Are Rich People Are Smarter than Poor People?


Are people who are rich smarter than poor people?


I grew up thinking that rich people were smarter than poor people

I grew up thinking that rich people were smarter than poor people.  It’s hard to remember why I thought this way.  After all, my parents sure didn’t drill the thought into me, but school and television very well may have.

When I was in middle school, one of my teachers had this poster on his wall:



I am sure that had something to do with the belief that rich people are smarter than poor people..After all, I bought a Porsche with a Masters Degree!

Either way, not much has changed to this day:  many people actually believe that rich people are a heck of a lot smarter than the rest of us.

Is there proof that rich people are smarter than poor people?

There is some evidence to support that rich people are smarter than poor people.  If you check out the US Census Bureau stats regarding education and income, you will find that the higher degree that one attains, the more money the person will make.

However, those that earn the most are not always the richest.  If you have read my blog (and others like it) long enough, you are convinced that someone can make 300k a year and spend 301k, therefore not attaining wealth…ever.  Someone earning 40k who spends only 30k a year will create a positive net worth over time that is enviable to most.

Being rich does not equate to being smart and vice versa

To determine real wealth, you need to create a balance sheet (assets minus liabilities) and determine your net worth — your income has little to do with it.


Being rich does not mean smart, being smart does not mean rich


If you want to learn more about this concept, read anything from Thomas J. Stanley.  His books The Millionaire Next Door, The Millionaire Mind, and Stop Acting Rich…and Start Living Like a Real Millionaire are all life-changing books in my opinion.

Stanley spent a ton of his life energy researching the habits and characteristics of America’s wealthy, and his findings are extremely interesting and informative.  For instance, most millionaires (individuals with a net worth of 1 million or more) live a different lifestyle than the Rolex -wearing, Lexus driving people we envision.

Examples Stanley sites of “real” millionaires:

  • They live in homes that cost less than 400k
  • They don’t own boats and second homes
  • They wear cheap watches
  • They drive Hondas or Toyotas, not BMWs
  • They are not obsessed with brand name and/or luxury items

So who is buying all the expensive shit?

We are.

Why we believe rich people are smarter than poor people

Normal everyday folk who want to appear rich, but aren’t.  Stanley calls us “aspirationals”.

I am as guilty as the next person for over-spending.  I fell for it hook, line, and sinker.  That is, until a year ago.


We can’t hyper-spend on material goods and save a lot of money at the same time

Us guilty ones are good people.  We are well-educated and we probably make decent money (even six-figures).  But our balance sheet sucks.  We can’t hyper-spend on material goods and save a lot of money at the same time.  And to be a millionaire, one needs to save.  Saving leads to investing, and so on…

So while millions of us are chasing what we call “success” — working our asses off for meaningless material goods that we eventually throw out or give away — other people (not necessarily smarter, mind you) are disciplined savers and investors who are enjoying freedom, satisfaction, and peace of mind that comes from spending less than they earn.  Those people don’t find self-worth through consumerism, they thrive on personal achievement and recognition for good work.  They are truly free.

The rich are not smarter than us, but they know it is how they live their lives — not how much money they spend — that makes them rich.

We can all learn something from them.


  1. Timothy says:

    Your article was very well written. I have worked for several millionaires that exerted Howard Hughes like eccentricities about thrift. One time my boss came into our work area and started to add a hose clamp to the soap dispenser to regulate how much soap we would use. We thought he was crazy. At that point in his life it wasn’t about the money it was about the discipline of thrift.

    I do feel you made a hard transition from your opening premise about the intelligence of rich people. Obviously, the more resources you have the more education you can afford. However, statistics show that the benefits of education to income ratio drop off at the doctorate level. Basically you should go get an MBA on some corporation’s dime and prosper.

    Thanks for letting me rant on your message board.

    • Thanks for the post, Tim! Not sure what you meant about a “hard transition”, but it’s true that we are told that more formal education = a better life, and I’m not quite sure I see it. Also, as a Professor myself, I agree with you….Doctorates make the income drop off a bit!

  2. Good post. I think a lot of “rich” people may be smart, but some lack common sense! And there are a lot of uneducated folks I know who are really much smarter than many well educated people I know! I guess I think about it rather as people who just choose NOT to be millionaires – they are too busy spending spending spending. They always NEED new clothing, new cars, bigger homes, and all of the “extras” (boats, RVs, etc.). I have a girlfriend – they have so many extra “toys”, I’m not sure they’ll EVER be able to retire. Not only do they have all the extra toys, but the thought of what they are paying for insurance, maintenance, gas, etc. for all for all of the toys is mind boggling to me. And they are very smart people. It’s absolutely CRAZY! My husband and I just shake our heads in wonder – because we just don’t get it. We ARE the multi-millionaires next door. We drive our Toyotas forever – take good care of them and maintain them. So we haven’t had car payments for, oh, 12 years. And if we want to take a boat ride, we simply rent one for the day! Same for the RV/camper – RENT ONE. Makes much more sense than owning these things with all of the associated expenses. I guess it’s all about the “show” – but I’d much prefer to remain under the radar – we certainly don’t have that desire to “keep up with the Joneses!” The girlfriend and her hubby have no idea that we have millions stashed away. And we prefer to keep it that way!

