Financial IQ is a very important aspect of management whether it is a company or an individual to run its business and family respectively. How to manage the usage of income stream, i.e. regular expenditures, savings, investments and other contingency planning.Prudent allocation of funds to these is very crucial for maximizing your wealth as only savings won’t make you richer but the proper investments will. You become richer by increasing your Assets Portfolio and most of us do not know the difference between the Assets and the Liabilities.
Similarly, we need to be proactive to prepare a corpus for the unfavourable times as we are living in a volatile world where there are always possibilities of economic slowdown and uncertainities. We always need to have a contingency plan to fall back on.
Apart from that, keeping track and record of income and various expenses can be very helpful to monitor and control the unnecessary outflow, which would result in more savings
Also, always keep a balance of long term and short term financial goals. This refers to the sagaciousness in financial management, as it is always not the case that we receive a fixed income stream in the form of salary i. e. When do not have a permanent job.
This will help not only in this situation, but also in contingencies.
The epitome of the potential of financial management is the success of Warren Buffet, one of the richest persons of the world
Following are some famous ideas of him, which can be helpful for anyone
- You do not have to be genius to invest well, But, master the basics
- Bad things are not obvious when times are good (i.e. Bad phase can come anytime)
- Price is what you pay and value is what you get.
To your financial IQ success!