Most people focus on book smarts, but the most successful people have street smarts
A friend of mine who is Catholic asked his priest what motivated him to join the priesthood.
“Well,” said his priest, “When I was a young man, there were two choices in front of me: join the mob or join the priesthood. Initially, I joined the mob and started rounds collecting money from the old ladies who wanted to play the numbers. It went great until me and my buddy got the bright idea to take a little off the top.”
“One day, after doing my rounds, I saw the boss waiting for me outside the door. I knew it wasn’t for a pleasant hello, so I started running. He caught up with me and pinned me to a wall, baseball bat in hand. ‘Tell me one reason why I shouldn’t mess you up right now?’ he growled. I blurted, ‘Because I’m going into seminary!’”
Thirty years later, the man is still a priest, and a happy, successful one at that with a very large and thriving church.
Street smarts vs. book smarts
The story of how my friend’s priest joined the priesthood is an example of street smarts. He knew, intuitively, what he needed to do in order to survive…and in the process he found his own personal calling.
While being a priest of a large church is one type of success, all of the most successful people I know in life have high street smarts either alongside or despite their book smarts.
This is why many successful people dropped out of college but still did well in life, such as Bill Gates, Mark Zuckerberg, and Steve Jobs. It is also why many people with degrees from prestigious universities can be stuck in middle management, dead-end jobs.
Street smarts and emotional intelligence
One of the reasons someone with street smarts can become successful despite not having high book smarts is because they have high emotional intelligence, which in life is much more important than educational intelligence.
As Rich Dad Advisor, Lisa Lannon wrote: “Education doesn’t teach you how to take risks and how to take a chance on life. It does not prepare you how to take financial risks, or how to achieve financial freedom. And let me tell you, financial freedom will only come when you finally accept that mistakes are learning curves and that risk can be managed.”
My friend’s priest showed emotional intelligence when being faced with an angry mob boss holding a baseball bat to his face. He knew what needed to be done and he did it. If he’d tried to reason his way out of the situation, he’d probably have just ended up with some broken bones.
Now I can guarantee he was scared in that moment, but emotional intelligence is what allows us to overcome fear, see clearly a path forward, and take decisive action in the face of obstacles.
In the same way, the most successful people when it comes to money have high emotional intelligence, even if they don’t have high educational intelligence. They have strong street smarts even if they don’t have good book smarts. In short, they are able to overcome fear with their emotional intelligence in order to take the necessary risks needed to increase their financial intelligence and become rich.
The need to overcome fear to succeed
Being human means having emotions. We all feel fear, sadness, anger, love, hate, disappointment, joy, and more. What makes us each unique is how we respond to those emotions.
When it comes to risking money, we all experience fear, even the most successful of us. The difference is how each of us handles that fear. For many people, that emotion of fear generates the thought: Play it safe. Don’t take risks.” For others the fear of losing money makes them think: “Play it smart. Learn to manage risk.”
Same emotions, different thought: different being—different doing—different having.
Simply put, those who are rich are more mature when it comes to overcoming their fear. They are not reckless in doing so, but rather they put their emotional intelligence to work to see more clearly the path forward even in the face of fear and doubt.
If you want to be rich, you also need to learn how to grow your emotional intelligence and overcome fear.
Emotional intelligence is the key to success
In my opinion, the greatest cause of financial struggle is the fear of losing money. It’s this fear that causes people to often operate too safely. If fear keeps you back from pursuing your dreams, I recommend you read “Emotional Intelligence” by Daniel Goleman.
In his book, he explains the age-old puzzle of why people who do well in school do not always do well in the real world.
Goleman’s answer is that your emotional IQ is more powerful than your academic IQ. That is why people who take risks, make mistakes, and recover often do better than people who learned not to make mistakes and are afraid to take a risk.
Too many people leave school with good academic marks but no marks earned by taking a chance. They are not emotionally prepared to take risks, especially financial ones. Financial freedom comes when you finally feel free to make mistakes and manage risk.
Emotional intelligence leads to financial intelligence
After reading Goleman’s book, I came to realize that financial IQ is 90% emotional and 10% technical information about finance and money.
Goleman, quoting 16th-century Erasmus of Rotterdam, uses the ratio of 24:1 in comparing the power of the emotional brain to the rational brain. In other words, when emotions are high, intelligence is low.
I don’t know if the ratio is scientifically valid, but it is useful in terms of practical experience. All of us have experienced events in our lives when our emotions overtook our rational thoughts. It often seems impossible to overcome our emotions and act rationally.
When it comes to money, our emotions often get the best of us. We know what we should do, but instead we do what we feel like doing—and that’s usually the safe route.
Kim and I experienced this early in our marriage when I was over a million dollars in debt and we wanted to grow our business. We were practicing our pay yourself first philosophy, even when we didn’t have the money to pay our bills. Our bookkeeper, Betty, was adamant we pay our creditors first, but we instead used our emotional intelligence to find ways to both pay ourselves first and to pay our creditors…even if it was a little late sometimes.
It would have been easy to give into our fear and not pay ourselves first. But if we did that, I can guarantee we would not be where we are today. Most likely we would have given up on our dreams and settled for something much less.
Use emotional intelligence to overcome fear
Part of becoming successful is recognizing patterns that hold you back, and taking action to overcome those patterns. When we are faced with fear of risk, we must be able to rationally recognize that fear before it becomes too strong to overcome. This requires self-knowledge that is the result of constant self-assessment.
If you can keep your emotions in check and go for what you know to be logical, you have a good chance of being successful. It’s a process of knowing which of your thoughts are emotion-based and which are logic-based. The most important conversation is always the one you have with yourself.
A coach can help you grow your emotional intelligence and overcome fear
When dealing with your emotions, it’s always helpful to have someone to talk to that can give you objective advice—especially when it’s advice you may not want to hear. When Kim and I were going through hard times, she was always there for me, to remind me of what we were working for. Her guidance kept me going, and I did the same for her. And we both had other coaches in our lives as well, who were committed to our success.
If you’re ready to make the next step in your financial journey, you may want to consider a coach. We have our Rich Dad Coaching program and our coaches work with you to help you develop your own personal plan of success, and they keep you on track—even when you don’t feel like it. If you feel our program is not for you, that’s fine; I still highly encourage you to find a coach. You’ll be better because of it.