  3. The homes less than $400K made me laugh a little, because it really depends on where you live, but yes, in general I agree with the message. I never assumed rich people were smarter than me, but rather that they made money smart choices.
    Daisy @ Prairie Eco Thrifter recently posted…The Green Option That Saves You Money: Paper Magazines vs DigitalMy Profile

  4. Passionate and moving, Tony! Nearly everyone, including the rich, is smarter than I am, but I get your point here. I loved watches, cars, caps, sun glasses, fine shoes, a lot of useless shit. Being an aspirational was simply being an ass. Oh, the hours I slaved away to have all that stupid clutter!! Devastating. But it feels great to get a hold of oneself and regain control, to think clearly and make good choices;)
    cj recently posted…Knowing When to Pop the BubblyMy Profile

  5. Great post, Tony. Smarts aside, no amount of formal education (or lack thereof) can give someone the emotional fortitude to change behavior. People who live beyond their means come in all forms and it usually takes some pain to begin to seek out information that will help transform behavior and build a wealthy life.

    I like your suggestion to start with a balance sheet. That can be a frightening exercise for many (I’ve been down that path…don’t ever want to go back!).

    It’s not what you make, it’s what you keep that counts!
    Ree Klein recently posted…Loony Logic: It’s Okay As Long As The Payment Is The Same!My Profile

  6. As far as the homes good it depends when they bought. I know some clients that purchased homes that were 150-200k and now they are over 2.8 million +. I would say that there are a lot of smart rich people but they aren’t rich because they are smarter. Some just have the determination and are willing to take chances that we are willing to take. I think most people what to look like they are rich and feel entitlement.
    Your Daily Finance recently posted…What Does It Mean To Pay Yourself FirstMy Profile

  7. I think rich people are smarter than most. Not that they have a special ability, but that the conscious choice of selection versus accumulation, or practical vs showy is a smart one per se.
    Pauline recently posted…Little house in Guatemala, week 31-32My Profile

    • Well, there you have it! Personally, I know a lot of people who have had little formal education but ran huge construction businesses and learned money the hard way. They don’t have advanced degrees, etc., but they know what’s up. I also know Doctors who spend more than they earn. That was the point…

  8. So true! You don’t have to be book-smart. Many of the book-smart people that I know are making very little money pursuing higher education and research. But when it comes to making and keeping money, you have to be a bit clever and know when to jump at opportunities I think.
    CF recently posted…3 Summer jobs for studentsMy Profile

    • Cleverness is a nice trait to have. I still think it comes with the ability to stay confident and not want to keep up with the Joneses.

  9. This post is truth. And I agree totally with the message.

    But since I’m feeling a bit prickly this evening, I just have to take exception to your suggestion that income has little to do with real wealth.

    It has everything to do with it.

    Your income (i.e. revenue) is one big variable in your net worth. Let’s not pretend otherwise. The more you earn, the more you can save. And vice versa.

    Your potential for earnings far outweighs your potential for savings. Your savings will always be limited by your income, but your income can only be limited by possibility.

    Trevor recently posted…How to Avoid the “What If” Train WreckMy Profile

    • Trevor, I love that you were prickly. I think that is great to disagree on this stuff!

      Basically, income is huge…I do not disagree. The point I was trying to make (albeit foggy) was that there are people who make a huge income who spend it all. There are people who make not-so-much that spend less than they earn. That is an income equalizer. It is incredible, but true!

  10. I don’t necessarily think that rich people are smarter they just spend their money differently. There could also be people worth millions upon millions and still blow money left, right and centre but may take ages if that to realize how silly they are spending money. If we only spend less than we earn that’s all we need to know. Many rich people I know do just that and they don’t have big houses and fancy cars. I believe it’s true, you can’t judge someone just by what they have or don’t have. It means nothing at all. Great post!
    Canadianbudgetbinder recently posted…Pet Budget: Homemade peanut butter dog treatsMy Profile

  11. Interesting article. Made me think a lot. I like that.

    I don’t think net worth in and of itself says anything about a person’s intelligence, or even the choices they’ve made. I grew up in a very wealthy town, with a lot of old money. Somewhere, someone in the family made some good financial decisions. But the people enjoying the benefits of it had no more intelligence or virtue than anyone else. I assume you are talking about people who have made their own millions, though, and, yes, that is likely due to good financial planning and money management.

