Blog | Personal Finance

Financial Intelligence: The Key to Finding Money Where Others Don’t

Financial intelligence starts with financial literacy

Summary

• True financial freedom is only accessible when you have true financial intelligence

• Enhancing your financial intelligence will make opportunities for wealth more visible

• Financial intelligence is the key to understanding the difference between financial freedom, and job security

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"The average person is 95 percent eyes and only five percent mind when they invest. If you want to become a professional in the B and I quadrants, you need to train your eyes to be only five percent and train your mind to be the other 95 percent." - Rich Dad

There’s no denying we were introduced to an unprecedented time with COVID-19, but it wasn't the only crisis the world had ever seen...nor will it be the last. The question everyone should be asking is “How do I find opportunities that others are not seeing during these crises?”

Financial intelligence leads to seeing opportunity where others don’t

Prior to the pandemic, the last crisis the world faced was the 2008 Great Recession; many people lost their fortunes. The same happened during COVID. It wasn’t a surprise.

The question you need to ask yourself is: “Where is the money flowing and how can I get there first?”

In fact, it was that very question that led Robert Kiyosaki to Ken McElroy, the Rich Dad Real Estate Advisor. Not long after, Robert took advantage of some of the only liquidity left in the market, Fanny and Freddie loans, to secure apartment communities at rock bottom prices. These deals provided cash flow from day one, and a few years after the crisis, he sold those properties and made a lot of money.

At the time, a lot of investors refused the opportunity to invest their equity in these deals. They were scared and didn’t want to let go of their money. Today, they regret those decisions.

The same thing happened with many entrepreneurs during the early days of COVID. While some people hunkered down in fear and didn’t take risks, others were finding ways to innovate and make money. For instance, in the first couple months of the pandemic, independent sellers on Etsy sold $133 million in face masks; money out of thin air by quickly providing a product everyone needed. That doesn’t happen by accident. People were ready and saw the opportunities that others didn’t.

In short, those who are successful in hard times see money when others don’t. This comes down to one big difference...higher financial intelligence.

Financial freedom vs. job security

There was a time when you could see parking lots full of people looking for jobs - everywhere you turned, someone was looking for another job.

But if you asked them “why don’t you transform yourself financially?” or “why don’t you complete a financial metamorphosis and become an entrepreneur?” people will often respond with the thought that being an entrepreneur is risky. “I’d rather have a safe, secure job,” these folks say. But COVID made it clearer than ever, the problem is that there is no such thing as a safe, secure job; and being an employee is one of the riskiest things you can do.

Why people seek job security

If you look at the CASHFLOW Quadrant, you’ll notice that the left side is motivated by security. The right side is motivated by freedom.

The primary reason many people live on the left side of the quadrant and seek job security is because that’s what they are taught to seek, both at school and at home.

As adults, millions of people still continue to follow that advice. Many of us are conditioned from our earliest days to think about job security, rather than financial security or financial freedom. And because most of us learn little to nothing about money at home or at school, it’s only natural that we cling ever more tightly to the idea of job security instead of reaching for financial freedom.

Many people search for freedom and happiness. The problem is that most people haven’t been trained to work from the right side of the Quadrant—the B (Business owner) and the I (Investor) side.

They have been trained instead to search for job security. Because of this training and their increasing debt, most people limit their search for financial freedom to the left side of the CASHFLOW Quadrant. Unfortunately, financial security and financial freedom are seldom found in the E or the S quadrant; true security and freedom are only found on the right side.

But in order to move from the left side of the CASHFLOW Quadrant to the right side, a new attitude and a new educational process must begin. In short, you need to enhance your financial intelligence.

Financial intelligence starts with understanding how money works

Every day, even during a global pandemic like the one we recently experienced, trillions of dollars are moved around the planet electronically. Whether through government bail out programs or general commerce, there is more money being created and available today than ever before. The problem is that money is invisible. Today, the bulk of it is electronic. So, when people look for money with their eyes, they fail to see anything.

