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Tip 8. Learn to Speak the Language of Money

Financial literacy is the ability to speak and understand the language of money.

If you can’t read or understand the money language then you have little chance of operating a business that lasts more than 5 years.

It's not uncommon for people to misunderstand money. The recent tech stock boom, with all the hype of a "new economy" is a good example. Stock prices went crazy while investors ignored traditional value indicators.

This occurred because the language of money is filtered through two primary human emotions - greed and fear. Sometimes you hear words, but do you understand them?

Take responsibility and control for becoming financially literate.

Financial literacy stems from understanding accounting concepts, corporate law and tax law. You need to be familiar with investment theory so you can rank investment opportunities. You must comprehend the relationship between a balance sheet and a profit and loss. It's not easy, but it is essential.

It's critical you take responsibility for becoming educated financially.

Make sure you use your accountant to best advantage!

Ideally you and your accountant will combine different skills; you provide the business background and your accountant provides the financial expertise.

Unfortunately most accountants are good at numbers, but not at communication. When you talk to an accountant you're going to need to talk in their language. Speaking as an accountant it's easier to provide accurate advice when you understand the problem. Understanding is improved when the business issues are effectively communicated.

Better understanding usually translates to cheaper accounting fees, because I can appreciate the issue and start to work on it immediately.

Be aware that what you tell your accountant and what they hear may be two different things. It may be a good idea to have your accountant prepare an engagement letter summarizing what they think you require. I would also recommend that you take notes at meetings and send your accountant a copy.

Most importantly, financial literacy will assist you to identify opportunities.

Improving your understanding of finance matters will also improve your business prospects. You can use the information to help analyze business trends and customer profitability.

How do you increase your financial intelligence?

Check out my research page. This has many excellent sources of financial information to help you get educated. I also recommend you join the Inner Circle.

A feature of my Inner Circle membership is the monthly chat sessions. You're encouraged to come online and chat about any issue you like. This is an excellent opportunity to work with me one-on-one.

Steps For Immediate Results

  1. Don't rely on your accountant to make sense of the numbers for you. Take charge and learn what all the figures mean. I recommend you start by reading a book by Robert Kiyosaki called "Rich Dad Poor Dad".

  2. Revisit this site regularly to see the new features and articles. Read the financial pages of your favorite newspaper and highlight words you don't understand. Look them up to find out their meanings.

  3. Use your understanding of money to identify business opportunities.

 




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