If you are reading this, then you are obviously interested in what the most important financial skills are and want to know how to acquire them.
Well, never fear! I have written down my top choices. I have listed why I believe they are important and how you can start using them to propel you to success!
There are some simple rule of thumb that come to mind, but they are so simple that I think they are overlooked and taken for granted.
Making money is simple, people are complicated.
With that, here is my top 5 financial skills list…
1. Money Management
This should go without saying, but the way we manage money can differ from person to person.
I was personally brought up with T. Harv Eker’s money management system that he talks about in his courses and books.
I also use a budgeting system that tracks my transactions, separates categories for my money, and has great back-end tutorials. This wonder of a resource is called, Mvelopes.com
If you have never used them, you are missing out big time! They are my favorite money managing tool and have forever impacted my life for the better!
Plus, sign up now and they will give you 30 days free to try them!
I can’t stress this enough. Money management is easily the most important thing to learn financially and can be the root cause of success or failure in any business or financial venture.
What good is getting 10,000 dollars if I don’t manage or handle it any better than I do with 1,000 or even 100 dollars?
The real value of someone financially eventually comes down to how well they manage their money, not how much they make.
2. Credit Card Management
Don’t get me wrong, I have a credit card and will most likely get another down the road, but the main reason I got one was so that I could build my credit score, not so that I could start getting in unnecessary debt.
This is what most people don’t realize about credit cards, that it is based on your “credibility” to pay back the mini-loan that you took out to make a purchase.
Credit cards can be very useful for business and many investors use them to finance their deals. They are easy to apply for and if you setup auto payments online, many of them are very easy to pay back or keep track of their transactions.
The reason I place credit cards on this list is because too many people fall back on them and don’t realize that they are going into debt rapidly.
I don’t advocate getting a credit card if you have a tough time paying back money or intend to use them as a substitute for a regular debit card or cash.
Credit cards should not be used lightly, however, they can be great tools and very good to have in hard times… as long as I know what I’m getting into.
3. Asset Vs. Liability
The key to success is knowing the difference between an asset and a liability. I don’t care who you are, what your background is like or what you believe; if you don’t know what brings you financial freedom and what takes it from you, you will never be truly successful financially.
Robert Kiyosaki’s Rich Dad Poor Dad is an exceptional way to lay a strong foundation for your financial knowledge, and much of this concept is due to his written works.
He talks about how knowing what puts money into our pockets vs. what takes money out, and what we need in today’s society vs. what we think we need today, are absolutely key in becoming financially free.
This may seem overly apparent, but if you have never read about the differences between these two things, this will seem very foreign to you, if not downright stupid!
The idea that a car, a house, or your cell phone are not assets, but are in fact liabilities, will completely re-shape the way you look at anything in your possession.
4. The Cashflow Quadrants
This is also an idea Robert came up with in his book The Cashflow Quadrant, and boy what a stellar book it is!
The next book after Rich Dad Poor Dad, it compares each working class, their strength’s weaknesses, and why the right side of the quadrant is better than the left to achieve financial freedom.
The reason I believe that everyone needs to understand the Cashflow quadrant is because all too many people have absolutely no clue when it comes to investing, being a business owner, self-employed work, and how these compare to being an “E” employee.
When I first saw this diagram, I became incredibly engrossed with financial freedom and what that meant, I think many people found me odd as I grew up because no one my age was talking about these ideas. (I learned these concepts at age 12 or so)
Understanding that simply being a doctor who makes a lot of money, but pays a ton in taxes and loses any revenue when he is no longer practicing, impacted me greatly, and that is just one example!
While I am sure some would argue that this not a “skill”, but if I have read anything about mindset, I have learned that holding a good mindset is a daily habit and practice. It is something that can be learned, but it is not something that comes naturally.
I’ve said it before and I will say it again, read T. Harv Eker’s Millionaire Mindset book, you need a book like this to help you overcome those internal blocks that so easily trap us in negativity and passivity while opportunities pass us by.
The reason I listed this is because without proper mindset, any tool, business, or investment we use can end in ruin not from external circumstances, but from our own self-doubt and self-sabotage!
There is a saying, it goes something like:
“Your greatest opponent is yourself.”
This is only true if I understand and believe that I am powerful, limitless, and that I have the ability to do anything I choose.
With that in mind, who can stop me?
Well, I can. I have the ability to not do something, and wreck anything. Are there consequences? You bet.
Let me know in the comments below with any questions, and I will get back to you asap!