Is there really any financial intelligence

What is Financial Intelligence?

Dear readers!

The first year of our blog Financial Intelligence is over. I hope you have received helpful suggestions and ideas on how to be smarter with your money. I want to use today's article to point out the essentials of financial intelligence. Get to know the six essential areas for your financial prosperity.

The Definition of Financial Intelligence - What It Means and What I Need It For:

Financial intelligence is the ability to build wealth from which one can live sustainably so that one no longer has to go to work. So financial intelligence strives for financial freedom!

Wealth and financial freedom can only be built if the following factors are present or taken into account:

Career intelligence - build a career and increase your income!

Most people start with little or no capital. The only way to get money now is that you earn money with your work. However, if you only work to have enough to live on, then you will not be able to build up capital from which you can live once. For this reason, it is of great importance for you to find exactly the professional area that you enjoy a lot and in which you have skills that you can develop and that are also required by the market. This is career intelligence. All self-made millionaires have developed extraordinary skills in their professional fields and have consistently expanded them. If you are good you can make more money. And high or increasing incomes are an important prerequisite for building prosperity.

Savings intelligence - always spend less than you earn!

No one in the world can build wealth if he has no savings intelligence. The old business adage “spend less than you take in” has unfortunately been very much forgotten in today's consumer world. Our grandparents still had values ​​such as frugality, hard work and thrift. They rebuilt Europe with precisely these characteristics after World War II and made it possible for us to achieve a certain degree of prosperity. These values ​​are no longer in vogue. Rather, it is now about self-realization, which is primarily sought through consumption and quick pleasure satisfaction. Unfortunately for all of us, the best example of this is the state. Almost all countries in Europe have been spending more money than they are taking in for decades. That cannot go well in the long term. In general: As a student, set aside 10% of your income. When you start a full-time job, two thirds of your income will be used for living and one third will be saved. With every new increase in income, you put 50% aside. This is how you can build wealth!

Investment intelligence - no wealth without investing or investing!

The masses play it safe when it comes to money matters. Generations of people save in building society savings, guaranteed interest products or with savings accounts. Are the masses wealthy? No she is not. Unfortunately, only 2-5% of citizens live in families that can describe themselves as financially intelligent. You have managed to build up a knowledge of money that is passed on from generation to generation. These family members would no longer have to work because they are financially free. The income from your investments is higher than your expenses. Most of the time, however, work is done very intensively in the interests of career intelligence. Now the crucial question: do these families save primarily through building society savers and the like? Nothing. These families have built up assets in a very targeted way, such as stocks, bonds, real estate, raw materials, business investments, etc. - all investments that are not sure of death, but generate much higher returns over a long period of time (usually several decades). The aim is to at least maintain the value after deducting taxes, costs and inflation or to generate real increases in value. The main difference is: Wealth builders think long-term, learn to deal with risk - i.e. fluctuations in value. They invest early and spread their investments very widely.

Security intelligence: also take the worst-case scenario into account

As risk-averse as the average is when it comes to its finances, it is reckless when it comes to the real worst-case variants. Which partly irreversible catastrophe scenarios are there on your way to financial freedom? Let's take another step back. The first area of ​​financial intelligence is career skills in order to gradually expand your own income situation. What could get in your way in the long run? Physical ailments, psychological problems, invadility, in short: occupational disability. Many people have fully comprehensive insurance for their car. So if the car is totaled, it is fully insured. But what if you have a total write-off? Can your family take care of you well into old age? Or do you have to take care of it yourself? Most people just ignore this question. “That doesn't happen to me!” - A look at the statistics is enough. Every third Austrian and also German becomes incapable of working at least temporarily at some point in their working life. Many young families also take an above-average risk because two-thirds and more often depend on the young father's income. But what if something happens to him? The most relevant worst-case cases are occupational disability, chronic illnesses and the associated extremely high costs for doctors, treatment and medication, death (do you mean death? Then rather write death, not death). You should also plan for pension insurance if you were not financially intelligent enough by the age of 65. The state pension will turn out to be very low and may only be a guarantee of livelihood. However, in order to be able to maintain a certain standard of living, adequate pension provision is required.

In addition to these four main factors (career, savings, investment, security) of financial intelligence, there are two other secondary factors that contribute significantly to the overall success of your wealth development.

Future outlook: Open up to new things!

Why is it basically so difficult for us to make a decision? Because the consequence of our decisions lies in the future, which is known to be uncertain and new. And we humans have always been afraid of the new and the unknown. Still, we have to learn to deal with it. If we don't learn that, the others will make decisions for us. And who would want to lead an incapacitated life? The only way to be fit for the future is to be curious and open to new developments. Find sources of information that will feed you new knowledge and learn from. These can be high-quality media, intelligent people, etc. With their help, you can sharpen your vision for the future, recognize trends and developments at an early stage and ultimately make better decisions.

Self-management: work on yourself!

Essential characteristics of self-management are: Discipline, constancy, will and commitment. All of the factors mentioned so far - career, savings, investment, security intelligence and perspective on the future - are worthless if you do not have a certain degree of self-management. Only those who can set goals for themselves and pursue them in a focused manner can achieve financial freedom. Most people fail at this point. I got to know the only way to increase the likelihood of your long-term success in sports. No top athlete would ever think of tackling his goals without a coach. A good trainer, coach or consultant will help you stick to your goals, get you out of your comfort zone, exploit your full potential and ultimately improve your performance. Why do without it? What rounds off self-management skills is the ability to unite the right people around you. This starts with the selection of the right life partner, friends, business partners, superiors, mentors and goes on to the right advisors, such as tax and financial advisors, doctors and so on.

Finally, I wish you all a healthy, fun and financially intelligent 2016!

Tip: Use your energy and start the year financially smart. Come and play the cash flow game on January 26th at 7:00 p.m. with other interested people. There you will learn to playfully improve your financial skills. Sign up here!