Many of us have gone through bad economic periods within our lives, there are times when we seem to run very low on money and no amount of work seems to be able to give us enough to put ourselves through and survive our daily lives. If you are having this situation or if you had it in the past, if living from paycheck to paycheck has been a constant in your life, then you need to start to take some steps to increase your financial intelligence and reach your financial goals.

Within this post I am going to be talking to you about five simple steps you can start to carry out to improve your financial intelligence and reach your financial goals in the future. It is certainly true that most people are not very intelligent with money and in time they make horrible decisions which end up costing them their financial future. By practicing the exercises shown below you’ll be able to start to tackle the monster of financial doom and start to see the light at the end of the tunnel. These are the exercises I suggest you carry out to improve your financial intelligence :

1. Where will your money be ? One of the only characteristics shared by all financially successful individuals is that they are able to say where their money will be in the future. If you have 100 USD in your pocket, where will that money be in 1 month, 6 months, 1 year ? Knowing where your money will be is one of the most important things about financial intelligence since it depicts the length of period in which you follow your money. Also only money that remains in your power counts, saying “this money will be in my credit card company’s pocket” doesn’t count since this is money you are losing. Take whatever amount you can each month (even 10 USD will do) and assign it a long term future. For example, “this 10 USD will be in a savings account in three years” then put it there and see things through.

2. Distinguish Necessary from Unnecessary. One of the most important things that financially ruined people have in common is that they do not distinguish their necessities from their actual craves. You will see people buying things they simply could do without because they are impulse buyers. Add to that the fact that most of this impulse purchases are done on credit cards and you will get into a LOT of trouble in the long term. For everything you buy in the future as yourself if you could do without it. Do you really need it ? this is a question you need to ask frequently.

3. Understand Debts. Debts are most likely the reason why most people reach a financial point of no return towards filing bankruptcy or the reason why many people live their lives from paycheck to paycheck without looking at one cent of their income. When you get into a debt, do you really understand what you are getting into ? Next time you’re buying anything with your credit card or next time you buy a car, house, etc, calculate all the money you will need to pay every month and what amount of money you’ll end up paying on interest. You will notice that in the end most debts will make you pay several times what you buy and they will simply not be worth taking.

4. Focus on Long Term Income Sources. Most people who are not financially inteligent tend to have a very short term focused mind which neglects to looks at any job that does not give instant compensation in money. For example starting a business may be a very difficult thing in the beginning with several months or years of loses but in the end profits will start rolling in and your long term income will be greatly increased. Always have a long term income project in mind. A website, an investment or a home based business are very good places to start. Having projects that currently give no income but that in the future will support you and your family is one of the biggest differences between those financially successful and those who live and endless 9 to 5 life style.

5. Have a Plan. Including some of the above, perhaps the most important thing you need to do to increase your financial intelligence is to have a well laid plan you can follow to achieve your financial goals. Write down in a piece of paper where you are now, where you want to be in 5 years and then make a plan of what you need to do to get there. If your plan is to unrealistic or if your goals are then you need to redo the plan to focus on what is really possible to do. Include the payment of debt, the cut of spendings and the starting of long term income producing sources on your plan.

Certainly by following all the above you won’t become financially intelligent in a few days but certainly over a few years doing the above exercises will bring a lot more certainty and organization to your life. I have followed the above steps for a long while now and I can tell you that they have all allowed me to improve my financial intelligence and keep track of my financial goals. I hope you too achieve a better financial situation for you and your families 🙂