Boosting Your Financial IQ
Boosting Your Financial IQ
130: What Surprised Me About Your Financial IQ Assessments
Uncover surprising insights from over 1,000 Financial IQ assessments and learn why many struggle with financial decision-making. Explore how enhancing your financial literacy can drive business success and personal growth. Discover key strategies for creating value, boosting financial skills, and achieving financial freedom. Tune in for actionable tips to elevate your financial IQ and transform your approach to finance.
Here's how to get started with Boosting Your Financial IQ:
- Step 1: Test your financial IQ for FREE
- Step 2: Download the FREE app
- Step 3: Take the Fundamentals of Finance course
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If you want to make more money in business, here's the recipe the more value you create, the more money you're going to make. All right, why do you think some salespeople make more money than their CEOs? Because they drive so much value to the business. They're bringing in so much revenue right, and the business is nothing without revenue. This is Boosting your Financial IQ, where we learn how to speak the language of money and leverage finance to grow profitable businesses. Please share and enjoy.
Speaker 1:Here's what I learned from over a thousand results from the financial IQ assessment that we offer at byfiqcom. In fact, what I'm about to share with you surprised me quite a bit. So, first of all, the average score from the financial IQ assessment is between 50 and 60. It's about 55 on average. Now, this isn't super surprising because there's this massive financial literacy gap throughout the world, but I would encourage you if you haven't taken this financial IQ assessment, be sure to go to byfiqcom and check out where you stack up. Also, here's a freebie you can download our app for free the BYFIQ app, the Boosting your Financial IQ app on the Apple app or Google Play Store, and you can take the starter course for free. So if you take the financial IQ assessment. First get your score, see how you stack up to this, and then download the app and then start learning for free. There's no gimmicks, there's no hook, there's nothing. Just download it and start learning, because I want you to improve your financial literacy score, because I believe if you can speak the language of finance, you're going to be so much more successful in business. All right, so that didn't surprise me. All right, that was pretty obvious that we had this financial literacy gap.
Speaker 1:I went through the questions, I analyzed the questions and I was going to do an episode explaining the results on each of the questions. But, more importantly, I want to talk about some qualitative results that I got. So in my older assessment, I asked some questions like why are you here, what are your biggest aspirations, what are your biggest pain points, and so on and so forth, with the participants in this financial IQ assessment. And here's what surprised me when I asked what their biggest concern was from a financial perspective, I thought people would say something like their debt, or not saving enough money, or not having enough money put aside for retirement, or some variation thereof. In fact, you know what the number one thing is, the number one thing that people are concerned with is feeling inadequate when it comes to making financial decisions.
Speaker 1:Think about that. I mean, that's so true. We rely on other people to make financial decisions for us when we don't have financial literacy, which is crazy. I mean, imagine going to a doctor and you're like, hey doctor, look, you're way smarter than me. I've done nothing to educate myself about my body, so just whatever you think is best you could do. And they're like, okay, let's cut off your arm. And you're like, all right, sounds good, cut off my arm. And then they're like, oh, actually, that we didn't need to cut off your arm, we just needed to do this and this and that we could have saved your arm. You're like, oh crap, well, that that's too bad.
Speaker 1:The same thing is true in the world of finance, whether I'm referring to personal finance, which I don't really get into, but if you're working with a financial advisor, guess what If you're paying 2% and you instead just save that money by investing in low-cost index funds? And I'm not giving you financial advice here, but I'm saying, if you went down that path, versus using an expensive financial advisor who's putting you in mutual funds with high fees, using an expensive financial advisor who's putting you in mutual funds with high fees? Do you know that you will pay 58% more, right? In other words, you will have 58% less money than if you just invested in low cost index funds. Right? I'm not saying just go after index funds, I'm just using this as an example. Also, did you know that a lot of people they don't even know that they're paying fees the majority of people they don't even know that they're paying fees. The majority of people they don't even know they're paying fees on their 401k. So financial literacy costs us so much money, either from a personal standpoint, but especially from a business standpoint.
