Why bother developing your financial IQ?
We live in a world where everything is bought and everything is sold. Literally.
At every step we are offered a huge quantity of different goods and services.
In order not only not to get lost, but make a go of it, you need to learn to understand the market. Understand how it functions.
To be financially literate, we should study tirelessly the four main subjects:
- ACCOUNTING
- INVESTING
- UNDERSTANDING MARKETS
- THE LAW
Well, let's take a look at each of them in order.
Accounting is a system of recording information about a business (recording of financial transactions, the process of summarizing, analyzing and reporting these transactions)
No wonder because we learn to count from an early age.
The whole of accounting is based on a single equation: ASSETS = EQUITY+LIABILITIES
We already know what is the difference between assets and liabilities (see it here).
And Equity, or owner's equity, is the value of the assets that the owner owns.
Investing is a tool for building wealth, but it is not only for the wealthy. Anyone can get started on an investing program. In fact, what differentiates investing from gambling is that it takes time—it is not a get-rich-quick scheme.
Here are some ways of investing:
- Contributions to banks
- Investing in the stock market
- Investing in precious metals and art objects
- Investing in real estate
- Investing in Internet projects
- Investments in Crypto-currencies
But always remember: before investing, be sure to carefully study what project or product you are investing in.
What exactly is a market?
Definitions of a market often focuses on customers. A group of consumers who may buy the product and who are able to buy the product. Or also as place where sellers and buyers meet to exchange value.
Most typically, this includes need and resource.
In order to successfully run business, we need to carefully study the needs and desires of potential customers. We need to understand how the market functions. And as the market is constantly changing, we should always be alert and monitor it.
The law is necessary for order and peace. Not only on the streets, but also in business. We need to learn the basics of law, in order to know what can and can not be done. To know about taxes, about permits and laws.
It should be remembered that ignorance of laws does not absolve from responsibility.
And now think about what the Rich dad said:
Which one sounds harder to you?
- Work hard. Pay 50% in taxes. Save what is left. You’re saving then earn 5% which is also taxed.
- Take the time to develop your financial intelligence. Harness the power of your brain and asset column.
Which one will you choose?
Keep follow my blog to learn the next lessons from the Rich.
Read also:
Money lessons from Rich Dad #1
Money lessons from Rich Dad #2
Money lessons from Rich Dad #3
Money lessons from Rich Dad #4
