Financial Education

Do Smart People Make More Money?

The smarter you are, the richer you’ll be. That’s a common belief anyway. Growing up, we saw the more intelligent people get better grades, get into better colleges, and get better jobs. It only follows they would make more money and accumulate more wealth. We’re made to believe that smarter people are richer, that there is a correlation between a person’s IQ and their income and wealth. Do smart people make more money, or could other attributes contribute to a person’s overall success?

Do Smart People Make More Money?

While traditional common sense tells us smart people make more money, a 2007 study actually shows a very weak correlation between a person’s IQ and how much money they make.

So if a person’s intelligence isn’t a strong indicator as to what kind of income they may achieve, what kind of attributes do?

• Work Ethic: People who are willing to take on any task, go above and beyond their job description and do whatever it takes to get the job done will find themselves valued employees. An attitude of, “Yes, I can!” will help someone advance their career.
• Charisma: Being able to get along with and work with other people is imperative in today’s workplace. A person could be extremely intelligent, but if people don’t like being around you, and can’t work with you, you may find yourself plateauing early or bouncing from job to job.
• Appearance: Whether we want to admit it or not, well groomed and/or good-looking people may have a bit of an advantage in the workplace. They make a good first impression and thus fit into a stereotype of success before even having to prove themselves.

Are Smart People Wealthier?

Again, traditional common sense would have us think that the smarter you are, the more wealth you would accumulate. The same 2007 study shows almost no correlation between a person’s IQ and the wealth they accumulate.

Many experts suggest that the attribute that most influences a person’s eventual wealth is self-control. If you can control your impulses, live within your means and instead invest extra funds, you can grow your wealth over time.

While being smart can certainly put a person in a position to be successful, it doesn’t appear that being smart by itself is any indication as to whether you’ll be successful or accumulate a lot of wealth. If you are of above average intelligence, use it to your advantage alongside developing other skills needed to be successful. If you weren’t blessed with above average intelligence, this is your wake up call. The road may be more difficult early on, but having a high income and accumulating wealth is really anyone’s game.

What do you think, Clever Friends, do you agree with this study?

From Zagorsky, Jay. 2007. Do you have to be smart to be rich? The impact of IQ on wealth, income and financial distress.