    However, are these people “smarter” than everyone else? I still don’t think they necessarily are. Earning millions simply is not everyone’s goal. I have some friends who choose to work less hours, in fields that they love (but that do not pay a great deal), and their income is well below the “poverty level.” However, they live simply, make smart financial decisions, and are never hard-up for cash. In fact, when we made some stupid decisions last summer, they helped us out!
    Bethany @ Journey to Ithaca recently posted…You Ought to be in Pictures!My Profile

    • Glad the post could be thought-provoking, Bethany. I probably could have written the post better, but the bottom line is that there are people who make a ton of money that spend a ton of money, and they are no better off than people who make little money but spend less than they earn.

      • Amen to that! Actually, I’d say they are probably a bit worse off. I’ve known people who went into so much debt, trying to keep up this “fancy” facade. It’s definitely fake, and it certainly doesn’t bring happiness.

  12. I loved this post. I’m going to link to it on Friday :) I agree that the The Millionaire Next Door is a life changing book. The post was a good reminder to avoid the sparkly fancy brands!

  13. You are so right that it’s mostly the Joneses buying all of the gawdy brand name crap….I see it every day!
    Holly@ClubThrifty recently posted…Versailles: A Tale of Ten KitchensMy Profile

  14. Great post, Tony! We somehow do believe the rich are smarter. In fairness, I’m sure some are! But many of us equate rich with possessions and anyone – smart or not, rich or poor, can have possessions. The truly rich know how to accumulate wealth and use it wisely.
    Shannon @ The Heavy Purse recently posted…Don’t Let Fear Prevent You From Talking about DebtMy Profile

  15. So true. We have good friends who are constantly getting new cars, have bought two different homes in the past 4 years, go on cool vacations, etc. Compared to them, our lifestyle on the surface looks pretty bland. But I also know that they are deep in debt, and we are patiently saving and enjoying the things we can actually afford. I think it’s so easy to get caught up in a consumerist lifestyle, but so dangerous. This is a great reminder that wealth is not about what we spend, it’s about what we save.
    Matt Becker recently posted…Help! I Need to Buy a Car.My Profile

    • Ever since my wife committed to getting out of debt and spending less than we earn we have seen this. Mind you, we make a lot of money. But it is not that easy to stay “under the cap”!

  16. I had that exact poster on my wall. It served as motivation when I was going to grad school. To me “Justification for Higher Education” meant that if you wanted to be rich, you had to go to college/grad school…not necessarily that rich people were smarter. But I definitely agree with you and Stanley’s book that “rich” people don’t necessarily buy all these status symbols…it is the aspirationals who do.
    Andrew@LivingRichCheaply recently posted…I’m Joining the Yakezie Challenge!My Profile

  17. For me, some rich people are really smarter than us and some aren’t, but most of them are really just resourceful and knows how to live below their means.
    The most obvious trait that separates them from normal people is they really know how to manage their money properly. Am I right with that?
    Mark @ Think Rich. Be Free. recently posted…Inspiring Quotes From World’s Richest Men In The Past And The PresentMy Profile

  18. It’s often the people without money who spend money to look like they have it. Like Dave Ramsey always says, “people buy stuff they can’t afford, with money they don’t have, to impress people (rich people) they don’t like (envy)”. Once we get past appearances and wanting to have certain things or look a certain way we’re a lot happier (well, I am).
    KK @ Student Debt Survivor recently posted…Neighbors Selling Their Condo – Are We Next?My Profile

  19. I remember having the same misconception about being rich and making more money. But then I got into my industry and found out that wasn’t true at all. PhD’s seem to often struggle to make more than what their lower educated peers make. You know who makes all the money? The people that handle the money: Management, sales, leaders, etc. If you really want to earn more, get involved in activities that are perceived to grow the bottom line for the company; not just routine functions.
    MMD @ IRA vs 401k Central recently posted…Comment on Taking An Early Withdrawal from Roth IRA Contributions by Kick-Ass Carnival of Financial Planning B | Money SoldiersMy Profile

  20. Not all rich/wealthy people are smarter than everyone else, they just choose to use their brain and save more money. There all always exceptions like the genius billionaires, but for the most part, rich people have just been presented with more opportunities and take advantage of these opportunities when they are presented to them.

  21. Big! Huge! Fan! of The Millionaire Next Door. It was a game changer for me.
    Taynia | The Fiscal Flamingo recently posted…Chiconomics 201: How To Be A Budgetnista When You’re Income Changes Every Month (Or How To Budget On A Variable Income)My Profile


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