The most important investment a person can make in his or her lifetime is to invest in yourself. If you don’t who else is going to? You, and only you, have to be proactive enough to take that responsibility.

When you invest in yourself, it means taking on the importance of educating yourself. Education not in the academic or technical sense, though they are necessary skills to be developed in life. Our education doesn’t, or shouldn’t, stop at school or college.

For most adults, their education stops after they leave college. They stop learning and therefore growing. We know that IQ is important, right? But why aren’t the most intelligent people people in the world the richest people? There are many accountants and financial planners rushing to their cars every evening trying to beat the after work traffic jams! They are not rich!

How about EQ or emotional quotient? Do working hard, having a great attitude and apositive mindset solve our financial situation? These are important when running a business, but:

If you were driving from one city to another using the wrong road map, you won’t get to your destination no matter how fast you drive (Working hard). You can work harder, but you’d only get to the wrong destination quicker! You may have the best attitude in the world or the most positive mindset, but you still won’t get to your destination (although the journey wouldn’t bother you as you’re feeling positive about it).

The Importance of Financial Education

You must first invest in your Financial IQ. Having a good financial IQ is not about saving tons of money or dumping it into mutual funds or shares. It is about developing a healthy relationship with money and building a wealth of assets that will generate you money.

What does it take to develop your Financial IQ?

Delayed Gratification is one of the most important aspects to developing your financial IQ. For example:

Would you pay for a pint of milk or buy a cow?

If you buy milk, it is used and it is finished. You will have to buy milk over and over again. Even if the milk costs less than a cow, in the long run, you will still be buying milk over and over again.

Now, if a cow was to cost 50 times more than milk, you might pay gthrough the nose when you buy the cow, but after using 50 pints of milk from the cow, you would break even on your investment and save more money in the future. In fact, the cow might give birth to two or more alves and you could sell one of them for profit.

Get the idea?

Everyone is capable of creating Wealth. when you take a scrap car and give it an overhaul, paint it, and change a few more parts to make it roadworthy again, you could sell that car for much more money than if it was just a scrap car. You would have created wealth in the process!

How about a farm? if you turn a farm into a getaway country retreat, wouldn’t the value of the farm increase manyfold?

It’s exactly the same principle for chefs, computer programmers and craftsmen. the sum of their whole is greater than the parts. We are all capable of creating wealth even out of thin air and that is the first step to get our creative juices flowing.

The value of anything is defined by Supply and Demand

You don’t need to have a degree in economics to understand this. Money is just an idea. Remember the Desert Island example on page 1? The true measurement of money is not the pence or pounds (or whatever your local currency is) it represents.

If you have developed a product that people want, would they pay more to you than usual? Would you apply your skills in creating good assets?

The Bottom Line is this: Invest in assets that bring long term value. Anything that brings you more income is an asset. Don’t invest too much in liabilities like cars or boats.
Even houses are not considered assets until they are fully paid off (if you lost your job tomorrow and couldn’t pay for your house, is it an asset or liability?)

Are you willing to step out of your comfort zone and pay the price for financial IQ or ignore the signs of the times and expect your boss, the government and the bank to take care of you financially for the rest of your life, living below your means and never taking risks to better your family’s future?

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