• what is your financial iq

    What is your financial IQ?

    If you have ever visited our office located on the East Hamilton Mountain, there is a good chance that you have heard our speech which includes “pay yourself first”. We are happy to say that in a recent article by Rich Dad Robert Kiyosaki, he echoed this same sentiment. In the article he discusses what is your financial IQ? On the surface, many people think that a big salary translates to a high financial IQ. The person making $120K/year has a higher financial IQ than the person making $60K/year right? Wrong! We have plenty of clients come through our office with the nice juicy salary that can’t qualify. On the flip side, we have the person making an average or low salary where any bank would beg for their business. Why? One knows how to budget and invest; the other does not.

    Pay yourself first!

    When we say “nothing can go wrong when you pay yourself first” some of our clients look at us sideways. What does that mean? It means that you make sure you budget in a way that you are able to put money away and then have enough left over to pay the bank. It’s not how much you make that counts, it’s how much cash flow or disposable income you have and what you do with it.

    Invest in yourself

    You need to stop giving your money away. Another example when contemplating what is your financial IQ is based on what you do with the money you save. Do you stick it into a GIC or a mutual fund or give it to your financial planner and walk away? Bad move. You should be involved in your investments and do regular reviews. Let’s say that the guy making $120K/year has $10K to invest after all of his expenses and the guy who is making $60K/year has only $5K to invest. Who has the higher financial IQ? The guy who has $10K? Not so fast – the guy who invests the $10K is paying 50% tax on his gains and the other guy is only paying 13%.

    Have an emergency fund

    When you pay yourself, it’s not only important to invest, but also put money away for a rainy day. What happens when the car needs a repair or your roof needs to be done? Resorting to credit cards in those cases just restarts the cycle of debt and throwing money away in interest. It is incredibly important to have an emergency fund to pay for those unexpected crises!

    It’s not how much you make or invest, it’s how much you keep that counts! Pay yourself first!!

    Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

    If you would like to apply for a mortgage online, please follow this link.

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