I often write on Quora.com, where I am the most viewed writer on financial matters, with over 352.2 million views in recent years.
In the answers below I focused on the following topics and issues:
- If being rich is due to being intelligent and hardworking, why isn’t every PhD in the world at least a millionaire?
- Many people say that money doesn’t buy happiness, but is it true? A lot of research has been done which has indicated that it is how we spend our money that counts the most towards happiness. In what ways can money help people be happier?
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Source for all answers – Adam Fayed’s Quora page.
If being rich is due to being intelligent and hardworking, why isn’t every PhD in the world at least a millionaire?
Wealth is achieved by spending less than you make, and investing the surplus wisely.
It is possible to get wealthy on middle-incomes, although it is obviously easier if your income is higher, and you don’t just overspend.
Let’s start with the income part of the equation. Being intelligent does help with income.
For all the faults with IQ tests, there is a connection between IQ tests and earnings:
What is more, conscientiousness, which is connected to hard work, does increase income:
However, we have to remember some basic facts:
- Conscientiousness increases incomes on average, but so do some other personality traits like disagreeableness, extroversion, and risk-taking, especially if they aren’t taken to the extreme.
- Hard work and smart work aren’t always the same thing
- Financial intelligence and other kinds of intelligence aren’t the same things. There are plenty of world-class, high-income, scientists who are clueless about money, in much the same way that studies show that most sports stars go broke after retirement. Income doesn’t always equate to wealth if the wrong decisions are made.
- The market cares about skills that you might not think are relevant. Some celebrities, which most people think are doing pointless things on Instagram, can make millions a year, whilst some world-class scientists can struggle. Markets aren’t always fair. A great example is how translation has changed in recent decades. It could be quite lucrative at one time, like in 1980s Japan during the bubble when few people spoke English. Technology has changed the game.
- Averages are merely averages. Highly intelligent people are more likely to become high-income and even wealthy, but it is merely an average – plenty of people won’t make the grade.
- In the digital world, smart work has become even more important than hard work in isolation. Leveraging others used to be king in business. Leveraging technology has now become even more important. What Cambridge Analytica did in the 2016 election couldn’t have been achieved by people just knocking on doors all day.
- The easiest way to become wealthy on a middle, or upper-middle, income, is to take advantage of compound interest. Einstein said it was more powerful than atoms itself as per the quote below! However, many highly intelligent people who pursue PHDs aren’t earning good money until their 30s, by which time, some of them are too busy to take advantage of this ….or at least they don’t prioritize it.
The bottom line is there are many components that go into this kind of thing. Merely working harder, and intelligence isn’t the be-all and end-all.
Do you think that more money can increase our happiness? Why?
I read about an interesting experiment a few days ago. Two groups of people had to hold out weights in front of their bodies for as long as possible.
After the first round, one group was told that they could get some money for going to round two. The second group was told that the money would go to charity.
The first group didn’t hold onto the weights as long as the first time. This is understandable.
They were fatigued compared to the first round. In comparison, the second group was able to hold out the weights for longer, indicating that giving the money to charity had given them something extra.
What is interesting is that during the experiment these people were just told that the money would be given to charity, but not a specific charity or person.
When people can put a face to the organization or person they are helping, the evidence is even more incredible.
People who give to such organizations have better blood works a few weeks after the giving act, compared to those who don’t give.
So, when we give to others, it is one way that money can make us happier. It isn’t the money itself, but what we do with it.
Likewise, spending money on experiences with others, and building relationships can also make us happier.
Having security that wealth, rather than income, brings also has a way to reduce our anxiety because we aren’t always in need of fresh money.
In comparison, buying things doesn’t really make us happier – it just gives us a sugar rush.
It is like a treadmill:
We get excited in the first instance, but then get used to the new reality after the purchase.
So, money can help increase our happiness, but only if we use it in the right way.
It perhaps shouldn’t be surprising, then, that many older wealthier people give more to charity as they age, and spend less on luxury things, as they have learned previous lessons.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 735.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
In the answers below, taken from my online Quora answers, I spoke about the following issues and topics:
- Why is Baidu’s stock doing worse than Google, even though the internet is growing more quickly in China?
- What is the best way to spend our money?
- Why can two people, given the same opportunity, result in different outcomes?
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