Character Traits and Behaviors That Make You Rich

by Laura Rowley

There's been much ado about a new book by Yale law professor Amy Chua, "Battle Hymn of the Tiger Mother." It chronicles her traditional Chinese approach to parenting, including strategies that many Westerners find extreme and bordering on abusive. A child of immigrants, Chua requires that her own daughters be No. 1 in every subject (except gym and drama), practice their instruments for hours at a stretch and refrain from social activities like play dates, sleepovers and school plays.

A Wall Street Journal excerpt of the book, which drew more than 6,000 (often caustic) comments, describes a screaming match in which Chua forced her younger daughter to stay at the piano after dinner and into the night — no water, no bathroom breaks — until she mastered a difficult piece. When her kids fall short of her expectations, Chua calls them "garbage."

Chua defends her methods based on the results: One of her children played at Carnegie Hall at age 14, and both are clearly shoo-ins for the Ivy League. Her older daughter Sophia gave an interview in which she says she's grateful for the way she was raised, noting, "If I died tomorrow, I would die feeling I've lived my whole life at 110 percent."

While the debate persists about how to raise successful kids, the story made me think about which attitudes, character traits and behaviors play a role in financial success. Like parenting, sometimes you can achieve the goal with pretty dysfunctional behaviors (becoming the biggest cheapskate imaginable or taking wild investment risks on exotic assets). But you might be surprised by what the research has found about the traits and actions that do — and don't — make a difference in accumulating wealth:

Propensity to Plan

Would you agree or disagree with the following statement? "Before going on a vacation, I spend a great deal of time examining where I would most like to go and what I would like to do." Researchers found that people who agreed tended to accumulate more wealth than people who didn't.

"Planning behavior and wealth accumulation is a chicken-and-egg problem: Did people have a lot of wealth and therefore do a lot of planning, or did they do a lot of planning and that led to the creation of wealth?" says John Ameriks, a Vanguard economist who co-authored the research. Hence the vacation question, which doesn't really reflect income or assets but merely whether you like to map things out in advance. In a study of TIAA-CREF plan members, researchers found a high correlation between the propensity to plan and both net worth and gross financial assets.

Moreover, there was no correlation between earnings and the propensity to plan — which means you don't need to be getting a fat paycheck to build wealth. (Researchers measure wealth accumulation as a multiple of annual income. So a planner personality who earns $50,000 might sock away four or five times that amount by the time they retire by saving early and consistently, while a more impulsive type won't.)

Math Confidence

Researchers in the same study asked participants if they agreed or disagreed with the statement: "I am highly confident in my mathematical skills." "We didn't give them a test to measure math skills; it's more a question about fear of numbers," said Ameriks. "Some people find doing calculation daunting," But it doesn't matter — researchers found no significant connection between positive feelings about math skills and wealth accumulation. That might seem puzzling, until you consider the next trait.

Financial Literacy

While math confidence doesn't seem to matter, the cognitive ability to actually do the calculations and understand their implications does. For example, a 2007 study found people who cannot correctly calculate interest rates given a stream of payments tend to borrow more and accumulate less wealth. (They may also lose ground over time because they tend to pick less advantageous mortgages and are less likely to refinance in a favorable rate environment, other studies show.) Meanwhile, there's also a negative correlation between financial literacy and planning: Folks who perform poorly on financial literacy tests are less likely to plan for retirement.

"It's surprising that there's no relation to math skills, but what's important is making the connection between math and setting up retirement savings plans," says Dartmouth economist Jonathan Skinner. "You have to have an understanding of how much you should be putting away and how much cash that will mean when you actually retire. Maybe people who can do math can figure that out but don't bother. Procrastination is a really bad trait."


It's an unhealthy habit, and nicotine buttheads spend a small fortune over time, $5 to $10 a pack, depending on state taxes. A typical non-smoker's net worth is roughly 50 percent higher than that of light smokers and about twice the level of that of heavy smokers, according to Jay Zagorsky, author of the study on the subject and a research scientist at Ohio State.

Heavy smokers had a net worth that was about $8,300 less than non-smokers, while light smokers' net worth was about $2,000 lower. And that wealth gap grows by about $410, or 4 percent, each year that a person continues to smoke. "It may be that smokers spend as much as others on everything else, and pay for smoking out of potential savings," says Zagorsky. (A separate study found the propensity to plan doesn't affect smoking behavior — suggesting financial planning might draw upon different skills than those needed to kick the habit.)


People who feel a sense of powerlessness tend to splurge on high-status luxuries, a sure-fire detour from long-term wealth. "If I have more of something than others, that's one thing I can use to compensate for being powerless — I can acquire status," says Derek Rucker, associate marketing professor at Northwestern's Kellogg School of Management, and co-author of a study on powerlessness published in the Journal of Consumer Spending.

Study respondents were asked describe an occasion in writing when they felt powerful or powerless. Afterward, they took part in an online auction featuring high-status goods such as a fur coat and a silk tie along with more ordinary items. "For products with low or no association with status, there was no difference in the reservation price for those who had power or those with no power," says Rucker. "But for products associated with status, those who recalled they didn't have power indicated they were willing to pay more for them."


Psychologists look at certain personality traits that are relatively stable patterns of thinking, feeling, and acting. Sometimes called the "Big Five," they include extroversion, agreeableness, openness, conscientiousness, and neuroticism (or its opposite, emotional stability).

Of the five families of personality traits, conscientiousness and emotional stability are most closely linked with economic success, according to research by Angela Lee Duckworth of the University of Pennsylvania and David Weir of the University of Michigan. More conscientious (i.e., industrious, dependable, organized) and emotionally stable (i.e., less neurotic) had higher lifetime earnings, the researchers found.

So being diligent and organized doesn't only get you high grades in school — these traits also impact your long-term financial standing. Which traits and behaviors have helped you build wealth?

Laura is author of the book "Money & Happiness" and blog of the same name.


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