What Is Financial Common Sense? The 5W’s and H – A Real Informed Finance Perspective
6 mins read

What Is Financial Common Sense? The 5W’s and H – A Real Informed Finance Perspective

What Is Financial Common Sense?

The terms ‘finance’ and ‘common sense’ are fairly common. ‘Finance’ relates to ‘the commercial activities revolving around money, credit, banking, investment and such undertakings’; while ‘common sense’ relates to ‘sound practical judgement’. By extension, simply put ‘financial common sense’ thus refers to ‘the sound practical judgement when dealing with money affairs’.

This article takes you through the 5W’s and H of Financial Common Sense – Who, What, Where, When, Why and How. It attempts to build our action-logic when dealing financial affairs.


Who needs financial common sense? It’s all of us; anyone and everyone who ever wants to amass formidable wealth and have financial freedom must needs understand what they need to look out for when spending or planning for their money.

The aspect of ‘who’ pertaining to financial common sense also entails the persons one surrounds themselves with in pursuit of their financial goals. Motivational speaker Jim Rohn uttered sheer wisdom in that ‘you are the average of the five people you spend the most time with’. Our common sense is built (or largely impacted) by the people we spend our time around in pursuit of our goals.

Financial freedom and/ or success is a journey; and ‘who’ we choose to take that journey with really matters.


‘What’ financial common sense entails relates to the instruments and/ or actions that would lead one unto financial wealth. It is also entails the metrics and measures of success that one will use to assess their progress on this journey. For example, one could choose shares and other paper goods as investment vehicles; while another could use tangible assets such as real estate properties, land and other natural resources. The ‘what’ guiding action logic in matters concern financial common sense pertains to both the financial products/ entities one chooses to deal with/ in; and how each of these contribute individually and collectively to financial success.


‘Where’ when considering financial common sense essentially relates to the avenues of attaining financial success. It revolves around the financial products/ entities available to an individual as a pedestal towards financial success. Just like natural journeys, for example, when crossing water bodies such as big rivers on a vessel, common sense dictates that one must ensure that the boat is sturdy enough to traverse the depths while carrying the laden weight. In finance the same applies. Financial common sense dictates that one must consider the financial entities, products, markets, etc that they wish to grow their monies in/ with early enough. A recently published article expounds on this by ‘evaluating financial entities/ products – beyond the 5C’s of credit‘. Both insight and nuance must find a congruence in order to fulfil the ‘where’ question of financial common sense.


‘When’ relates to the financial weather/ climate and how it alligns with one’s agenda. Old country music folklore tells the tale of a gambler who explains to Kenny Rogers that they must know ‘when to hold them, when to fold them, when to walk away and when to run’. The ‘when’ in financial common sense should dictate when it is feasible to buy, sell or hold short and long positions with monetary instruments. It should inculcate a plan of action for when the market sways in whichever direction. For example, when to short, hold, buy, sell or even ignore market situations. We should also understand whether we are dealing with short-term or long-term issues; just as farmers must delineate weather from climate in their husbandry.

Knowing what to do is smart; but knowing when to do it is wiser.


The ‘why’ question in financial common sense gets us back to the basics. It queries our impetus of why we really want what we want. Case in point, it gives us the fuel, the umph, persona and all to get to our financial goals with all the grit within us; (plus some more from those around us). If you have a foggy mind about the ‘why’ in financial common sense, I invite you to my library where you’ll find books that might trigger a spark of this in you. You could start with ‘Why We Want You To Be Rich’ by Robert Kiyosaki and Donald Trump, Think and Grow Rich by Napoleon Hill and Who Will Cry When You Die.

The ‘Why’ question in financial common sense is often the most overlooked, yet probably the most important one because it is a strategy/ focus question, while most of the rest are tactic questions. One’s reasons to pursue financial success (the why) should be so elaborate and a call for action that it inspires the whole financial common sense pursuit. For me I reckon it gives me shivers when I consider all the reasons I must strive to attain financial freedom and success.


The ‘how’ question in financial common sense is mainly a tactical inquisition into money matters. It entails querying the most feasible way(s) to get to the desired goal. A perfect example is the common analogy (in the game of monopoly and elsewhere) to slowly invest and buy up four green houses so that one can eventually buy a red hotel. Understanding this ‘how’ helps us formulate strategies to tackle or dodge obstacles along the way and position ourselves for success. Inasmuch as we would all desire to take the fastest, most-convenient route to our goals, our launching pads could sometimes be like a bow that has to be pulled back so tight till it almost breaks, so that it can launch its arrow furthest.

So how? We pledge to move forward by all means… Fly, and if you can’t, Run, and if you can’t, Walk, and if you can’t, Crawl… but by all means keep moving forward… That’s How!

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