Financial Fluency Friday: Where Are You On The Financial Fluency Scale?

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Are you financially fluent?

Starting today, and every Friday for the foreseeable future, we’re going to talk finance.

Since we here at The Edge of Innovation don’t know exactly where your financial education lies we’re going to start from the basics and build from there.

Let’s jump right in…

Wait! Before we begin I want to remind you of the two great financial dangers:

“I already know that.”

AND

“This is too overwhelming.”

Routinely when I work with business owners I hear the phrase, “I already know that.”  The objective, of course, is not whether you already KNOW, it’s whether you currently APPLY.

For those of you who are financially fluent, rather than dismiss these basic financial lessons in the beginning blog posts, make the committment to challenge yourself on whether you are actually applying these principles to your business right now.

If you are one of the more inexperienced when it comes to financial fluency, it’s important for you not to gloss over these lessons and arrive at the conclusion that it’s too overwhelming.

Much of business comes down to a financial score. And when you don’t score well, you don’t have a business. At least not for long. Therefore, it’s imperative you know the financial score of your business and your personal wealth. (Which, by the way, are not one and the same)

Now let’s get started…

It’s starts with an understanding of where you are currently. Where do you fall on the financial fluency scale?

Financially Illiterate –> Financially Literate –> Financially Fluent

Financially Illiterate:

• Very little knowledge of finances.
• Always rely on others for financial advice.
• Don’t know the different between business finances and personal finances.
• Struggle to understand basic financial terms.

Financially Literate:

• Understand basic terms, but get lost on more advance strategies and concepts.
• Can read and interpret financial statements.
• Don’t always rely on others for financial advice, but rarely make strategic financial decisions.
• Generally do an average job of staying on top of both business and personal finances.

Financially Fluent:

• Understand and apply advanced financial strategies and concepts.
• Consistently evaluate both business and personal finances.
• Use advisors regularly, but remain in full control of all strategic financial decisions.
• Always take the time to learn from past financial mistakes to avoid repeating.

Take Inventory

This weekend, take a moment and take an inventory of your finances. Also take an investory of your knowledge and how well you are applying your knowledge.  Determine where you fall on the financial fluency scale. Write down your strengths and weakenesses. Determine what areas you want to improve. And, be sure to share with us so we can address them each week on Financial Fluency Friday.