What It Takes to Get Rich

We've previously discussed that intelligence is linked to income, but not to wealth and, as a result, have asked, "Well, what then is linked to wealth?" Fortunately, Yahoo has some thoughts on what it takes to get rich. Here's what Ohio State economics professor Jay Zagorsky suggests are the factors that help determine how wealthy you'll become in life:

"Staying married, not getting divorced, thinking about savings."

Hmmmmmm. Even I can handle this. ;-)

The article gives some additional insights into why smarter people don't end up wealthier -- even though they make more money on average:

We would reasonably assume, then, that smarter people would end up wealthier. But that was not suggested by the study. Instead, people with higher IQs and incomes tended to spend more, maxing out credit cards and paying bills late. At the end of the day, those with lower IQs often had a greater net worth.

And finally, a little encouragement for those who aren't as bright:

Here's my favorite Zagorsky conclusion: "Intelligence is not a factor for explaining wealth. Those with low intelligence should not believe they are handicapped, and those with high intelligence should not believe they have an advantage."

The next time you're thinking you're not smart enough to do well at investing, think again. Think of those Nobel Prize winners who lost a lot running Long Term Capital Management -- which also cost their creditors hundreds of millions of dollars. Meanwhile, many simple folks -- bus drivers, teachers, and the like -- are quietly amassing fortunes by saving and investing.

No, it's doesn't take a genius to accumulate wealth. I (and many of my financial tips) are proof of this. ;-)

All it takes to become wealthy is following a few simple principles like those outlined in these pieces:

• How to Get Rich in Three Easy Steps

• The 10 Best Money Moves You Can Make

• The Top Five Steps to Grow Your Net Worth

Comments

[Edwin]

Yea, it would seem counter-intuitive initially but I think it's true. The higher your IQ the more likely you'll be in a high paying profession where you'll have to keep up appearances. Like a lawyer/doctor having to drive the expensive car, live in an expensive neighborhood, pay for the landscaping, send the kids to private school, dress well, etc. Meanwhile the "average" person may be making a lot less money but saving alot more and investing it thereby building wealth instead of just working to look wealthy.

[Minimum Wage]

I thought it takes disposable (i.e. savable) income.