It takes a combination of dedication, strategy, and understanding to develop financial intelligence.
1. Educate yourself financially
To start, you should educate yourself on money. It’s not as easy as it reads. You have to understand things such as: budgeting, keeping expenses under control, investing, taxes, tax planning, interest, inflation, and more. If you have no concept of what any of that is, or how these aspects play a part in your life, read books, take out a subscription on blogs, and watch videos pertaining to personal finance.
2. Create a personal budget
Knowing exactly where your money is coming from and leaving is one of the four foundations of financial intelligence. So, go ahead and create a spreadsheet (there are templates online) and record your income and expenses month by month. Separate fixed (rent, utility bills) expenses from variable expenses (shopping, entertainment) and determine how much you can spend without upsetting your financial planning.
3. Set clear financial goals
Set short, medium and long-term financial goals, such as: building an emergency fund, a holiday, purchasing large assets or retirement savings. These objectives keep you inspired to save and spend and act as a guide for your financial actions. On the other hand, if you do not have goals to guide your finances, the chances of spending on non-essential items and piling up debt are much higher.
4. Build an emergency fund
It is imperative to have an emergency fund. Saving three to six months’ worth of spending in an easily accessible account is often advised. For example: if your monthly expenses are approximately R$5,000, the ideal is to have a fund of R$15,000 to R$30,000. The ideal is to leave this fund in an investment with daily liquidity, that is, one that can be withdrawn at any time.
5. Invest wisely
Another very interesting tip is to make your money work through investments. So, compare various options and know your risk profile. Begin with more straightforward investments, i.e.: direct treasury, investment funds and fixed income. By contrast, braver profiles may invest in stocks and cryptocurrencies. The key thing is to research, be familiar with the existing possibilities and know which ones suit you best.
6. Manage your debts
Understand the difference between “good” and “bad” debt. Good debt is debt that generates income, such as investments or school loans. Bad debt, like too much use of credit cards, can stop you from making financial progress. If you owe money, pay the highest-interest debts first to avoid it snowballing.
7. Live within your means
A very important tip is to adopt a lifestyle in which you spend less than you earn. This is essential. This process allows you to save more, invest and build your wealth consistently. Try to plan your purchases, checking whether you really need the item in question. Of course, leisure options from time to time are important, but we shouldn’t overdo it, right?
8. Regularly reevaluate your financial planning
Maintain a record of your objectives and do periodic financial reviews. This will help you make adjustments, change your goals, and maintain financial management as your life progresses. It is also important to talk to your spouse and even your children about your family’s financial situation. This is important so that everyone is aware of the current situation and each person’s obligations. Plans need to be revised, goals postponed, and so on.
9. Look for additional sources of income
If possible, put into practice ideas to increase your income, such as: freelance or temporary work, monetizing hobbies (e.g., crafts or cooking), investing in businesses, and so on. These are strategies to help you stay debt-free and enhance your financial status. Let your creativity go wild.
10. Cultivate a long-term mindset
keep your eye on the future and steer clear of quick fixes or financial shortcuts that are hazardous. There are some “miracle promises”, particularly on the internet, which you need to keep away from. Long-term results can be achieved by cultivating patience and perseverance over time. To achieve this, recall that it is natural to make certain sacrifices in the current time in order to get more significant achievements in the long term.
In conclusion, developing this skill takes time, but with discipline and knowledge, it is possible to achieve a more stable and prosperous financial life. Financial intelligence depends on the acquisition of knowledge, emotional balance and the discipline to put everything you have learned into practice.