Starting a journey towards financial intelligence and financial freedom is extremely hard and in the beginning you definitely feel that all the work you are putting forward is being wasted in the sense that fast results are almost never achieved.  You start thinking about what you are doing and if you do have the necessary skills to achieve those long term goals. Through my analysis of financially successful people and my analysis of their previous and present circumstances I can tell you that people with high financial intelligence have several characteristics in common that they share even before obtaining great fortune.

What are these characteristics that make people successful in financial aspects of their lives ? Through the following few paragraphs I will explain to you some of the key aspects of financially intelligent people and how these characteristics ultimately lead to their achievement of financial freedom. If you don’t have any of these skills it certainly does not mean that you will be doomed to financial failure but it does mean that you should probably start to work in your financial intelligence if you do want to achieve success in this particular area. What are these simple yet essential characteristics ?

1. Live below their means. I can tell you that all the financially intelligent people I have known, even before they were rich, lived below their income. This means that if they earned just 1K a month they would live below that and if they earned 10K they would also do that. Living below your income level means that you will always have extra cash and the potential for saving and capital accumulation is present.

2. They do not get into debt for liabilities. I don’t know a single financially intelligent person that has got into debt for a liability. No one with a high financial skill would ever buy a computer with a credit card or a car with a loan. Getting into debt to buy liabilities is one of the most unsound things anyone can do financially.

3. They get into debt for assets. People with financial intelligence eventually realize that they can increase their potential for income if they get into debt to acquire assets. When these people get in debt, they do so to acquire assets not liabilities. When you get leverage to get things that make money you will get the potential to repay your debt with your purchase. Using leverage to acquire assets is therefore another characteristic of the financially intelligent.

4. Understanding risk. It is absolutely important to understand risk and financially intelligent people are able to do this. If you save, don’t get into debt for liabilities and then you get into a huge debt to get an asset that holds an absurd risk you would simply go bankrupt. Financial intelligence is also about understanding the risk of what you are doing, knowing the risk and potential loss behind every asset is a characteristic of the financially intelligent.

5. Long term expectation. I think that the most important thing that ties all financially intelligent people is their focus on long term achievements. People who have a lot of financial intelligence can tell you where their money will be in 10 years and what the work they are doing today will do to affect their future income. Financially intelligent people know that what they do today may not be rewarded today or next week but in time all their little efforts will add up to get them where they want to be. Picturing efforts, goals and money in the long term is a paramount characteristic of the financially intelligent.

I bet that all of this things just make a lot of sense. Why would you live a life-style that is way above your means ? Why would you get into debt to buy a car, a computer or a vacation ? It definitely does not make any sense to make any of these financial decisions but they are sadly the type of decision that has so many people nearing bankruptcy. If you want to improve your current situation then learn from the above characteristics, take a long look at your current financial situation and start to work towards your long term financial freedom 🙂