Financial intelligence is very important for both business and individuals. Money without financial intelligence will soon be gone.
Your success in creating wealth is not dependent on how much money you make, but how much money you are able to retain after your expenses.
In Africa, our greatest challenge is lack of financial intelligence. Many are poor, not because they lack resources to make money but for ignorance. Ignorance also prevents them from acquiring the necessary skills that is required to establish thier selves.
Sustainable wealth creation and financial stability requires financial intelligence
Some key notes
... Scarcity of correct teaching about financial issues.
... Wrong concepts about finance.
... Most people mistake liability for assets.
... Most people think they are investing while merely gambling.
... Not using professional services
... Poor grasp of basic numeracy and financial ratios.
... Lack of personal financial discipline.
... Wrong philosophy about debt or borrowing
... Not learning to value a Naira.
... Not taking record of what profits or gives loss.
In management of finance of small scale business the force of habit demonstrate its power intensely. A business person's habit are among the most important factors that determine whether he will be a success, or a failure.
... The habit of time management
... The habit of thrift or frugality
... The habit of leaving a margin of error
... The habit of taking a last minute pause.
A lot depends on the individual, his/her nature and personality, the particular field in which he is engaged and many other variable factors.
... Good understanding of basics of financial reporting.
... Understanding the link between assumptions and conclusions
... Using the knowledge of ratios in making better financial decisions.
... Analysing the bigger picture, not numbers only..
You should be able to interpret your personal financial statement, that of your family and your business. Know that income is money coming into your life and outcome is money going out of your coffers.
In addition to these, you should understand what cash flow is ( the difference between your income and your expenses for a given period); whether it is positive or negative.
Know the difference between your assets and your liabilities ( what you own that brings money to you and what you owe, or anything that takes money away from you).
