Is your intelligence making you poor?

Ok, so I've stated that Intelligence is Expensive but how do you know if you're intelligence is actually making you poor?

It's very, very simple.

Look at your bank statements from one year ago and add together all of the cash in your savings accounts. Then, take from that figure the total of all your debt on your credit cards, personal loans and home loans. This is your starting point. (If you have a home loan it is likely that you will be starting with a negative figure)

Now do the same for today.

Is today's figure more positive than last year's figure?

Notice that the above equation has nothing to do with the size of your income? If you earned $50,000 and went forward you're a better driver than someone that has earned $300,000 and going backwards (granted they might be in a nicer car but you are the better driver!!)

Ideally you'll have saved at least 10% of your income so if you earn $150,000 you'll have saved $15,000. (If you've achieved this, that's great!! Be sure to stay tuned to future blogs to check how well you're doing at making your money work for you).

Now if you own property the values may have gone up and that's great. But in this exercise, unless you have bought a new property, and used your 10% savings for that, it's irrelevent to the equation.

If you didn't move forward, did you stay in the same position or did you go backwards slightly (or even a lot)? Why? Be careful how you answer this. Every year there will be unexpected expenses (it's the same when you drive a car - the car in front stops suddenly, children chase balls onto the road...things happen). The key is to drive safely and plan for the unexpected.

Now if you're not quite on track, it's not all doom and gloom... tune in next week for what I believe is the most important step in wealth creation...