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It is a truism that money-making is one of the strongest desires of human beings. This desire is naturally expected, given that with money, one can accumulate material possessions and do many other things. It is equally so because money constitutes the  major part of the foundation of financial wealth. Money is the seed that can germinate and become a full-blown tree called enduring financial wealth if well nurtured to maturation with sound ideas.

Therefore, if there is one topic that always passionately engages or arrests the attention of people across the world, it is how and where to make money. But knowing how and where to make money is not enough to keep one off the shackles of financial insufficiency in the long run.

Robert Kiyosaki, an investor, entrepreneur and author of the masterpiece “Increase Your Financial IQ” also reinforces the assertion that money alone does not make one rich. Kiyosaki educates that we all know people who go to work every day, work for money, make more money, but fail to become richer. This financial expert adds that we have also all heard stories of lottery winners, instant millionaires, who are instantly poor again.

Kiyosaki declares that hardwork alone also does not solve money problems. He thus stresses that the world is filled with hardworking people who earn money, yet grow deeper in debt, needing to work even harder for more money. He says formal education does not solve money problems, adding that the world is filled with highly educated but poor people.

Kiyosaki illuminates that many of us also know of individuals who have lost money investing in the stock market. He educates that even investing in gold, the world’s only real money, can cost investors money. In the words of this financial expert, “Money alone does not solve your money problems. That is why giving poor people money does not solve their money problems. In many cases, it only prolongs the problem and creates more poor people.”


What then is the solution? To enjoy enduring financial freedom, one needs the mastery of how to make and manage money because financial literacy or knowledge is very critical here. According to Kiyosaki, it is only financial intelligence that solves all money problems. Financial literary is very important to individuals, families and even the day-to-day operation of corporate organisations. To achieve maximum financial freedom in the society, we need to embrace financial literacy with a touch of revolution, that is, a complete personal and societal financial mindset change. The need to embrace financial literacy as a revolution becomes imperative in this digital revolution or information and communications technology (ICT) explosion age that the world has become a global village with multiplicity of financial, business and investment opportunities online.

Financial Literacy Defined

What then is financial literacy? Financial literacy refers to the ability to understand money and how it works, including its management, investment and expenditure. Being financially sound and aware always works in your favour as it allows you to make choices on investments that can help you multiply your returns. Even when you are busy with your professional or personal life, putting your money in the right places i.e., the stock market or the money market, can help you achieve massive profitability.

According to Wikipedia, financial literacy is the possession of the set of skills and knowledge that allow people to make informed and effective decisions with all of their financial resources. Understanding basic financial concepts allows people to know how to navigate in the financial system. People with appropriate financial knowledge make better financial decisions and manage money better than financially illiterate ones. 

Understanding certain basic fundamentals such as setting financial goals, being a pro budgeter, investing like an expert and understanding retirement, can set you a notch apart. You need to know how to make your money work for you and not how to work for money. It is time to set aside your financial anxiety and take your bank balance into your own hands. Financial literacy is regarded as the convergence of financial, credit and debt management as well as the knowledge that is critical to making sound financial decisions.

Little wonder then that Kiyosaki says, “In simple words, financial intelligence is that part of our total intelligence we use to solve financial problems… Financial intelligence solves these and other money problems. Unfortunately, if our financial intelligence is not developed enough to solve our problems, the problems persist.”

Laws and Importance of Financial Literacy

To achieve orderliness in the society, there are laws to guide people’s conduct. This approach also applies to money-making. Money laws are applied by financially successful people as well as financial institutions. Basically, there are four simple laws that govern money. The first of these four laws is the EARNING LAW. The second is the SPENDING LAW. The SAVING LAW constitutes the third, and it is about the accumulation of a surplus from your income. The last of these laws is the INVESTING LAW.

It is interesting that saving money, being prudent on spending and monitoring your earning-to-spending ratio are the necessary steps you must take to achieve financial sufficiency that can lead to financial wealth eventually. Dr. Michael LeBoeuf, a renowned business consultant and author of “The Millonaire in You” also says four things you need to know about money are: how to make it; how to save it; how to invest it; and how to enjoy it. In his words, “Very, very few people manage to do all four, although almost anyone can.”

Sometimes, most of us are hit by the deadly upper-cut of excruciating money crunch that leaves us feeling dejected. This kind of embarrassing situation underscores the fact that we need to undergo training in financial literacy. Knowledge is indeed very critical and it is the right solution to assisting yourself to become financially sound. All you require in terms of an investment is a commitment of your time and efforts and you have a lifetime of benefits accruing as a result of your financial intelliegence. Though understanding basic economic concepts may sound as easy as ABC, the implementation of these principles demands so much in terms of massive investment of time and efforts.

Distinction between Financial Intelligence and Financial IQ

One area worthy of note is the technical distinction between Financial Intelligence and Financial Intelligence Quotient. We know that a person with a mental IQ of 98 is supposedly much smarter than a person with an IQ of 70. The same analogy can be drawn with Financial IQ. Financial Intelligence is that part of our mental intelligence we use to solve our financial problems. Financial IQ is the measurement of that intelligence. It is how we quantify our Financial Intelligence. As Kiyosaki puts it, “For example, if I earn $100,000 and pay 20 per cent in taxes, I have a higher financial IQ than someone who earns $100,000 and pays 50 per cent.”

Kiyosaki explains that the person who earns a net of $80,000 after taxes has a higher Financial IQ than the person who earns a net of $50,000 after taxes. Both have financial intelligence, but the one that LEGITIMATELY keeps more money has a higher Financial IQ.

