Rewind: Financial IQ vs EQ — Karen Eley on the money habits that matter

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Owen Raszkiewicz (1:01)

Over the years, we've produced some fantastic episodes here on the Rask Network. Thousands of podcasts. And sometimes there's some gold that's buried deep in this vault of content. What you're about to hear is one of those episodes. It's already been published on this channel. But we thought it was so good that when we reached back into the vault to see what was there, this episode came up. I hope you enjoy this very special Rewind Episode here on the Rask Network.

Hey there, here's a quick note. This podcast contains general financial information only. That means it's not specific to you, your needs, goals or financial objectives. So don't act on the information until you've spoken to your financial planner. You'll find our full disclosure, disclaimer, and link to our financial services guide in the show notes. Hello and welcome to this episode of the Australian Finance Podcast. I am joined in studio by Karen Eley. How are you going?

Karen Eley (1:50)

Really good, thanks Owen.

Owen Raszkiewicz (1:51)

That's good. Today we're talking the difference between financial IQ and financial EQ. So IQ versus EQ both have a role to play in dealing with money and growing wealthy, staying wealthy and all the things. So for folks who haven't maybe heard you or come across you, you've been on the podcast a lot.

What do you do?

Karen Eley (2:17)

So I am a money coach. So I help people in terms of financial literacy and education, but I also look into this people's psychology. So their patterns and behaviors and mindset around money. So I was a financial advisor for 16 years and I love being a financial advisor. So I've got all the practical skills, but my passion really lies in why answering the question, why people do what they do with money, because sometimes it's not always using their IQ, but it's using their EQ.

Owen Raszkiewicz (2:47)

Yes, it is indeed. You're technically still a financial advisor.

Karen Eley (2:50)

I am still on the register.

Owen Raszkiewicz (2:52)

Yes, you are, yes. Kept up to date with all your qualifications and everything like that.

Karen Eley (2:56)

Definitely.

Owen Raszkiewicz (2:57)

And you're also the chair of our investment committee. So that's always fun getting to chat with you about investing and hearing everything you have to say about how investing should be done. So today we're going to zoom in on this kind of this intersection of financial IQ and financial EQ.

Let's start with, let's pull them apart one at a time. So what's financial IQ?

Karen Eley (3:20)

So that really is your level of financial knowledge and literacy. So things about understanding diversification, risk versus return, what is a share, what's property, tax consequences. So I was having all of that knowledge and then acting on that knowledge.

Owen Raszkiewicz (3:36)

Okay. So that's kind of the spreadsheet brain, I guess.

Karen Eley (3:38)

Absolutely.

Owen Raszkiewicz (3:39)

What's the financial EQ then?

Karen Eley (3:41)

Yeah. So the EQ is around how you make decisions under pressure.

Owen Raszkiewicz (3:47)

Okay.

Karen Eley (3:47)

How you feel about money, your level of emotional regulation. So when those emotions come up, how do you manage them? Do you manage them well? Do you not manage them well? And then what are the consequences for your finances because of that EQ?

Owen Raszkiewicz (4:03)

Okay. So we talk about this a lot on the show.

So we mainly probably deal most in the first one. We're trying to help people understand finance and investing at a practical level. Like dividends are this and compounding is that and tax means this.