8 ways to increase your Financial Intelligence in Nigeria
Financial intelligence refers to the way and manner one handles and spends his or her allocated funds. These funds may come through the form of salaries and allowances, profits from business and entrepreneurial efforts or even gifts from friends and family. Inheritances also cannot be ruled out. Simply put, how you manage and use the monies that come into your hands is financial intelligence. The how to is gotten from the knowledge that you develop in this case.
When it comes to creating wealth, most people do not realize that it is how you use your personal knowledge that matters, not what you do with the money that comes into your hands. This is because the latter is a precursor to the former. The knowledge that you have regarding money will determine how exactly you use money.
This is the very beginning of financial intelligence. It is about having the right knowledge and more importantly using that knowledge on a very regular basis in order to make an impact; be it in your personal life or at work.
If you want to develop your financial intelligence, you must as a matter of principle possess basic knowledge of accounting and finance which most people don’t have. You must first be able to read basic financial statements which is in itself a plus as most people think that financial statements are only for accountants and those who want to have an interest in banking. They do not realize that financial intelligence starts from this basic set of skills.
Without further ado, the following are the ways, means and methods which you can use to improve your financial intelligence:
It is an oft quoted saying that says: “If you want to hide something from a black man, hide it in a book”. Nothing could be further from the truth. This is because black people in general and Nigerians in particular do not like reading books as a matter of habit. They think that academic learning stops after they graduate from school and that there is no need for further improvement over time. This is what has created the general ignorance which we have today across the board in Nigeria. If you want to develop your financial intelligence, both on a personal basis and for your business or organization; you must be consistent in your acquisition of knowledge as this is what will aid you to get the expert knowledge that is required when it comes to the development of financial intelligence. A reader is a leader! Enough said!
Understand the big picture
When financial analysis is going on, financial experts take the different parts of the analysis and sum it together in order for them to get an idea of what the big picture really is. It is your ability to understand the big picture that will make you to be ahead of your peers as regards the financial situation of your life or your organization. If you’re able to use the native intelligence that providence has provided you to be able to put everything you know together, then you will be able to make decisions that will affect both your life and the lives of those connected to you as well. When it comes to money, the big picture is the most important thing which you must see. Most people get stuck at the individual aspects of the financial situation without understanding that those parts make up the whole. This is where you must be different if you have to succeed in developing your financial intelligence in Nigeria.
Know your net worth
Most people do not understand the concept of net worth. Net worth can be said to be the total sum of your assets and liabilities at any given point in time. Assets are anything you own or are involved in which consistently generates cash flow to you while liabilities are anything that you own or are involved in which takes away cash flow from you. The net difference between the two (in naira, dollars or whatsoever currency which you may begin to want to define it) is your net worth. Knowing your net worth allows you to be able to have an accurate idea of your financial position and what you must do to improve it. It also identifies the various activities or things which you either must cut back on or dispose of to generate a higher value as regards your net worth. It is the aim of anybody who is wishing to develop his or her financial intelligence to pursue having a higher net worth. This concept also applies to organizations as well. A higher net worth is the aim of any business manager and owner as it also leads to higher profits and longevity of the business as a whole. The concept of net worth is one of the key foundational elements of finance. It is used to track the monetary value of an entity and can be used to determine basic decisions which must be taken in order to improve such an organizations’ financial position.
This is another area in which most Nigerians think that the do it yourself approach always works. The hiring of professionals in the financial sector is critical if you want to improve your financial intelligence. This is because having people who are well versed in such matters provides the much needed experts view point on your financial position at the time. Such people will bring to the table years of financial expertise which can save you many mistakes later down the line. Even if you’re a professional yourself getting a second opinion from your colleague will enable you to see the bigger picture and allow for you to obtain objectivity. Experts produce the kind of opinion which you must listen to strongly. They do not have any emotions invested in your current financial situation and as such are not exposed to the mistakes which you may make as an individual. Experts also help you to add to your knowledge base when it comes to finance, both corporate and personal as they show you new ways and methods of doing things which will ultimately improve your financial position and standing. This also helps when it comes to certain critical aspects of finance which include tax planning, budget preparations and even investment decisions.
Know what you can control and control it
In life there are things we know which are out of our control. Are some certain stocks which you invested in falling drastically and you are freaking out? You may not control the eventual outcome of the stock prices, but you can control your emotions! This is one of many real life scenarios which you must consider when it comes to developing your financial intelligence. From the above described scenario, it is obvious that most people cannot control their emotions but they must learn such if they are to do well financially. There are many situations that occur over which we may not have any control of but on the other hand there also are other situations that exist which we have control either absolutely or partially. It is your job to discover those situations and to also use them to your advantage.
Always see failure as a teaching aid
Most people’s attitude to failure is to get depressed and never try to do whatsoever is that they have purposed to do. They see failure as the end of things rather than a means to an end. The truth about life is that failures and mistakes are merely instruments of learning and it is those who learn best from such instruments that succeed in the long term. If you want to improve your financial intelligence in Nigeria you must learn and understand that failure is the best teacher. So when making investment and other critically important financial decisions, you could cut yourself some slack and make the decision without fear of failing. You could also find someone who you know has failed in such an area before and collect his or her advice on how best you can take such a decision. That way, you can kill two birds with one stone!
Understand and use the power of leverage
Leverage is anything or resource that can give you an advantage in any situation. This is most importantly true in the world of finance where anything which can put you in a better financial position is also leverage in itself. The use of other peoples’ resources (in an ethical and legal context) is one way through which you can grow financially. If you understand how resources can be put together and profits can be made exponentially then the leverage is something which you can use to your favor. If you are to improve your financial intelligence in Nigeria successfully, you must realize that leverage itself may not be money. It may be other peoples’ time or other peoples’ contacts or even other peoples’ goodwill. Each of the previously described concepts provide unique insight into how exactly leverage can be used to enhance ones’ financial position.
Insurance serves as the key foundational component of risk mitigation. If you must develop your financial intelligence in Nigeria, you must know how best to use insurance and its various forms when taking risks of any kind. Insurance serves the main purpose of the protection of capital in the first place and it allows for the limitation of risk and it can even be used to enhance ones’ financial position when properly used. Insurance and its many forms can put one in a place where risk now becomes easy as the risk of loss is now even less than before.
Developing your financial intelligence in Nigeria may take years and years of practice, but it is possible to become an expert. The key to succeeding at something is to keep doing the same thing over and over again. That way, and understanding of how to do it better will keep coming to you.
Do you know of any other ways, means or methods through which one can improve his or her financial intelligence in Nigeria?
Do you have any that have been tried and have worked for you? Please feel free to share them!