Monday, 13 April 2009

Smart Money

Today we are going to take a break from our ten step program. Today I want to talk about your financial intelligence, and how important it is to raise your knowledge about money. The more you know and understand about money the more likely you are to become rich.

As a school teacher I believe that a good education is fundamental to being successful in life. However, I do not believe that a formal based education such as school and university is the only education a person needs to be successful. People need to have an education in finance and creating wealth.

The reason this is not taught in schools and universities is because students need to learn more important aspects of life such as English and maths. Your education in financial intelligence has to take place outside of these institutions and it is something that you are responsible for.

What is financial intelligence? I’m glad you asked. It’s not just about raising your knowledge about money, but gaining an understanding of how money works and how you can get money working for you through saving and investing.

You see one of the biggest problems people have is that they over spend. Most people live on 110% of the wages. That means they spend it all and then use credit cards. The main reason that this happens is because they have very little idea about where they are spending their money and how much they are spending.

A sad fact of life is most people do not keep a budget. They don't plan their expenses and just spend spend spend. If big businesses took this sort of action they would be broke. So you need to learn how to control your finances and the use of a budget is the best way to go about it.

Once you are in control you can then see what your money is being wasted on and where you can cut back in spending. Then you should have some money left over at the end of the week and you can stop living on credit. Then you have a choice either to invest that money or start paying off your debts.

Financial education is also about learning about investing. You will not be rich through saving money alone. You need to find an area to invest in. The main choices for most people are housing and shares. Both have their upside and both have a down side.

To be successful in investing you need to study as much information about your chosen area as possible. If you going in with only a limited idea of what you are doing then you will not succeed. So you need to buy books, and attend seminars about housing or shares and read them thoroughly before you start.

Let’s recap. You need a good education to be successful in life, and to have lots of money you need to build your financial intelligence. This includes learning how to budget and learning how to invest.

If you do not do learn how to save money you will never be rich. You will simply keep on spending it and never have any money to invest. If you don’t invest your money then you will never have you money working for you earning you more money. This is the basis of financial intelligence.

The best book I can recommend in starting your education in financial intelligence is Robert Kyosaki’s book Rich Dad, Poor Dad. It will challenge what you believe about money and help open your eyes to a wider world.

That's all this week. I’ll be back next week with step 6.

Terrence Shadwell

P.S. Don’t forget the web page www.livingyourdreams.webcitypro.com . I have posted up my book The Internet, eBay and Motivation (only $1). A great tool for learning how to make easy money on line, plus the free members’ page is now open with a free budget planner to help you get your finances sorted out. Plus the book Rich Dad, Poor Dad is available through our bookstore.

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