Speaker 1:So I get you, I hear you right. It makes sense that you feel inadequate when it comes to making financial decisions. Look, when I was running my first business I've said this before I had no clue how to read financial statements. I was literally just running my business off sheer grit and hard work and I have, like this crazy ambitious work ethic, right, I got it from my mom, right? Thank you, mom. I'm nobody great, I'm not even that smart actually, I'm just an ordinary guy but I have this incredible work ethic.
Speaker 1:So when I was running my business, I just like man, just go out there and bust out work, just do things. But then I was like, oh my gosh, when it comes to financial decisions, like after the fact, I'd be like that costs us a lot of money. And I made terrible mistakes. If you haven't seen my YouTube channel, I have this YouTube called the difference between markup and margin and in that video I explained the difference between marking something up by multiplying it by one plus the desired markup like multiplying it by 1.4 if you want a 40% markup and the difference between that and actually dividing it by one minus your desired markup right, one's going to give you a certain margin number. The other one's going to give you another margin number. So there's a major difference between markup and margin. I'm not going to get into the details, but find comfort in this or discomfort, whatever you want to do. I lost a ton of money just by making this simple mathematical mistake. So I get you, I hear you.
Speaker 1:You don't want to go out there and make financial mistakes, either in your, your business or in your role as a leader. If you're running a company, and especially if you're coming up through the ranks, you know a lot of people reach out to me. A lot of you reach out. Maybe you've reached out to me before, maybe you haven't. You always can. I love when people reach out. But students reach out to me and they ask for advice when it comes to pursuing a certain degree or a certain career and I could tell you, when you make better decisions, you're going to go so much further in the world of business and you're going to create a much more valuable company. So don't worry about it. Like, if you feel insecure about your financial skills, no big deal. Guess what? Join the club. That's where I was back in the day, but I got here just by building line upon line and understanding these principles day by day and just putting this stuff into practice. So just by listening to this podcast shows that you're dedicated to this and the more you listen to this and put this stuff into practice, the more it's going to stick All right, so don't worry about it. If you feel inadequate right now, there are a ton of tools out there to help you. Go to byfiqcom. I have free stuff you can just check out right now, like the get started for free no big deal.
Speaker 1:The second biggest concern that people have is not seizing financial opportunities right. This is true for all of us. Now, maybe there's an investment that somebody wants you to get into. If you don't know how financials work, maybe you don't understand the free cash flow of the business. You may go down that path and lose a ton of money.
Speaker 1:I've had people reach out to me before like oh my gosh, steve, I put all this money in crypto. I got a second on my house. I leveraged my house, I put money in crypto, I lost it all and now I'm like living in an apartment. I'm like what the heck are you doing? But I've also had business leaders that considered opportunities. They passed up on them because they didn't do the right analysis, because they didn't understand the story behind the numbers and guess what? They lost out on millions and millions of dollars.
Speaker 1:So that's why I believe it's so important to build financial skills, because finance is the language of business, and imagine going to a foreign country starting a business and never learning the language. Your business probably wouldn't do super well. The same thing is true in business. Imagine starting a business and you don't even know how to read financials. That was me. Don't do that right. It's not super smart. You're going to lose a ton of money. So I just want to point that out and just empathize with you, and I get that. These two things are real. I was just a little surprised, Like I said, I thought you were going to say something entirely different. Super helpful for me, all right. The second thing I want to talk about is what people said was most important to them. This surprised me as well, because there are a lot of options, but here's the number one thing people said is they want to achieve financial freedom. Now, that's not super surprising to me, because that's how I am.
