial intelligence you make money work for you.

Since, when you have financial intelligence, all expenditures and savings are made in a balanced way, without excesses.

One research conducted by “GuiaInvest” showed that 87.4% of people who have financial planning admit that they live well, while only 18% of those who do not plan have good financial results.

Therefore, we can see how important it is to develop financial intelligence to be able to align your goals, objectives and investments assertively.

But how to achieve financial intelligence and what are the main advantages of this skill? In this article we will answer these questions to help you prepare better to manage your finances.

So, go ahead and have a good reading!

What is financial intelligence?

Financial intelligence can be described as an ability to manage one's finances. It makes it possible to be more assertive in controlling your own money.

That is, the person who has this ability starts to spend more responsibly and starts to give due value to their money. Avoiding excessive, superfluous expenses that compromise the personal and family monthly budget.

In addition, those who develop financial intelligence are more likely to make assertive spending, savings and investment decisions. The relationship with money becomes more sensible, balanced and much more is thought about the future and the construction of wealth.

The secret of the concept around financial intelligence is that regardless of how much you earn, it is possible for a person to be smart, financially speaking.

After all, what is at stake is how much you are able to make your money pay and achieve your goals and objectives through it.

What are the advantages of developing this skill?

Developing financial intelligence throughout your routine can be the crucial point for you to be able to build wealth. But not only that, it is an important part for you to get rid of financial stress and start giving more value to your assets.

We have selected below some of the main advantages of developing financial intelligence.

  • Easy to control earnings and expenses;
  • Potential to invest assertively;
  • Decrease in financial stress;
  • Greater management of money to achieve goals and objectives;
  • Wealth building;

Next, we'll talk a little more about how to develop financial intelligence and the impacts it will have on the control of your finances.

Tips for achieving financial intelligence

Is it possible to develop financial intelligence? If I don't have it, can I have it? The answer is yes! With dedication it is possible to develop this skill and use it in favor of managing your finances.

However, it is important to follow some tips to develop this skill, know some of them below.

Control your spending

Financial intelligence is closely linked to spending control. This is because those who spend without prior planning end up compromising the possibilities of spending their money responsibly.

So, one of the tips for developing financial intelligence is have a macro view of what you earn and what you spend. If there is balance in this sense, it is a sign that you have been acting intelligently in the use of your money.

Therefore, perform a thorough analysis of your finances and align with your goals and objectives. Never spend more than you earn, review your spending and take a step to change your habits.

Set goals and objectives for your money

Establish goals and objectives short and long term is what contributes to people being able to act with financial intelligence on a daily basis. When you have goals, it’s easier to focus on something, and mainly to motivate themselves so that the objectives are achieved.

For example, you have defined the purchase of an apartment as your life goal in the next 5 years, for sure, from this project, it is easier to build a plan to achieve it.

Not to mention that this way, your mind will work around that goal which consequently will save you more, spend with greater responsibility, so that your goal is reached.

Escape superfluous spending

Financial intelligence agrees with the use of money responsibly, this means that superfluous expenses must be cut. Superfluous expenditures are “non-essential” expenditures.

You could survive without a streaming service, right? Or could you not rethink that expensive TV package, but that you practically don't watch all the channels? Is there a need to have lunch or dinner every day?

To cut these expenses is to act intelligently in controlling your own money. Since they are not indispensable for their survival and a cut can be of great value to their savings.

Invest your money

Another important tip for those who want to act with financial intelligence is to invest the money in the right way. Leaving your earnings on the account is synonymous with “losing money”.

Therefore, it is important to act wisely in this direction and seek ways for your money to yield.

Look for the best forms of investment in the market (Social Security, Direct Treasury, LCI / LCA, stocks), analyze the risks and especially know your investor profile (conservative, moderate, bold).

Change your financial habits

The change of habit is a fundamental step for those who aspire to have financial intelligence. This means that you must reflect on what most compromises your budget in the month.

If your Achilles' heel is your credit card, avoid using it, or at least reduce your expenses by choosing to pay things in debt. Give up making unnecessary purchases and impose limits on yourself.

Determine a value to save monthly and another to spend, so it is easier to avoid overeating.

Save money

“Received and saved”, this is the best and wisest action of financial intelligence for those who want to have greater control over their finances. The ideal is to set a value to save every month and as soon as you receive your salary already apply that money.

According to the research Portraits of the UK residents Society, carried out by IBGE, 59% of UK citizens admit that they want to save more in 2021.

However, to achieve this goal it is important to have discipline and start with a value that is within your means.

Have an emergency reserve

To act with financial intelligence is also to be prepared for unforeseen events. The saying goes that cautious people live longer. Bringing it to the context of financial intelligence, those who develop this skill suffer less.

This occurs because the cautious person recognizes that unforeseen circumstances are possible, such as a financial crisis, job loss and so on. So he always has a emergency reserve style=”font-weight: 400;”>, should an expense appear unexpected.

So, as difficult as it may be, begin to reflect on these bad unforeseen events that may occur in your life.

So, if one of them comes along, you will be prepared to face it and you will not declare your finances bankrupt, as you will have something, like an emergency reserve, to support you for a period.

Study on the topic

To develop any kind of skill it is essential to be based on something, with financial intelligence it is no different. So, a tip to develop it is to study the subject to increase the knowledge on the subject.

Whether reading books or magazines about personal finance, participating in workshops, lectures, courses, in person or online, and watching videos on Youtube with people who are references in the subject.

Look for tips related to budgeting, how to invest, debt payments and others. In our blog we already gave reading tips on financial management, Click here and check out 10 nominations.

Value your money!

Being able to give your money due value requires organization, commitment and financial intelligence. Throughout this article we have shown the importance of financial intelligence for you to be the dominant over money and not the other way around.

This is because those who live in the red, working only to pay bills, are certainly doing something wrong. What is worse is that this concern creates a great deal of financial stress, affecting the health of the person in question.

One ISMA-BR research (International Stress Management Association in Brazil), showed that 78% of UK citizens put financial uncertainty as the main cause of everyday concerns and anxieties.

This high number is a reflection of people who do not use financial intelligence to manage their money. However, if you are within that number, know that it is possible to reduce financial stress and conduct your finances more assertively.

Just take the first step, following some of the tips we gave in this text, to achieve a greater balance between what you earn and what you spend.

Starting from this premise and respecting it, you can in fact say that you are acting with financial intelligence in relation to your finances, and consequently, you will be developing a skill that will be of great value in managing your money in the present and the future.

Did you like our article? So, share on social networks and help your friends and family to develop this very important skill to live in a balanced way in relation to finances.

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