If there were piles of money sitting in the street they would run out and grab as much as they could. This is because their level of intelligence allows them to easily know how to see and grab what is physically in front of them.

Unfortunately, when it comes to financial intelligence, most people have a low IQ. Taking advantage of the virtual piles of money in the financial system takes a high level of financial intelligence that most people simply do not possess. They have no idea how to go grab the cash sitting right in front of them.

In fact, most people struggle to live paycheck to paycheck. And yet trillions fly around the world every day looking for someone who wants it—looking for someone who knows how to take care of it, nurture it, and grow it.

This is because money works like an electric current. An electric current must always transfer somewhere. If it cannot find a new home, it will die. This is why money is called currency. It must transfer somewhere or else it will also die. This is why savers are losers. Eventually savings become worthless because of inflation. To keep money alive it must flow to where it can grow. Those with high financial intelligence are attuned to see where money is flowing and how to go where the money is flowing.

If you know how to take care of money, especially in times of crisis, money will flock to you and be thrown at you. People will beg you to take it. If you don't know how to take care of money, money will stay away from you.

It takes financial intelligence to see money in front of you

Rich dad was adamant that in order to see money and see where it was flowing, you need financial intelligence. His definition of financial intelligence was as follows: It's not how much money you make, but instead how much money you keep, how hard it works for you, and how many generations you keep it for.

For those looking in from the outside, a person with financial intelligence seems like a wizard with money. They seem to make it out of thin air, and often it appears as though this is done with almost no effort. And they seem to always be getting richer. It can be mystifying and maddening for those with low financial intelligence.

The reality is that if you have a high financial intelligence, you can see where money is flowing, be there before others are, reap the benefits of that money by acquiring assets that grow in value and provide cash flow, and then use that money to then go acquire more assets where more money is flowing. The work is in seeing, then money works for you. It isn’t a magic trick, but you have to study like a magician to be good. It takes dedication for years but it’s the best thing you could spend your time getting good at.

For rich dad, financial intelligence started with simple financial education and grew from there. He felt that education was important because you needed to train your brain to see money; it doesn't come naturally.

Financial intelligence starts with financial literacy

The key to training your brain to see money is financial literacy, the ability to understand the words and number systems of capitalism. If you don't understand the words or the numbers, you might as well be speaking a foreign language.

For rich dad, each quadrant in the CASHFLOW Quadrant was a different country with a language of its own. Employees (E), Self-employed (S), Business (B), and Investors (I) all use different ways of looking at the world and even different words to describe those ways of looking at the world. In each quadrant, if you don't understand the words, you won't understand the numbers.

For example, if a medical doctor says, "Your systolic is 120 and your diastolic is 80," is that good or bad? Is that all you need to know for your health? The answer is obviously a no, but it's a start. It's the same as asking, "My stock's P/E is 12, and my apartment's cap rate is 12. Is this all I need to know for my wealth?" Again, the answer is no, but it's a start.

The beginning of financial literacy is knowing words and numbers, and financial literacy is the basis of financial intelligence. The statement "It takes money to make money,” is an untrue one. In truth, the ability to make money with money begins with understanding the language of money. As rich dad always said, "If money is not first in your head, it won't stick to your hands."

Start growing your financial intelligence with financial literacy today

At The Rich Dad Company, our mission is to elevate the financial well-being of humanity. Through both free and paid resources, we have dedicated our lives to helping others understand money and how it works so they can live a full and successful life.

It’s time for you to take advantage of the wealth of knowledge at Rich Dad to begin your financial literacy. You can start with the free glossary of terms right on this site. From there, continue opening your eyes through the many tools we provide, such as our free online version of CASHFLOW, the best game to increase your financial literacy and grow your financial intelligence. Or consider looking into Rich Dad classes or coaching. You can also listen to learn with our Rich Dad Radio Show podcast for free.

Take the time you have now to develop your financial literacy and you’ll be well on your way to growing your financial intelligence and seeing money where others don’t.