Do personality traits have anything to do with the creation of wealth? An article in the December 2014 “Journal of Financial Planning” tries to determine what traits high income individuals have in common.
They defined “high income” as those individuals in the top 2.5% of earners in the United States – $154,000 and up – and compared them to those earning a median income of $80,000.
Success, measured as high income levels, is often ascribed to intelligence, hard work and education. But there is evidence that personality traits exceed these factors as a predictor of financial success. Among these traits are the ones that most people would assume:
- Conscientiousness – the tendency to be dependable and self-disciplined is found as a common trait in successful people.
- Emotional stability – being able to control impulses helps people be successful.
- Openness to new experience and creativity is a key indicator of success.
But one interesting, and major, indicator of success is referred to as “Locus of Control.” This refers to the extent to which the individual takes responsibility for the outcome of their lives. Someone with an internal locus of control views themselves as being in control of their future and see their actions determining where they are going. Both success and failure are their own making, and they do not ascribe either one to outside influences.
An opposite personality, someone with an external locus of control, views him or herself as being under the control of others. They view their lives as unrelated to their behavior, or the result of chance or luck. They view negative outcomes, not as the result of their own actions, but as the actions of others. “Society” “the Man” or some other malevolent influence keeps them for achieving their goals. Things are never their fault.
Of course high income does not necessarily translate to happiness. It does, however, mean that you have access to things that may make you more comfortable, healthier and better educated. While satisfaction is not guaranteed, positive psychological traits combined with financial success “may enable individuals to maintain life satisfaction during difficult times.”
One other thing to note. These psychological traits will also make you happier even if they do not help you achieve great wealth. They are equally valuable traits to develop if you decide to live humbly and devote yourself to self-contemplation or good works. These traits are never wasted.
Take responsibility for your financial future by working with an experienced, professional Registered Investment Advisor (RIA).