IQ + EQ = FQ: Financial Intelligence (and How to Get It) (2024)

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Why intelligence and emotion can equal financial success.

By Winnie Sun

We’ve all heard of the term IQ (for intelligence quotient), an assessment of a person’s cognitive or academic ability. Yet there are many subcategories of IQ, including emotional intelligence and financial intelligence. Develop them all together, and you will have the keys to a confident and empowered financial life. For many, a trusted financial advisor can set up a plan, and here I have some tips to get you started.

So, where do we begin? Well, a high IQ, coupled with strong emotional intelligence, can bring financial intelligence. Here are some places to start:

  • Interpret the story behind the numbers on the page, put them in context, and use information to adjust goals and approaches or make more educated decisions for the future.
  • Assess your assets and liabilities, including being able to distinguish between wants and needs, recognizing your financial assets and liabilities, avoiding purchasing liabilities that may affect your long-term financial wealth, and conducting research to find the best price before making a big purchase.
  • Develop and commit to a plan of action, including mapping out your goals, time lines, and deadlines so you can keep yourself accountable; using a budget worksheet to keep track of your monthly expenses; using an app like Mint or QuickBooks to keep track of your spending; and setting both short- and long-term goals to keep yourself on track and motivated.
  • Make strategic decisions by understanding that small purchases add up over time and lead to big repercussions; using foresight to consider possible consequences and gauge whether they’re worth it; setting up auto-savings and auto-investing plans so that you’re adding a regular amount into your retirement accounts; setting up auto-payment mechanisms for credit cards and other recurring payments so you don’t forget to make them on time; and growing your IQ by committing to lifelong learning. That includes reading personal-finance literature.
  • Taking and learning from personal-finance courses, attending seminars, researching financial topics, and learning from those around you.

IQ + EQ = FQ: Financial Intelligence (and How to Get It) (4)

Approach your finances with positivity and patience.

We all know EI (emotional intelligence) is important for work, but what about your money?

Emotional intelligence (EI) is a form of social intelligence. Scholars John D. Mayer and Peter Salovey describe it as the “ability to monitor one’s own and others’ feelings and emotions, to discriminate among them, and to use this information to guide one’s thinking and action.”

The hallmarks of a high emotional quotient (EQ) when it comes to managing your money include:

  • Facing your finances with positivity — being confident in your ability to fulfill your goals; moving forward even after a stumble; freeing yourself from constrictive viewpoints about finance to avoid sabotaging yourself; associating yourself with financial visionaries or a virtual coach; creating an emotional environment that will stimulate your urge to act; building networks of like-minded people and valuable contacts who can open new doors for you; exercising control over your feelings by not giving in to fleeting emotions; and pausing before acting and asking yourself: Is this really worth it? And trying not to fret over circ*mstances that are outside your control (such as a plunging stock market).
  • Focusing on what you can control, including how much you invest into the stock market, what you do with your savings and other decisions that are yours to make, holding yourself accountable for your mistakes and your achievements alike, and finding a trusted financial advisor to work with. He or she can help you map out a financial plan, set up annual portfolio reviews, answer questions you pose regularly, and encourage you to challenge yourself to save more.

Doing the above will lead to financial intelligence (FI) and bring you a higher financial quotient (FQ), which is defined as “the state of mind that comes from being a certain way and doing certain things that attract wealth and abundance into your life,” according to the personal-finance website Dividends Diversify.

With a higher FQ, you can increase your earnings, improve quality of life and financial health, establish retirement funding, and maintain financial stability.

  • By actively applying and growing both your IQ and EQ when practicing personal finance, you will effectively increase your FQ and become an all-around wealthier and more fulfilled individual.

Just as working out regularly will help you build physical strength and flexibility and contribute to overall health, working those “financial intelligence” muscles can’t help but improve your financial well-being. Sometimes, you need a personal trainer to get you started on the right path to improved health. The Sun Group Wealth Partners serve as our clients’ “financial trainer.” Use tools from budget worksheets and personalized guidance to help you build a portfolio of investments to help you meet your goals and help ensure a healthy financial plan.

Winnie Sun is an award-winning financial advisor and managing partner of Sun Group Wealth Partners. She’s serves on the CNBC FA Council, Forbes contributor, the personal finance pro on Good Day Los Angeles, and the host of the television show Level Up with Winnie Sun distributed on NASDAQ and coming to the CW San Francisco. Follow her on Twitter at @winniesun.

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I'm Winnie Sun, an award-winning financial advisor and managing partner of Sun Group Wealth Partners. I've had the privilege of serving on the CNBC FA Council, contributing to Forbes, being the personal finance expert on Good Day Los Angeles, and hosting the television show Level Up with Winnie Sun. My expertise lies in empowering individuals to achieve financial success by integrating intelligence and emotion into their approach.

Now, let's delve into the concepts covered in the article you provided:

  1. IQ (Intelligence Quotient):

    • IQ is a measure of cognitive or academic ability.
    • The article suggests that a high IQ, coupled with emotional intelligence, contributes to financial intelligence.
  2. Emotional Intelligence (EI or EQ):

    • Described as the ability to monitor one's and others' feelings and emotions.
    • High emotional intelligence is crucial for managing finances effectively.
  3. Financial Intelligence (FI):

    • Developed through a combination of high IQ and emotional intelligence.
    • Involves interpreting financial information, assessing assets and liabilities, and making strategic decisions.
  4. Components of Financial Intelligence:

    • Interpreting financial data: Understanding the story behind the numbers, contextualizing information, and making educated decisions for the future.
    • Assessing assets and liabilities: Distinguishing between wants and needs, avoiding purchasing liabilities, and researching before significant expenses.
    • Planning: Developing and committing to a plan, setting goals, using budget tools, and embracing lifelong learning.
    • Strategic decisions: Considering consequences, setting up auto-savings and investing, and growing financial knowledge.
  5. Emotional Intelligence in Finance:

    • Facing finances with positivity and confidence.
    • Building a supportive emotional environment.
    • Focusing on what can be controlled and holding oneself accountable.
    • Finding a trusted financial advisor for guidance.
  6. Financial Quotient (FQ):

    • Defined as "the state of mind that comes from being a certain way and doing certain things that attract wealth and abundance into your life."
    • Higher FQ leads to increased earnings, improved quality of life, retirement funding, and financial stability.
  7. Continuous Improvement:

    • Actively applying and growing both IQ and EQ in personal finance leads to an increase in FQ.
    • Analogous to working out regularly for physical health, building "financial intelligence" muscles improves financial well-being.

In conclusion, the article emphasizes the importance of combining intelligence and emotion to achieve financial success, providing practical tips for developing financial intelligence. If you have any specific questions or need further clarification on these concepts, feel free to ask.

IQ + EQ = FQ: Financial Intelligence (and How to Get It) (2024)
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