Increase Your Financial IQ

Robert Kiyosaki, author of this text entitled Increase Your Financial IQ is an investor, entrepreneur and educator whose perspectives on money and investing align with conventional wisdom. Kiyosaki has challenged and changed the way many people around the world think about money.

Born and raised in Hawaii, this financial expert is a fourth-generation Japanese-American. After graduating from college in New York, Kiyosaki joined the Marine Corps and served in Vietnam as an officer and helicopter gunship pilot.

On the question of whether money makes one rich, this author says it is not so. He explains that money alone does not make one rich, adding that we all know people who go to work every day, work for money, make more money, but fail to become richer.

This financial expert asserts that ironically, many only grow deeper in debt with the money they earn. Kiyosaki says we have all heard stories of lottery winners, instant millionaires, who are instantly poor again. He adds that again, we have heard stories of real estate going into foreclosure, and instead of making homeowners richer, more financially secure, real estate drives homeowners out of their homes and into the poorhouse.

Kiyosaki says many of us know of individuals who have lost money investing in the stock market. He educates that even investing in gold, the world’s only real money, can cost investors money.

According to him, this text is not a get-rich one or a text about some financial magic formula. Rather, he says it is about increasing your financial intelligence, your financial IQ. It is about getting richer by getting smarter and the five basic forms of financial intelligence required to grow richer, regardless of what the economy, stocks, or real estate markets are doing, reveals this author.

Structurally, this text is segmented into ten chapters. Chapter one is interrogatively entitled What is financial intelligence? In this author’s words here, “Money alone does not solve your money problems. That is why giving poor people money does not solve their money problems. In many cases, it only prolongs the problem and creates more poor people.”

Kiyosaki educates that hardwork also does not solve money problems, stressing that the world is filled with hardworking people who earn money, yet grow deeper in debt, needing to work even harder for more money.

He says education does not solve money problems, adding that the world is filled with highly educated poor people.

According to Kiyosaki, it is only financial intelligence that solves all money problems. In his words, “In simple words, financial intelligence is that part of our total intelligence we use to solve financial problems… Financial intelligence solves these and other money problems. Unfortunately, if our financial intelligence is not developed enough to solve our problems, the problems persist… Many times they get worse, causing even more money problems. For example, there are millions of people who do not have enough money set aside for retirement. If they fail to solve that problem, the problem will get worse, as they grow older and require more money for medical care.”

This author reiterates that whether or not you like it, money does not affect lifestyle and quality of life, adding that the freedom of choice that money offers can mean the difference between hitchhiking or taking bus or travelling by a private jet.

Chapter two is based on the subject matter of the five financial intelligence quotients (IQs). Kiyosaki educates that the five basic financial IQs are: Making more money (Financial IQ No 1); protecting your money (Financial IQ No2); budgeting your money (Financial IQ No3); leveraging your money (Financial IQ No4) and improving your financial information (Financial IQ No5).

As regards difference between financial intelligence and financial IQ, he says, “Most of us know that a person with a mental IQ of 130 is supposedly smarter than a person with an IQ of 95. The same parallels can be drawn with financial IQ. You can be the equivalent of a moron when it comes to financial intelligence… Financial intelligence is that part of our mental intelligence we use to solve our financial problems. Financial IQ is the measurement of that intelligence. It is how we quantify our financial intelligence. For example, if I earn $100,000 and pay 20 per cent in taxes, I have a higher financial IQ than someone who earns $100,000 and pays 50 per cent.”

Kiyosaki explains that in this example, the person who earns a net of $80,000 after taxes has a higher financial IQ than the person who earns a net of $50,000 after taxes. Both have financial intelligence, but the one that keeps more money has a higher financial IQ, educates this expert.

In chapters three to seven, the five financial IQs already discussed in chapter two, are elaborately examined respectively.

Chapter eight is christened The integrity of money. According to Kiyosaki here, “‘Integrity’ is an interesting word. I have heard it used in many different ways and in different contexts. I believe it is one of the more misused, confused, and abused words in the English language. Many times I have heard someone say, ‘He has no integrity’, or ‘If they had any integrity, they would be more successful’. Someone else might say, ‘That house has integrity of design’.”

