How smart people make money
Why your intelligence could be keeping you broke Posted by Julian Nowland Why are so many smart people so stupid when it comes to money? To help illustrate my point, try answering the following question.
Not necessarily. If you define intelligence as the ability to apply knowledge and skills, then intelligence can certainly help someone to accumulate wealth.
However, there are many hardworking people who have studied hard and applied themselves only to find that their pay is average, and there is no advancement in sight.
Key Takeaways Intelligence appears to have no direct correlation with wealth. Granted, there is some correlation, as Google founders Sergey Brin and Larry Page are considered very intelligent and have built a multi-billion company. The ability to exploit opportunities might have a higher level of correlation to wealth than intelligence, however.
Educated but Underemployed Educated people working in disappointing jobs is not options method reflection of dire recessionary times.
The Dumb Things Smart People Do with Their Money
Rather, it's because financial rewards are tied to what a producer has to offer. Every individual competes in the labor marketplace, and intelligence plays a limited role.
Smart people make not-so-smart decisions all the time. Research backs this up, too.
The how smart people make money is nothing more than the exchange of people's accumulated wants and desires. Much of what consumers collectively consider of great value in the marketplace has little to do with intelligence.
No one expects Earvin "Magic" Johnson Jr. In Johnson's case, he developed non-academic, unique skills that he could use to obtain a high salary. By saving that salary and investing, Johnson earned far more money through passive income than by active means.
How Intelligence Relates to Wealth
Langan's story is a classic example of how little correlation there can be between intelligence and financial reward. Raised in poverty by a single mother, Langan dropped out of two colleges and has worked a series of manual labor jobs ever since. This is despite being billed as "the smartest man earnings on 24opton options America" and having an IQ measured at between and In between his shifts as a bouncer, Langan single-handedly devised a theory that unifies science and theology.
His theory might significantly advance human understanding, but it does not pay Langan's bills as efficiently as his current job as a horse rancher.
Applying Knowledge or Practicality Applicable intelligence, however, is still a force in the labor marketplace. Google creators Sergey Brin and Larry Page are adept programmers with strong credentials in mathematics and computer science.
It's a very nice blend of finance and psychology -- the field formally known as behavioral finance. Since the first edition of the book was published inI was concerned that the content might be dated.
However, Brin and Page also had a mission. Their goal was to organize the world's information and make it available to everyone.
Dumb Things Smart People Do with Their Money
Without intelligence, Google, or its parent company Alphabet, would have remained just a niche business instead of growing into its massive market cap. Leveraging a gap in the market does not necessarily require acute intelligence; perhaps just practical insight.
Why Smart People Make Big Money Mistakes and How to Correct Them
Harvey House founder, Fred Harvey, never attempted to formulate a scientific theory, but he did notice that people disembarking at train stations often wanted something to eat and a place to spend the night.
Armed with that knowledge, he became one of the hospitality industry's most successful entrepreneurs.
The Bottom Line Exploiting opportunities is a skill often far removed from what is learned in a classroom. Take two college mathematics majors.
The "C" student casually mentions that she became a billionaire.