Speaker 1:When I was younger and I was working and I was saving all this money and making all this money, I was doing it, not so I could go out and buy the next Mercedes or Porsche or this wristband or whatever. It may be. No shame in that if that's your prerogative. Just for me, that's not what I was interested in. For me, I liked money because what it bought me and it bought me freedom, and I've just been one of those guys like this naughty little curly haired boy. I used to have curly hair, believe it or not, but I used to be naughty. My mom actually had me on a leash back in the day and it was before. The leashes are cool. Now the leashes are like a monkey backpack with the leash and parents like can control their kids. No, mine was like a straight up rainbow leash, like a dog harness. My mom had me on. She's like come here, steven, and pull me around as I'd run around the store. And so I was just this non-conforming kid and I still have that in me. Somebody says, hey, you can't do that. I'm like okay, game on, I'm going to prove you wrong. So that's just how I've always been. So I don't like people telling me what to do. I like the freedom to just pursue my creative interest, and for me that's what money means. So I get it.
Speaker 1:People want financial freedom, but I can tell you it's going to be really difficult to achieve financial freedom by just saving your wages. Think about it. Let's say you make $200,000 a year. You want to become a millionaire. Say you live on half of that, which most people don't. But let's say you do. That means you have 100 grand left over. You pay taxes. Just take 50% off that for easy math, you're left with 50 grand. Sure, you can invest it, but not accounting for investing or inflation, it'd take you 20 years to get a million bucks In business. You could become a millionaire by taking a business from zero, putting a little bit of money in, growing your profits to, let's say, $250,000, getting a 5X multiple on it, paying capital gains tax of 20%, and you end up with a million bucks. So business is a great way to build wealth. That's why I'm so passionate about teaching business finance, because there's incredible upside. So achieving financial freedom I get it. It's really important and by listening to this stuff you're on your way there, all right.
Speaker 1:Number two is making informed decisions. That makes sense. I can't tell you how many times I've made decisions in the past and I was like that was dumb. Or I didn't understand things like LTV versus CAC, lifetime value of a customer versus my customer acquisition cost. And guess what? What? That was broken. My whole flywheel is broken. I kept pouring money into this flywheel and I was bleeding because my acquisition was wrong or my turn was wrong or my repeat customer base was wrong, like something was wrong in the flywheel, but I didn't have the financial acumen to know what to fix. So I just kept doing over and over and over again and I kept losing all this money. So I get that.
Speaker 1:And then the last thing that people are most interested in is making more money. All right, let's talk about this I just mentioned. If you wanna become a millionaire, there's a 20-year path of trying to earn it through your wages, or there's the business path. If you wanna make more money in business, here's the recipe the more value you create, the more money you're going to make. All right, why do you think some salespeople make more money than their CEOs? Because they drive so much value to the business. They're bringing in so much revenue, right, and the business is nothing without revenue. So if you could figure out how to drive more value in the business, you're going to get paid more. You're going to have more job security, whatever it is, because they're not going to want to get rid of you, because you're a value creator. So that's why I put out all this content. That's why I talk about strategy and finance.
Speaker 1:It doesn't matter if you're an aspiring finance professional, or maybe you're just an aspiring student. You just want to get a job, or maybe you're a business leader, or maybe you're a business owner. Wherever you're at, understanding how to drive value will be absolutely game-changing for your career. Before I doubled down on my financial literacy and went back to school, I spent eight years with my undergraduate in accounting and finance, my CPA, my master's in accountancy in my MBA. I don't say that to brag, trust me, it's not bragging. I spent eight years in a classroom, in like prison, right. But before I built these skills and had this knowledge, I made a ton of mistakes. I wasn't super valuable, but once I had them I left and now businesses hire me because of my financial literacy.
Speaker 1:So it doesn't mean you have to do what I do. It doesn't mean you have to go into a finance role. You may be a sales manager, or maybe you're an HR director. Whatever it is. If you can understand the story behind the numbers and you can participate in financial discussions and financial decisions, trust me, it's going to translate to more money, all right. So that's what I wanted to share with you. I have a ton of resources for you for free. Just to get started, I have my podcast, the YouTube, the free app. There's resources at byfiqcom. I literally care about you and your success. I want all the best for you. That's all I have for you. Anyways, be sure to share and subscribe. Thanks for joining me this time and until next time, take care of yourself. Cheers.
