Financial intelligence or economic intelligence, as the best emerging way to earn and succeed in business, is the ability to understand the principles of finance and accounting in the business world and to acquire knowledge and skills in this field and apply it to achieve success.
Financial intelligence means knowing the ins and outs of a financial situation. This financial position can be an individual or a large organizational strategy. Every decision an organization makes affects its finances, so understanding the principles of accounting and applying smart solutions that reduce business risks, increase profitability, and reduce unnecessary costs.
Financial intelligence is an acquired skill and having experience, knowledge, and applying it in the real world are valuable assets. The set of skills needed to have financial or economic intelligence is very wide, but it must be said that financial intelligence is basically knowing how to read financial statements.
Many companies offer courses in the form of management skills to their employees. People’s financial perceptions are related to their knowledge of budgets, payroll, profit and loss, and more.
A company’s financial statement is used to show the overall performance of that company over a period of time.
Most companies submit their financial statements quarterly in at least three different forms: income statements, balance sheets, and cash flow statements. The evaluation of these financial statements helps to determine the company’s revenue or loss points, financial stability points, and areas of investment.
- Profit and loss statement: This financial statement shows how much the company has earned and how much money it has spent to achieve such income. In other words, the income statement includes all cash inflows of goods and services to the business minus the costs paid for the supply of goods and services.
- Balance Sheet: Shows the assets, liabilities, and net worth of the company.
- Cash flow statement: This shows the cash flow in and out of the business. The cash flow statement helps the company understand exactly where the money is coming from and where it is going.
Why is financial intelligence the key to the success of all businesses?
Financial intelligence seems to be a skill that only a few experts know the mystery of, yet most of us have little financial intelligence, but we are not aware of it, and even those who know it do not know how to do it. Make the best use of it. Some people have better financial intelligence than others and have a more accurate understanding of how to use their money to make more money. Experts say there is no mystery or quick plan to get rich.
Of course, this does not mean that you have to work many times over. Just have a better understanding and make changes to how you use the money you have. You probably will not find a successful person who is not aware of financial or economic intelligence. Some people do not have a lot of money, but they are happy with what they do and the salary they get for what they do, and that means success.
Some people have a lot of money, but they have no control over their expenses and they lose their money due to wasted expenses. To be more precise, these people do not know much about financial intelligence. Let us now introduce 10 reasons why economic intelligence is a key factor in success.
- Most people tend to increase their wealth steadily. For those who have a business mind, the most important thing is to know the cash flow. One reason that makes the rich richer is that they are aware of the cash flow and always control it. By controlling your cash flow, you know which way your money is going, in which case you can increase or decrease the inflow of money in that direction, or eliminate it. This technique will automatically increase your wealth.
Communicating with money
- You may not believe it, but how you think about money has a lot to do with your financial intelligence and your success rate. People have different beliefs about money in their minds and have grown up with it. Some people believe that money is the root of all evils, others believe that it blows away the wind, and others believe that you have to work hard to get money and the so-called money does not grow on the earth! You may believe in these beliefs, but in general, what we all need to believe in and believe in is that we can control our income.
- Successful people are in control of almost every single situation. They control their money. On the contrary, they control their money. They are the ones who decide where and to whom their money goes. Your relationship with money should expand and not be limited to what you learned in childhood and adolescence.
Increase knowledge about money
- There are many differences between people’s attitudes toward money and what they know about it. Nowadays, what most of us know about money is purchasing power through money. However, to use financial intelligence, we need to learn more about money. For example, we need to understand what money’s uses are or how much our financial assets are against our debts. Most of us have a laid-back attitude when it comes to painting a picture about credit cards and debit cards.
Information about what you do with money
- Many of us think we have little money and that is why we always find ourselves in financial trouble. No matter how much we earn, we always think it is not enough. This is because the more money we make, the more we spend it. So there is a competition between the money we make and the money we spend. Some people feel better when they spend money, in this case, it is the spending that wins the field. We have all read the biographies of people who have come from poverty to poverty and people who have fallen into poverty despite their great wealth.
- These stories are not just for fun, they are life lessons for us to learn from. These stories show that success is not about how much we earn, but about what we do with our income. A simple example that can be mentioned is that many people with good economic intelligence always automatically save and ignore at least 10% of their income. They use this 10% for long-term investments.
Awareness of the best opportunities for investment
- One of the most common questions people ask is where should I invest my money, in real estate, stock exchanges, or bonds? All of these can be good investment opportunities, however, the best investment you can make is gaining knowledge to be aware of the appropriate areas of financial investment. This will increase your chances of success.
- This is why successful people take part in various financial courses to learn more about the right markets. You are the one who can help you increase your wealth, so you need to invest heavily in personal growth and development. As you focus on your own growth and development, you will realize what you are talented at and that will help you succeed.
Control what you can do
- There are many things that we can do. For example, we can not control how the stock market works, increasing or decreasing the price of land and property is beyond our control. Even the salaries you receive are controlled by the company manager. You may think that many things are out of your control and you will end up disappointed in doing things.
- To be successful in business, you need to focus on things that you can control. The idea that you want to invest in is under your control. How you spend your salary is under your control.
- We live in a world where change is happening very fast and the future is always full of doubts and uncertainty. However, people with economic intelligence know full well that what they do today will affect their future.
Employing people who have an economic intelligence
- Without financial intelligence, not only will your money not last, but you may not be able to make as much money as you used to. You may think you have poor financial intelligence, it is not bad to know that many people think so. However, there is one important point to note. Part of a person’s intelligence is to believe that he does not know everything.
- Most people are inherently financially intelligent but do not know how to use this ability to succeed. Of course, you prefer free counseling, but getting free counseling from unskilled people can be costly.
Short-term and long-term goals
We all have short-term goals that we strive to achieve. You need to differentiate between your short-term and long-term goals, as this will make you more focused and balanced. Both of these goals are financial goals. We often focus on our short-term goals and neglect long-term goals. Many are more adept at spending and wasting money than at saving it. This is because we have no plans for our actions. You need to protect your future and your wealth, and invest your money in activities that meet your long-term goals.
- Expanding your network with others and interacting with people with high financial intelligence in this network will help you to be more successful. When people seek financial advice, they tend to talk to people they trust, but they may not have enough knowledge and offer some kind of blind guidance that is unlikely to help them succeed in the future. . You need people who are experts in the field, people who can manage and understand money well.
- The wider your network of communication with others, the more you can learn and achieve better financial habits.
Blame the game
- Another point to note is our interest in the game of blame and finding the culprit. If we are asked why our money is gone, we blame our work, our boss, our family, and the bad weather. A big part of financial intelligence is to be courageous and accountable for the mistakes we make about our money. If we do not admit our mistakes and shortcomings, we can not succeed.
Intelligence solves problems, not money
This is good news because you can strengthen your financial intelligence at will. This will also increase your income. Now is the time to think like a businessman, even if you are not a businessman. Be aware of your spending, change or at least expand your mindset, increase your understanding of money, and seek advice from the right people to put you on the right track to success.