“Sounds like the radiator,” says one of the men. “I bet it’s the alternator,” interjects another. A small group of men huddle around a stalled car, each giving their “expert” opinions while blindly looking under the hood. While each of the men speak as though they were experienced mechanics, one is a laywer, the other is an accountant, and the third a writer. In actuality, these men know absolutely nothing about this car or any other car for that matter. But, rather than admitting their lack of knowledge, they each decide to save face, pretend to know the answer, and remain ignorant for yet another day.
This is exactly what happens with our personal finances as well. Rather than continually studying and seeking ways to improve your financial mind, you are more likely to talk a good game while knowing exactly nothing about becoming wealthy. This tendency is leading to the most financial illiterate generation to date.
Wharten University has been studying personal finance intelligence for over 10 years and has repeatedly found disturbing results. In their study, they polled a wide audience of people and asked them three questions:
1) Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? A) More than $102. B) Exactly $102. C) Less than $102. D) Do not know/Refuse to answer
2) Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, how much would you be able to buy with the money in this account? A) More than today. B) Exactly the same. C) Less than today. D) Do not know/Refuse to answer
3) Please tell me whether this statement is true or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund.
Do you know the answers to these seemingly simple questions? Fortunately, I was able to get them right (phew!), but many in the study were not so lucky. On average, just 50% of those polled were able to get the first two questions right, and only one-third were able to answer all three questions correctly. In case you are curious, the answers are A, C, and False. Hopefully you got them right as well. But, whether you did or didn’t, we all can benefit from these 5 top ways to improve your financial mind.
The average American spends over an hour and a half driving every single day. Imagine what you could learn if you just tuned into Dave Ramsey or Clark Howard on the radio instead of listening to those same old songs that you are starting to hate? The Dave Ramsey Show is typically on from 2pm-5pm – search here to find your local station and air times. If Dave is a little to abrasive for you, then tune into Clark Howard. He provides some similar personal finance advice, but conveys the message without the over-the-top dramatics. His show typically airs from 1pm-3pm. If those times don’t work for your schedule, then just listen to the podcasts from your smartphone after they air! While you likely won’t learn everything there is to know about personal finance in one sitting, the little nuggets that you pick up on each day will soon grow into a massive pile and might become one of your top ways to improve your financial mind!
2) Read Personal Finance Books
This is perhaps the most challenging way to gain personal finance knowledge (as many of us are already experiencing restraints on our limited time), but in many instances it can more effective than audio. According to Forbes, this isn’t because one is more cognatively undertood than the other. Instead, with reading there is more of an opportunity to study the subject by underlining, taking notes, or re-reading a passage that you may not have initially comprehended.
When asked about personal finance books, these are the titles I recommend:
- The Richest Man in Babylon – by George S. Clason
- The Total Money Makeover – by Dave Ramsey
- God’s Plans for Your Finances – by Dwight Nichols
- The Behavior Gap – by Carl Richards
- The Cash Flow Quadrant – by Robert Kiyosaki
In addition to these titles, I would also suggest that you dig into the book of Proverbs from the Bible. Whether you’re a believer or not, there are hundreds of fantastic money insights that can better you and your personal finances.
The Dave Ramsey and the Clark Howard show are excellent for learning little tid-bits of information while driving, but if you want to better yourself and your financial situation more rapidly, then I suggest that you listen to more meaty audio – specifically, books on tape (or perhaps more accurately described today as, “books on CD” or “books on your smart device”).
The books I suggested above can all be found in an audio format, and I want to suggest some other audio as well:
- Live Your Best Life Ever – a presentation by Jim Rohn
- The Power of Habit – audio, originally written by Charles Duhigg
- Sell Your Crap, Get Out of Debt, Do What You Love – by Adam Baker
- 7 Baby Steps – by Dave Ramsey
All of the above links are free and will hopefully stay that way so that you can enjoy and learn from each one!
4) Attend Interactive Personal Finance Seminars
The initial three ways to improve your financial mind are good, but if you want to, you can do better.
From an old Chinese proverb:
“Tell me, I’ll forget. Show me, I may remember. Involve me, and I’ll understand.”
Audio helps, and reading is often better, but unless we get involved with our personal finances, we won’t truly understand. Unfortunately, many of the larger seminars out there use a talk and listen approach. A speaker typically stands up on a stage and tries to hold your attention for a few hours while clicking through PowerPoint slides. The information is often excellent in quality, but remembering all that is said will be difficult if you do nothing but take notes.
Instead of attending a large seminar, I recommend that you to do your due-dilligence and find a seminar that allows you to get more hands-on advice. If you want to learn about investing on your own, search your local library, church, or young professionals group for a class that will show you how to set up an online account, how to find and buy funds, and what to do once you make your selections. Of course, classes won’t always be available for your exact topic of interest, but do your best to keep your eyes peeled for opportunities like these. You’ll learn a lot and you’ll likely retain what you’ve been taught for many years in the future.
If you are looking for ways to improve your financial mind in the near future and interactive seminars aren’t at your immediate disposal, the absolute best way to learn about wealth is by seeking out those that are already wealthy and learning from what they have done. They say that your earnings are typically the average of your five closest friends, and this is certainly no coincidence.
If you want to improve your financial mind, then I suggest you get closer to those that have exceeding knowledge financially. Take them out for lunch, pay for a round of golf, and do your best to learn all you can about what you don’t understand. If they are willing, have them come along side and show you what you need to do to become wealthy (and also be sure to actually do what they tell you, otherwise their mentorship probably won’t last very long).
If you truly want help and wish to progress financially, you must become vulnerable and admit that you don’t understand everything. Open up your mind, open up your ears, and only open your mouth to ask questions.
Will you try these ways to improve your financial mind?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.