A 50-year-long study has revealed the secret to financial success, and it has nothing to do with academic performance, professional connections or work ethic.
Psychologists have tracked the lives of 1,000 kids from the New Zealand town of Dunedin since 1972, gathering 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 referred to this skill as ’emotional quotient’ (EQ), and individuals with high EQ tended to focus on the positive, listen before making decisions, admit to their mistakes, show empathy and handle negative emotions appropriately.
But children with low EQ were more likely to have ‘unfavorable outcomes in wealth’ as adults, including low income, poor saving habits, credit problems and dependence on the social welfare system.
By the time they reached their 30s, this group was less likely to have saved money and had acquired fewer financial building blocks for the future, such as home ownership, investment 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 papers, reports and books.
A 50-year-long study has revealed the secret to financial success , and it has nothing to do with academic performance, professional connections or work ethic
The psychologists assessed the Dunedin children’s emotional intelligence, which they refer to as ‘self control,’ at the ages of three, five, seven, nine and 11.
The assessments were made by directly observing the children’s’ behavior, interviewing their parents and asking their teachers to fill out a questionnaire about them.
‘All children lack self-control now and then, but this composite measure ensured that low scorers had shown poor self-control in a variety of situations and across years,’ the researchers reported in American Scientist.
The researchers then interviewed participants in adulthood, assessing their financial status and stability.
Their findings revealed a clear link between a child’s ability to understand, regulate and appropriately act on their emotions and their financial success in adulthood.
This may be partly because people with high EQ possess 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, granting them greater job security and increasing the likelihood that they will receive a promotion or raise, researchers noted.
In addition, people with high EQ have greater impulse control and tend to think before they act. This may contribute to responsible money management through saving, budgeting and planning for the future.
This may be partly because people with high EQ possess skills and traits that help them succeed in the workplace, granting them more job security, raises and promotions
But what determines a person’s EQ? The researchers identified several factors appear to have a strong influence on a child’s emotional intelligence.
The analysis revealed that average levels of ‘self-control’ were 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, 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 establish these practices while they are in infancy or toddlerhood.
During these early years, parents can promote emotional awareness by labeling and validating their children’s feelings. For example, saying ‘You look happy when you see the colorful toy’ helps children link emotions to experiences, according to Weston Family Psychology.
