I have posted about this subject before but I recently read an article that did a good job of explaining this. A professor got access to a database of people that have been participating in a study for the last 25 years. It started when they were in college and now these people are in their forties. While the original study didn’t cover finances, it did measure the people’s IQ’s. Jay Zagorsky, who is an economist at Ohio State University, contacted 7403 of the original 10,000 people that are in the database and asked them a series of financial questions to see where they were at.
Some highlights from the article:
-Each point increase in IQ is associated with $202 to $616 more income per year
-Even though people make more money, the smart ones don’t end up with more wealth
-17.5 percent of those with an IQ of 75 or below missed payments
-11.8 percent of those with an IQ above 125 missed payments
-On average, people are off by 62 cents for every dollar of wealth they actually have (They think they are worth less)
Overall, this article was a good read. I would recommend checking it out. If you haven’t already calculated your net worth, hurry up and do it! You can’t tell if you are moving forward if you don’t know where you are.
I earn minimum wager. My IQ is 120. Where’s all that extra money I’m supposed to be making?
I earn minimum wage. My IQ is 120. Where’s all that extra money I’m supposed to be making?
Good read. I had my IQ tested twice in college for studies not unlike this one. Both times, my IQ was in the low 130s. I make over $100k from all my income sources and have an above average net worth for my age and income.
That being said, my IQ and savings rate have nothing to do with one another. I simply happen to posess both traits.
My father makes a fair ammount less than I do and he is going to be able to retire at 55 with a very substancial retirment account.
It seems to me that another trait that is required when succeeding with personal finance is determination. I know there are lots of people with lower IQ’s but that are very hard working and determined. Some of them are doing quite well financially. I think the trick is to give everyone basic personal finance skills so that they realize it’s a goal they need to embrace.
What good are hard work and personal finance skills if you make minimum wage?
How funny, I was just reading this article. I think it comes as no surprise to anyone who has read the Millionaire Next Door. The specifically cite that SAT scores and GPAs are not very good predictors of future wealth.
To Minimum Wage, I think the hard work is supposed to do you some good by allowing you to get out of the minimum wage rut.
My hard work has not allowed me to get out of the minimum wage run; indeed I think I’m perpetually stuck there. Pay range where I work is 20 cents, so even the hardest work is not rewarded here and my age and lack of career-related experience probably have by now made me unemployable.
Minimum Wage,
It sounds like you are in a hard spot. I’m not sure what your age is, but have you considered trying to get some training that could help you move in to a more lucrative field? I’m sure that opportunites vary based on where you live, but it is one consideration.
I’d love to get some training or education, but I don’t have the money and cannot borrow it. It’s funny how they all insist on getting their money up front.