Episode 1: Emotional Intelligence versus Financial Intelligence
Welcome to the new Financial Intelligence series on Money and your Emotions.
This is a topic that concerns everyone that ever has anything to do with money.
At one time or the other, you may have made a financial decision out of emotion rather than reason.
When this happens two things are possible. You will either overspend or hold back your money.
Before we go into the details of how your emotions affect the financial decisions you make, let us define and understand certain key terms.
💰What is Emotion?
Emotion is a person’s internal state of being and involuntary physiological response to an object or a situation, based on or tied to physical state and sensory data.
It is the major driving force for most of the decisions we make and action we take ranging from happiness to anger.
💰Emotional Intelligence is essentially the ability to recognize your emotions, understand what they’re telling you, and realize how your emotions affect people around you.
The authors of Emotional Intelligence 2.0 have identified 4 skills that make up EQ to include: Self-awareness, Self-management, Social-awareness and Relationship Management.
While the first two relate to your Personal Competence, the last 2 are more about your Social Competence
I believe the part of your EQ that relates to your ability to make quality financial decisions is personal competence.
💰On the other hand, Financial Intelligence is obtained from knowledge and experience gained from working with money.
In my own words, Financial Intelligence is defined as the basic knowledge of how money works and the application of this knowledge in making financial decisions that make life better.
As you can see, these two types of Intelligence are distinct from one another.
However, both are crucial for the successful management of personal finance.
In the next episode, we are going to consider in details how your emotions can drive away Financial Intelligence.