A fifty-year study has revealed the secret to financial success, and it has nothing to do with academic achievement, professional connections or work ethic.
Since 1972, psychologists have followed the lives of a thousand children from the New Zealand city of Dunedin, collecting information about their growth, development and success from birth to adulthood.
The best predictor of future financial and professional success later in life was emotional intelligence and the ability to control one’s actions.
Scientists called this skill ’emotional quotient’ (EQ), and iPeople with high EQ tended to focus on the positive, listen before making decisions, admit their mistakes, show empathy, and deal with negative emotions appropriately.
But children with Low EQ was more likely to experience “adverse wealth outcomes” as an adult, including low income, poor savings habits, credit problems and dependence on the welfare system.
By the time they reached their 30s, this group was less likely to have saved money and acquired fewer financial building blocks for the future, such as home ownership, mutual funds or retirement plans.
The Dunedin Multidisciplinary Health and Development Study, led by the University of Otago, is still ongoing.
Over the years, it has created a data goldmine and led to the publication of more than 1,000 research articles, reports and books.
A 50-year study has revealed the secret to financial success, and it has nothing to do with academic achievement, professional connections or work ethic
The psychologists assessed the Dunedin children’s emotional intelligence, which they call “self-control”, at ages three, five, seven, nine and 11 years old.
The assessments were made by directly observing the children’s behavior, interviewing their parents and asking their teachers to complete a questionnaire about them.
“All children experience poor self-control occasionally, but this composite measure showed low scorers to exhibit poor self-control across situations and over time,” the researchers reported in American scientist.
The researchers then interviewed participants in adulthood and assessed their financial status and stability.
Their findings revealed a clear link between a child’s ability to understand, regulate and respond appropriately to their emotions and their financial success in adulthood.
This may be partly because people with high EQ have skills and traits that employers want to see in the workplace, such as the ability to work well with others, effective communication skills and social awareness.
Emotional intelligence therefore sets people up for success at work, giving them greater job security and making them more likely to get a promotion or raise, researchers noted.
Additionally, people with high EQ have greater impulse control and tend to think before they act. This can contribute to responsible money management through saving, budgeting and planning for the future.
This may be partly because people with high EQ have skills and traits that help them succeed in the workplace, providing them with greater job security, pay increases and promotions.
But what determines someone’s EQ? The researchers identified that several factors appear to have a strong influence on a child’s emotional intelligence.
The analysis found that the average level of ‘self-control’ was much higher among girls than boys, and among children from wealthy families.
Children with greater emotional intelligence also had significantly higher IQs.
But EQ is not something children are necessarily born with.
This skill can also be cultivated, the researchers found, by their parents, educators and early intervention programs.
There are many ways to help your child build emotional intelligence, by modeling these skills in your own behavior, encouraging open communication and validating emotions, and talking them through problem-solving situations, according to Weston Family Psychology.
Children start developing emotional intelligence very early, so it is important to develop these practices in infancy or toddlerhood.
During these early years, parents can promote emotional awareness by labeling and validating their children’s feelings. For example, by saying, “You look happy when you see the colorful toys,” children can connect emotions to experiences, according to Weston Family Psychology.