All the time, people are heightening their academic intelligence by studying and learning from others, in many places, such as at school or at home. But there’s another type of intelligence, which is financial intelligence. Financial intelligence is how well you can manage your bank account, your credit card debt, and other financially related things. This is very important, because if you can’t manage your money well, then bankruptcy could be in your future. Financial intelligence also refers to seemingly mundane actions such as purchasing a house or managing your mortgage. If you have enough financial intelligence, then you’ll be able to successfully learn how to control your finances and retire with a 401k retirement account. I believe that financial intelligence is just as important as academic intelligence, and that we should spend more time studying it.
Everyone has to work in order to be successful, but it’s much easier if you have a good grasp on the finances of your company. You can learn the benefits and risks of debt, and gain good money management skills for your debt and profits. According to Bankrate, “Because you get the loan payment all at once, it can be easier to make a large purchase, consolidate debt or otherwise use the loan all at once. Plus, you’ll get a fixed interest rate and predictable monthly payment, making the loan easier to manage.” This is the benefit of taking on debt, but the con is that the interest rate could be too high. This would allow you to decide whether you wanted to take out a small loan in order to help jump start your company. Plus, some helpful statistics such as how 25% of all Americans say they will never get out of debt without help can be useful to know. You’ll be sufficiently cautious when you take out a loan, and make sure never to take out too much. Learning about debt is something that’s very useful, especially for new business owners.
Budget constraints are a serious problem for many companies and people, because the amount of money allocated to them just isn’t enough for them to work with. But with the right skills, you can turn your miniscule budget into enough to fund your entire company. 20% of new businesses fail within a year, and 50% fail in five years. You don’t want to become one of these, so it’s important to know where to spend your revenue. According to Kriya, “It recommends that business owners allocate 50% of their profits to paying themselves, 30% to taxes, and 20% for reinvesting in the business. This model gives business owners a reasonable amount of capital to enjoy, prepares them for future tax surprises and still accounts for reinvestment.” Splitting up your budget reasonably for important investments such as marketing and labor costs are very helpful. Knowing how to manage your budget constraints is very useful in life, because of how it helps you manage your business.
After you work, you’ll eventually get old enough and go into retirement, so it’s important that you save up enough for a 401k retirement account. A 401k retirement account is when you put a small portion of your income into it, eventually allowing it to bud, then blossom into a large amount of money that you’ve put away for when you retire. According to JohnHancock, “Because the contributions are pre-tax, it lowers your total taxable income which means you might owe less in income taxes, regardless of whether you itemize or take the standard deduction.” This means that you’ll pay less taxes using a 401k retirement plan, instead of others. This plan often brings many benefits with it. Plus, 60 million Americans use this plan, meaning that nearly 20% of the entire United States are using this plan. This plan is very intelligent and useful, because it helps you quickly store up cash without much work, and allows you to end up with a large retirement savings account.
Financial intelligence comes with many boons, and is very useful, which is why it is definitely as good as or better than academic intelligence. With financial intelligence, you can manage your money and strategically invest or purchase things. Financial intelligence also refers to seemingly mundane actions such as purchasing a house or managing your mortgage, so if you’re in control of your finances, you can successfully avoid bankruptcy. If you have enough financial intelligence, then you’ll be able to successfully learn how to control your finances and retire with a 401k retirement account. This allows you to be successful throughout life and retire with enough cash to sustain you. Academic intelligence helps you do this, but financial intelligence will be sure to help you succeed.
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