This author says before discussing the integrity of money, it is necessary to define Integrity. Kiyosaki says “Integrity”, according to Webster, can be defined as “Soundness” (an unimpaired condition); “Incorruptibility” (firm adherence to a code of especially moral or artistic values) and “Completeness” (the quality or state of being complete or undivided).

This expert educates that just as health can break down from a literal lack of integrity, so can wealth be compromised by lack of integrity. “Instead of disease or death, which comes from a breakdown in the body’s integrity, symptoms of a lack of financial integrity are low income, crippling taxes, high expenses, excessive debt, bankruptcy, foreclosure, increased crime, violence, sadness, and despair,” expatiates this author.

He says the integrity of all the five financial IQs is needed to grow rich, stay rich and pass wealth on to generations after you. Kiyosaki asserts that missing one or more of the financial IQs is like someone who does not know how to drive attempting to drive a car that has brakes without pads, and water in the gas line.

In this author’s words, “When a person is struggling financially, one or more of these financial intelligences is out of whack, financial integrity is not sound, and the person is not complete. For example, I have a friend who earns a lot of money as a manager of a small business. Her problem is she has no protection against taxes, plus she does not budget wells, spends impulsively to buy clothes and goes up in price. She gets her financial advice from her husband and his (the husband’s) financial planner.”

In chapters nine and ten, this author beams his intellectual searchlight on the concepts of developing your financial genius and developing your financial IQ.

As regards style, this text is a prototype for stylistic excellence. For instance, most of the illustrations are based on the financial experiences of the author himself, thus lending credibility and conviction to the text. The language is simple and the presentation very didactic. Kiyosaki generously employs graphical embroidery to achieve visual reinforcement of readers’ understanding and make the layout of the text eye-friendly.

However, conceptual repetition is noticed in chapters three to seven where the five financial IQs already discussed in chapter two are further examined. One would have expected him to have harmonised chapters two to seven. Probably, Kiyosaki wants to create emphasis through deliberate repetition.

Also, the word “Intelligence” whose grammatical behaviour in the dictionary shows that it is an uncountable noun as reflected by the symbol “U” against it, is still used in this text in a countable way on pages 150 and 151 where we have “Intelligences”.

In spite of the few errors, this text is fantastic. It is a must-read for those who want to accomplish financial freedom and abundance through concrete financial education.

Achieving SOX Compliance Through Security Information Management

Introduction: Brief Overview of SOX The Sarbanes-Oxley Act of 2002, also known as the Public Company Accounting Reform and Investor Protection Act of 2002, and commonly referred to as SOX, is a federal law designed to improve disclosures and closely supervise accounting practices for publicly traded companies and public accounting firms. The legislation, spawned from high profile fraud and scandal dating back to the late 1990s, represents one of the largest reform measures in the history of US business.

The regulation mandates strict operating and reporting practices for all publicly traded U.S. companies, foreign filers in US markets, and public accounting firms. The sections of SOX that impact the public company’s IT department include:

  • Section 302 — Corporate Responsibility for Financial Reports. Public company officers must confirm the reliability of quarterly and annual financial statements.
  • Section 404 — Management Assessment of Internal Controls. All publicly traded companies must submit an annual report to the SEC on the effectiveness of their internal accounting controls. The independent company auditor must also attest to the accuracy of the report. (While not explicitly defined, IT general controls are included in the scope of Section 404 compliance).
  • Section 409 — Real-Time Issuer Disclosures. Public companies must stay abreast of and declare material changes in their financial condition or operations within 48 hours. (While not specifically defined, a major breach in information security has the potential to cause a significant deficiency or material weakness in the internal control structure.)

The primary focus for SOX compliance has been Section 404. Management must consider the extent to which threats and vulnerabilities in the corporate computing environment can represent a significant deficiency or material weakness in the internal control structure. They must ensure that the systems, services, devices, and data involved in the production of corporate financial records and financial reporting are appropriately isolated, that physical and logical access is appropriately restricted, and that all controls are thoroughly tested and documented on a routine basis.

