Today you’re going to learn about the main tenets of financial intelligence. This is the stuff you didn’t learn in school, and your kids won’t learn either, unless you take the initiative to teach them the value of financial education. I hope you’re ready to take notes, because I’m going to share ten foundations to financial intelligence that you need to know to build a better future for your family.
Whether you’re a beginner or you just need some reminders to sharpen your skills, this episode is going to arm you with the skills and mindset shifts you need to create your own path to wealth. Click play to learn about the foundations of financial intelligence!
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Understand the difference between assets and liabilities. If you don’t have a basic understanding of this fundamental principle, I can almost guarantee you’re going to get stuck in the middle-class trap. An asset is something that you own that can generate income or has a cash value, and liabilities are possessions that take money out of your pocket every month.
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Build a balance sheet to know where you stand. Once you know the difference between assets and liabilities, it’s time to get a baseline of your own assets and liabilities. There’s no better exercise for getting a grasp on where you stand than building your balance sheet. This is something that even children can do. A simple balance sheet helps you calculate your net worth by listing out what you owe and what you own. A balance sheet is a simple step you can take to measure your financial status, and start moving toward your goals.
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Be selective about taking on debt. Sometimes debt is necessary. You might need an upgraded family car or had some unavoidable medical debt.. There’s a time and a place for loans, but it’s critical that you stay away from predatory credit cards with astronomical interest rates. For more on this, I want you to check out a video I recently published on America’s problem with credit.
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On a similar note, know the difference between good debt and bad debt. Good debt helps you buy performing assets that bring in cash flow, while bad debt keeps you locked into the cycle of paying high interest for liabilities. I know there are a lot of so-called experts out there that say you should never under any circumstances utilize debt. But the truth is, if you’re smart and strategic, using the banks’ money to build wealth can be incredibly powerful.
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Be mindful about where you’re saving money. Unfortunately, a lot of people aren’t smart about how they’re saving. Your bank’s standard savings account with an APY of 0.01% is not going to cut it in this economy – in fact, it’s going to hurt you! With inflation, your savings can quickly get eaten up. The current inflation rate is about 3%, so make sure you’re putting your money in an account that has a rate higher than that. You can find high yield savings accounts online or consider parking your money in real estate short notes. Our friends at Connect Invest offer short notes with returns in the 7.5-9% range. See if it’s a fit for you at morrisinvest.com/connect
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Invest in your financial education. The best way to build your financial intelligence is to become dedicated to your education. Seek out books, videos, and podcasts to continue growing your knowledge base. There is so much free information out there – take advantage of it and intentionally create a solid foundation of financial intelligence.
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Find your Freedom Number. If part of your plan is to build financial freedom through real estate investing, the best place to start is with my Freedom Number Cheat Sheet. It’s a free PDF that will walk you through how to calculate how much income you’d need from rental properties in order to be financially free. This can be a transformative process, and I highly recommend going through the cheat sheet, even if you think you’re not ready to invest in real estate. I think it can really open your eyes to how to set realistic, personalized goals. Get your free copy at morrisinvest.com/freedom.
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Start building multiple streams of income and buy performing assets. Have you heard the statistic that the average millionaire has seven streams of income? Meanwhile, most people have just one earned income from their 9-5 job. No matter where you lie on this spectrum, I encourage you to add an income stream. This can be rental income, a side hustle, passive income from selling a product, returns from short notes, and so much more. This is powerful; it diversifies your income, helps you develop new skills, and builds your confidence in your financial intelligence.
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Take advice from people who have achieved the level of success you desire. No more letting your weird uncle Bill tell you that real estate investing doesn’t work. No more listening to people who are thinking small. Take advice from people who have achieved the goals that you are striving toward.
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Act in alignment with your goals and values. With our clients at Morris Invest, before we get on the phone with our clients, we have them go through our Purpose-Driven Goals process. The idea is, we want to learn about you, and that includes your goals and the meaning behind them. Because when you know your goals and your values, it’s easy to make decisions.
Episode Resources
Book a Call with Our Team
morrisinvest.com/Clayton
Download the Freedom Cheat Sheet
This Is Devastating to America’s Credit Score
morrisinvest.com/connect
Download the free Financial Empowerment Bootcamp
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel
Like Morris Invest on Facebook
DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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