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Develop Your Financial IQ
Chapter #1:
Foundation in Financial IQ
Definition Of Insanity
Naturally, most if
not all of us want and crave for
something better. It is all part of us
if we want a bigger car, a better house,
buying good things for the family. We
keep hoping for more but, in order to
get what you don’t have, you have got to
do something you have never done
before.
That simply means:
Doing the same thing
over and over again YET expecting
different results!
As an employee, you
can’t stay at the same job forever and
hope that a miracle will happen and your
boss will suddenly give you a raise. You
will be lucky that there is no
downsizing in your company. Switching to
another company will only provide a
short term solution to a long term
problem.
Sure, you can take up
a second or even third job, but do you
have enough hours and stamina in a day
to sustain it?
The bottom-line:
Trading time for money isn’t wise
financial sense in the long term. You
keep on increasing the hours just to win
the rat race, but in the end of the day,
you are still a rat on the mill!
Increasing your wages
only puts you in a higher tax bracket.
Your salaries increase but so does your
expenses on your house and car. How will
you invest in yourself when all the time
you spend working for a company, working
for the government paying taxes and
working for the bank paying off your
house and car? What if you fall sick and
can’t work tomorrow? Will the government
take care of your family?
I highly doubt so.
So isn’t it time you
take your finances a tad more
seriously?
What Is
Money?
You see, there are
many ideas of what people think money
is.
Some say it is a
form of measurement.
Yes, but a
measurement of what? Wealth? In the
olden days, people measured wealth by
how many cows, sheep and horses they
had. But do people measure wealth today
by your cows and horses? How about
slaves? Was there a time where manpower
is considered a hot commodity? Are
slaves worth anything today? Are your
dollar bills sitting in the bank going
to protect you if a recession strikes
the country? No, wealth can not be
measured by the dollar bill.
Some say it is a
form of power.
Yes, money can give
you power, but if you are stuck on a
desert island forever with a trillion
dollars, will that money mean squat to
you? If someone offered you water and a
helicopter to fly out of there, you
would trade all your money in a split
second, so money is not an accurate
measurement of power – it heavily
depends on how and wisely you use it (hint!).
Many believe it
is the root of all evil… and several
others take on this belief without much
questioning.
Now, now, now… money
is NOT the root of all
evil (otherwise, why do you think
churches still accept monetary donation
and charity?). The love of money
is the root of all evil. Remember, money
is an excellent servant but a terrible
master. If you are trading your life
away for the dollar, money then has
power over your time and life.
And unless you have
proper financial intelligence, the lack
of money can spawn a lot of evil
thinking and negative mindset as
observed in primarily cheats, thieves,
criminals, breakups, freeloaders,
cheapskates, and more to name.
But what is money,
really?
Money is an idea,
backed by confidence.
While money has
naturally been developed by merchants in
the older days to replace the
questionable barter system, money today
is literally invented by the rich and
wealthy.
Entrepreneurs are
willing to part with their money to buy
other people’s time. Other people’s time
i.e. employees and self-employed
people becomes their employer’s
asset and the employers this priceless
resource to go on to create more wealth
for themselves.
And here’s the thing:
as long as you work for money, you
are enslaved by it!
80% - 90%
of the populations today are being
enslaved involuntarily.
What we don’t realize
is that there is a part of our soul that
cannot be bought at whatever price.
Would you chop off your little finger if
your boss offered you 24 months of your
salary immediately? You and I know we
are worth more than that. But when you
hear of cases of people selling their
body parts for cash in some countries,
we can have our eyeballs pop out of our
eye sockets.
On the other hand, we
occasionally DO sell out a part of
ourselves for money like a donkey and a
carrot.
Awareness
Before Change
Now don’t get me
wrong: I’m not banging on working at
a job (I worked at one before I became
an Internet Entrepreneur).
But let’s face it:
our needs today are growing more than
ever before in any period of history.
Prices go up, salaries don’t. There are
more baby boomers than ever and have
very little pension to show for their
decades of years of work efforts.
And there is no
guessing to how many people really,
really hate the unhealthy, hectic
lifestyle of getting up early, coping
with stress for most parts of the day,
join traffic jams, spend more money and
time in traveling, enjoy very little
rest, and repeat the viscous
cycle.
Definitely doesn’t
paint a nice financial and lifestyle
picture, huh?
The first step to
change is to be aware of the problem.
Awareness before change (or ABC
for short) is necessary if you are to
make any changes in life to start taking
control of your financial life and then
get out of the rat race.
We need the awareness
to know what state we are in so we know
where we are going. For starters,
indulge me in a quick exercise as we
exit this chapter shortly:
Time And
Money
There are generally 4
types of people in the world:
(1)
No time,
and no money.
Most employees fall
into the category. You can’t go shopping
on a Tuesday afternoon or fire your boss
whenever you like. Most employees can’t
even save money in their pension to last
3 years!
(2)
No time,
lots of money.
Self-employed,
professionals and small business owners
are in this category. They are slightly
better off than the employee because
they earn more, but they have to work
even harder than employees to keep up
with the diminishing profit margins,
competition and servicing their
customers.
(3)
Got time,
no money.
A lot of farmers,
villagers, college dropouts or bums have
lots of time but no money. Maybe
ignorance is bliss, but without a stable
source of income, how long can you last
many days forward?
(4)
Got time,
and lots of money.
It is the category
that big business owners, landlords,
investors are in. Imagine, not having to
work for money, but having money to work
for you by investing them and earning
profits by using your money to make
money.
Short Quiz
1 Which one of the four categories
are you currently in?
2 Which one category do you desire
to be in tomorrow?
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