NOTE that Kiyosaki is not advocating tax evasion or illegal under-payment here but legimitate reduction of your income’s exposure to unnecessary payment of tax (tax avoidance). Even Robert Allen, author of “Creating Wealth” and “Multiple Streams of Income” corroborates Kiyosaki’s position thus: “A big problem with taxpayers today is that they simply do not know exactly how they are taxed.” Allen also reinforces his own submission with Judge Learned Hand’s assertion, “There is nothing sinister in arranging one’s affairs as to keep taxes as low as possible … for nobody owes any public duty to pay more than the law demands.”

The five basic financial IQs are: Making more money (Financial IQ No 1); protecting your money (Financial IQ No2); budgeting your money (Financial IQ No3); leveraging your money (Financial IQ No4) and improving your financial information (Financial IQ No5).

Steps to Achieving Sound Financial Health and Sufficiency

It is noteworthy that some symptoms of lack of financial soundness are low income, crippling taxes, high expenses, excessive debt, bankruptcy, foreclosure, increased crime, violence, etc. It is therefore necessary to X-ray steps towarding achieving financial soundness.

Creating a Budget

Creating a budget is the first step to achieving financial sufficiency. Making a list of your earnings and expenditures every month is important to start out on the path to gaining financial soundness. From the said list, it is important to identify very important expenditures and reduce or remove unecessary spending so as to strategically enhance your savings. This is the essence of budgeting. Budgeting allows you to know how much to spend monthly and whether or not that ratio is suitable to your earnings and savings target.

Creating and maintaining a budget is one of the most basic aspects of staying on top of your finances. In this modern day, it is easier to create a budget with the help of websites and apps such as Mint.com. These apps can help with keeping your finances on track. And, when applied  appropriately, they will keep you in the know about where your money is actually going.

You need financial discipline to be financially rich and wealth. Without following a budget, it is like writing an essay without first forming an outline for proper sequence. It will be difficult to hold yourself accountable on the inflow and outflow of your income without a budget.

Cultivation of Saving Habit

Saving is another way towards financial soundness. Obviously, saving is an important aspect of maintaining a healthy financial situation. But, the majority of people do not prioritise this aspect as much as they should. It is easy to ignore things like retirement or old age since it seems so distant in the future. But learning to save early in life can help you gain the knowledge, practice and set of skills you will utilise throughout your entire life. Working towards a goal is critical here and people need to understand that there is a lot of value in paying yourself first by saving because the bills will always be there.

Mastery of Investing Rules

Another step towards achieving sound financial health is investing.  But we need to master the rules investing is not science, as anyone who has ever lost money on a “sure thing” can testify. Larry Burkett, the author of “Investing for the Future” says investing’s law of risk and return works the same way. Burkett adds that the higher the promised rate of return, the higher the risk of losing your money.  But Robert Allen, author of “Multiple Streams of Income” articulates a contrary opinion in his book entitled “Creating Wealth”. Allen says if we are “programmed to think that saving is good, and debt and risk-taking are bad, we disqualify ourselves from ever having a chance at big money”. He is advocating borrowing a huge sum and taking a big risk for business here.

Also in this digital age, the market is unpredictable and ever-changing as it is embroidered with a hybrid of both local and global players. Therefore, technological advancements through the use of financial technology, e-trading etc., can all cause conflicting views in the mind of investors. But financial literacy will offer you a sound perspective regarding where to put your money, when to switch your investments, etc.

Portfolio Diversification/Multiple Streams of Income

Another thing you can do to achieve financial success is to diversify your portfolio. Diversification involves spreading your money among different types of investments. Ron W. Blue, author of “How to Make and Manage Money” educates that by diversifying your portfolio, you reduce your overall risk. Blue adds that when his firm wants to help a client structure his or her investment portfolio, the firm follows a sequential strategy that includes diversification among different categories. He asserts that by moving from one category to the next, this approach gives an investor the ability to diversify within diversification, thereby strengthening the total portfolio.

You can achieve multiple streams of income by setting up a (small) business, writing books, investing in stocks and real estate as well as exploiting many income-fetching opportunities on the Internet.

Also to achieve financial freedom through financial literacy, you need to acclimatise yourself with the mountain range of financial freedom by climbing the REAL ESTATE MOUNTAIN, INVESTMENT MOUNTAIN and MARKETING MOUNTAIN.

By way structural decomposition and conceptual amplification, as regards the REAL ESTATE MOUNTAIN, Finding, Funding and Farming are critical factors. In Allen’s words, “If you want to be successful in real estate investing, you need to know how to find bargain properties, how to fund those properties, and then how to farm them … or harvest the profits from each deal.”

On INVESTMENT MOUNTAIN, Allen says screening and filtering, time in and time out are very important. As he puts it, “Using simple, understandable filters, you can sift through the gravel of the market and uncover a nugget or two. Using the power of inexpensive (how about free?) tools, you can know exactly when to buy and precisely when to sell.”

As regards MARKETING MOUNTAIN, Allen educates that you can operate in the emerging business fields such as digital (internet) marketing, network marketing, infopreneuring and idea of licensing.

Final Note

Financial literacy is a pathway to financial sufficiency and enduring wealth. It is therefore a must-embraced financial revolution.

GOKE ILESANMI, Managing Consultant/CEO of Gokmar Communication Consulting, is a Communication Specialist, Motivational Speaker, Career Management Coach, Renowned Book Reviewer, Corporate Leadership Expert, Editorial Consultant, Certified Mgt Consultant and Fellow, Institute of Management Consultants of Nigeria (IMC).

Tel: 08055068773; 08056030424

Email:  gokeiles@gmail.com

Website: www.gokeilesanmi.com.ng

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