5 financial IQs as listed by Robert Kiyosaki -By Aisha Yesufu

According to wikipedia Financial literacy is the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.

Financial Intelligence is that part of our mental intelligence that is used to solve our financial problems. Financial IQ is the measure of financial intelligence 

Today we would be talking about 5 financial IQs as listed by Robert Kiyosaki 

1. Improving your financial information
2. Making more money
3. Protecting your money
4. Budgeting your money
5. Leveraging your money
6. Improving your financial information

Money is only one form of power. Financial education is where the real power lies. Today’s primary currency is information. Information unlike material resources is fluid. It can appear (be discovered or communicated) or it can disappear (become outdated) at any moment. Having the best information at the point of need requires network. The currency of networking is generosity. 

Many people believe it takes money to make you rich. This is not true. It is not gold stocks r real estate that make you rich. Its what yu of them and how you use then that makes you rich. It is your financial intelligence that makes you rich.

In 1971 there was a new rule for money. US took the dollar off the gold standard. Money became currency.

Currency is from the word current meaning movement. Your currency must be moving. If it stops moving it loses value. With the new rule for money savers becme losers and debtors became winners.

A currency ‘s use is to acquire assets either appreciating in value for producing cash flow.

A currency must move quickly to acquire real assets with REAL value because the currency itself is rapidly declining in value.

Many invest hard-earned money on assets and almost nothing on information so their financial scores remain the same-Robert Kiyosaki.

Regardless of what the economy stock or real estate are doing one can always get richer when one has the required financial IQ – Robert Kiyosaki 

Most important to note is that Financial IQ is learnt. 

2. Making more money

Financial IQ number two is making more money. The person who makes more money has a higher financial IQ number 2. If two people earn the same the one who pays less taxes legally has higher financial IQ. If they are both on the same level still the one who has higher ROI has higher IQ. 

It is not your employer’s duty to make you rich. It is what you do with your salary in your spare time that determines that. Doing work for your employer comes first. Finding time to manage your outside work is your responsibility. Concentrate on an industry that your present employer doesn’t service.

What ways can one work on to make more money? What do you love to do? What problem can you solve and earn money in return? What is It you can improve upon? What have you seen elsewhere that you can d where you are and in the process make money?

Earn active and passive income and use them to earn more money.

What is Active income? 

What is passive income?

Sources of Active income 

Business job

Sources of Pssive income

Rental properties 

Stocks and Shares

Royalties

Business ownership 

You can start a small home-based business, an Internet company or network marketing business. The key is to start small and learn everything about the business.

3. Protecting your money

The world is out to take your money. Not all who take your money are crooks. The government would take your money. Friends and family would take your money. Even you are out to take your money from you.

Find ways to legally pay less in taxes. Protect your money from inflation.

Protect your money from your spending habits. 

Don’t buy things you don’t need. Always do the needs or want test before buying anything. 

Don’t compete with others

Don’t try to impress others

Stop buying thing you don’t need to impress people you don’t like- Suzie Orman 

18-40-60 Rule 

Pay off your bad debts and don’t take more bad debts

Spend less than you earn 

Your ability to protect your money is financial IQ. 

4. Budgeting your money

Budgeting does not make you spend less. It makes you spend smart. Budgeting requires a lot of financial intelligence. Many earn a lot but fail to keep much money because they budget poorly. 

First in budgeting is to write down all your sources of income. 

Second is to make a list of all your expenses. 

Essential Expenses (Needs)

Discretionary Expenses (Wants)

Savings (Pay yourself first)

Savings requires us to not get things now so we can get bigger ones later- Jean Chatzky. Make savings a priority. Savings is the easiest way to accumulate wealth 

50:30:20 Rule 

60:20:20 Rule 

Keep your budget flexible 

5. Leveraging your money

After a person’s budget is surplus the next thing is to leverage the surplus money. Financial IQ number 5 is measured in ROI. A person who earns 50% on his money has a higher financial IQ than someone who earns 5%. 

How is your money working for you?

The worst kind of investment is cash.

Cash is a bad investment over time- Warren Buffett 

Savings help to be financially independent when invested in income yielding investments or investment that appreciate over time.

ICEPIF

Jim Rohn illustrated it by saying

To become financially independent you must turn part of your income into capital; turn capital into enterprise; turn enterprise into profit; turn profit into investment; and turn investment into financial independence.”

Financial leverage refers to the use of debt to acquire additional assets. 

Get into good debt. Use other Peoples money. 

There are two philosophies in life according to Jim Rohn 

“The philosophy of the rich versus the poor is this: The rich invest their money and spend what is left; the poor spend their money and invest what is left

The choice is not between success and failure, it’s between choosing risk and striving for greatness or risking nothing and being certain of mediocrity ‘ Keith Ferrazzi