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Bad Financial Moves Aren’t Necessarily Determined By Your Intelligence


A reader sent me a link to an article on Yahoo Finance:

Why Smart People Make Bad Financial Moves

Basically, those with a high IQ are more likely to bring home bigger paychecks, but that doesn’t necessarily mean that they have more wealth than the average Joe down the street.

“Those are significant numbers of very intelligent people who don’t have control over their finances,” says Zagorsky. “If you’re not in the top 5 or 10 percent, it’s comforting to know there are really intelligent people making mistakes, too.”

Mensa is an organization comprised of individuals where the only requirement is to have a high IQ score. What they state in their information page is similar to what the Yahoo study article mentioned:

“Mensans range in age from 4 to 94, but most are between 20 and 60. In education they range from preschoolers to high school dropouts to people with multiple doctorates. There are Mensans on welfare and Mensans who are millionaires. As far as occupations, the range is staggering. Mensa has professors and truck drivers, scientists and firefighters, computer programmers and farmers, artists, military people, musicians, laborers, police officers, glassblowers–the diverse list goes on and on. There are famous Mensans and prize-winning Mensans, but there are many whose names you wouldn’t know.”

I think I find the above so interesting because I would think that someone with more intelligence would be better suited for building wealth. But that’s not necessarily the case.

After thinking about it a little bit more, I think that someone’s success for building wealth is based on two things: knowledge and desire. You need to learn about personal finance and then have the desire to put what you learn into action.



  • Reply lowincomelady |

    This is what the book ‘The Millionaire next door’ says. Making a lot of money is not dependant on how you do at school. Your character and integrity are much more important than other factors. Cheers lowincomelady

  • Reply Emma |

    I tend to agree that knowledge and desire are required to manage financial decisions successfully – however I think there is something else. I managed to get myself into personal debt despite having the knowledge and desire to do things differently. Maybe it’s confidence or courage or just being in a better ‘headspace’ emotionally that has made the difference to how I handle money. I feel a lot more in control of my life generally now and this is reflected in my finances.

  • Reply danielle |

    I always thought it was the type of smarts you had. Book smarts vs. common sense. (or, school smarts vs. learning from real life so to speak) To my husband and I, everyone we know who is our age who is deeply in debt is college educated. Whereas, he and I only have an AA degree and occupational certificates, and we are debt free and doing great.

  • Reply Aimee |

    I totally agree, there is a huge difference between being able to think fast and retain a lot of information in your brain and being mature enough to control your spending and make smart financial decisions.

  • Reply Daisy |

    I think it’s Discipline, actually.

    And it isn’t “natural.” It’s a battle to acquire, and a battle to keep. Intelligence might help you recognize a problem. Desire might get you started. But Discipline keeps you on track. When we “stumble,” or succumb to temptation, it is because we lost our Discipline.

  • Reply Noma |

    This is so interesting to me. As a psychotherapist I see this all the time. I have many patients who have common sense, book smarts, and high IQs that are complete messes financially.

    I think character, integrity, and discipline are all big factors, much more so than intelligence. Unfortunatly these are not global attributes. You might be disciplined in one area, but not another.

    Discipline is a forbidding word. I agree with the guy at zenhabits.org that it can be easier to tackle things when we think in terms of motivation, rather than discipline.

    Again, what can be really tricky is when you have motivation and discipline, but then at some point they give way, and that is a recurring problem. Then people tend to think there is something wrong with them…

So, what do you think ?