The SOX Challenge: Improving the Accuracy and Reliability of Financial Reporting Though SOX can positively affect corporate governance by improving the internal control structure, compliance presents significant challenges, particularly for IT organizations. The IT general controls are very closely scrutinized during the annual audit, because virtually all of the company’s financial data resides on network servers. IT departments must provide detailed information to internal and external auditors about the IT general controls protecting financial reporting data and processes. Network administrators need the ability to use existing technology to manage and report on access controls related to the target environment, and provide documented evidence of the reliability of those controls.

SOX mandates accountability and requires each organization to examine the effectiveness of their approach to information security. To be effective, an information security solution must demonstrate that IT general controls are managed and monitored over time. The solution should also ensure that all systems, services, devices, data, and every personnel that touches financial data and reporting processes are secured.

Financial information security is a complex task requiring a broad security strategy. Organizations must not only achieve SOX compliance — but also maintain it continuously.

Publicly traded companies must to do the following in support of Section 404:

  • Ensure that the IT security administration monitors and logs security activity and identified security violations.
  • Review a sample of problems or incident reports, to consider if the issues were addressed in a timely manner.
  • Determine if the organization’s procedures include audit trail facilities for incident tracking.
  • Review a sample of problems recorded on the problem-management system to consider if a proper audit trail exists and is used.
  • Ensure that system-event data are sufficiently retained to provide chronological information and logs to enable the review, examination, and reconstruction of system and data processing.

Identify all systems, services, devices, data, and personnel that participate in the production of financial data and financial reporting

  • Isolate this target environment from the rest of the corporate computing network
  • Restrict physical and logical access to the target
  • Monitor physical and logical access to the target
  • Monitor the target for unusual and/or anomalous activity
  • Create an incident response plan specific to the target
  • Test and review the incident response plan
  • Routinely test controls in place and prepare summary reporting for the internal audit team

Though no single software product can enable full Section 404 compliance, the right SIM technology can help public companies efficiently manage the IT general controls. An effective security management solution provides public companies the tools to implement, maintain, and report on information security controls with minimal utilization of resources.

SOX mandates that corporate governance now include the appropriate management of information security. Senior management and even board-level directors now bear personal responsibility for oversight of compliance. Executive management needs to work closely with IT organizations on risk assessment and the implementation of security policies and operations. Overall, a security program that integrates people, policies, process, and technology is the best approach to managing Section 404 compliance.

Register now to read the full report outlining in detail how an effective Security Information Management solution can enable SOX compliance [http://netforensics.com/resource_form.asp?f=/download/nF_SOX_WhitePaper.pdf&i=SOX_WP&source=article&topic=SOX].

5 Steps of Financial Planning Process

Financial Planning process starts from understanding & examining your current situation, gathering relevant financial information, setting up financial goals (short term & long term) and finalizing a plan in detail. This will cover how to meet the financial goals in the current situation and future plans.

Step by Step approach – Financial Planning Process

Set specific and quantifiable goals You should have a specific targets of what you want to achieve and when you want to achieve it. Have measurable goals as it will be simple for you to understand whether you achieved your goals or not.

Analyze and understand every financial decision Every decisions are interrelated and one has impact on other financial decisions. A comprehensive plan is required otherwise it will be difficult to reach financial goals.

Re-evaluate your financial situation periodically Apart from planning, you need to monitor and check your financial position regularly. Owing to change in income levels/expenses/circumstances, such as a marriage, kids, house purchase or increase in income. As Financial Planning is dynamic in nature, changes are required in your planning periodically, so that you are on track with your long-term goals.

Start your financial planning early The early you start your planning, the better it is for you. Developing well Financial Planning habits at an early age such as saving, budgeting, investing will prepare you to meet life changes and handle any kind of situation/emergencies.

Be ready for the unexpected – Know all risk Inflation, stock market movements, interest rates all effects your financial goals and these are beyond your control. So be prepared for this kind of unexpected situations.