What Determines How Wealthy You Will Become in Your Lifetime?

19 Comments

The topics of economic mobility and wealth disparity make for some of my favorite conversations, because I want to understand all the facets of wealth. I am not fascinated merely by the rich, but by the process of getting rich. I used to perceive the wealth equation as very linear: earn money, save money, get rich. But I have since come to understand it to be much more complex than that.

Not everyone receives the same start in life, and therefore not everyone faces the same journey to the top. How do you know how far you have to go without understanding where you’re starting from? What do you need to do to overcome the odds stacked against you? And, perhaps most importantly, what are your chances of getting to where you want to be?

What determines how wealthy you will become in your lifetime?

Below is a list of things that impact your income and wealth over the course of your lifetime. Many of them are in your control, but some of them are not — and some of them have greater impacts on your overall earning potential than others.

Your personality changes your earning potential

Your personality likely has a very big impact on your ultimate earning potential, whether you like it or not. I’m an ENTJ, which is identified as the highest earner of the Myers-Briggs personality test. This is likely because ENTJs exhibit the highest levels of educational attainment, which directly translates to higher incomes.

Furthermore, extroverts tend to do better than introverts when it comes to career advancement and income, because they’re the most likely to take on leadership roles and make aggressive moves like negotiating their salary.

Learn how your Myers-Briggs personality manages money here, or how your zodiac sign manages money here

Your parents’ educational attainment 

Neither of my parents completed high school, which means there was only a 13% chance I’d graduate from university. Thankfully, I’ve beat the odds and completed both Bachelors and Masters degrees.

But it wasn’t easy. Post-secondary education was never considered a priority in our household, and when I did make the decision to go to university, I had to pay for it out of my own pocket.

Your educational attainment

The higher your level of education, the higher your average income and the less likely you are to be unemployed. It’s true that not all university degrees are created equal, but your best shot at a high income and job security remains a high level of educational attainment. 

An MBA typically translates into a six-figure salary in both Canada and the US within 3 years of graduation.

Your race

The race conversation as it relates to income is uncomfortable, but the problem is real: there are serious disparities in earnings based on race. This problem is worse in some regions compared to others, but has yet to be eliminated from everywhere.

Your gender

Women are still earning less than men in many professions. The gender wage gap is closing, but it’s not yet equal for everyone. I recently learned that female MBA grads earn less than their male counterparts, which just goes to show that even high educational attainment isn’t a perfect strategy for high income.

Your orientation

The studies on your sexual orientation in relation to your income, especially in reference to the wage gap, are newer and much less talked about. But they show that those of us in the community are bound to face discrimination in the workplace which often results in being shorthanded in terms of salary. This is all on top of the actual spending costs that come with being LGBTQ+. 

There are a number of factors that come into play here. Put simply, who you love has a huge impact on how wealthy you will become in your lifetime. 

Your birth order (surprisingly) changes your earning potential

First-born kids are the most likely to earn six-figures and hold top executive spots. First-born women earn about 4.2% more than second-borns and 6.6% more than third-borns, which is unfortunate news for my baby sisters.

Older children are hungry for achievement, and that often shows up in their career.

How supportive your spouse is of your wealth

Turns out, one of the best investments you can make is the right partner. A conscientious spouse puts more money in your bank account. When it comes to productivity at work and climbing the corporate ladder, it matters a lot who is helping with housework behind the scenes.

Whether or not, or when, you decide to have children

Frequently referred to as the “motherhood tax“, a woman who chooses to have children faces a lot of barriers that don’t exist for the child-free. Men, on the other hand, are more successful if they are fathers. However, for every year a woman delays having children in her 20, she realizes a 10% increase in salary.

The sad truth is: if you want to maximize your earning potential, have kids later. 

Your looks

No one likes to hear this, but it’s true: beautiful people make more money

Attractive people are perceived as more competent (even if they’re not), are typically more confident, and have higher social and communication skills. You can’t drastically alter your physical appearance without plastic surgery, but if a promotion is on the line, that’s certainly reason enough to spend some time in front of the mirror each morning.

The more frequently you change jobs, the wealthier you will become

I took major career leaps in my twenties, abandoning my cushy job in academia after only two years to go back to school. I had no reason to leave: I had a good salary, a pension plan, and my own office.

But turns out the 2 years I stayed is almost too long, because employees that stay for longer that that earn up to 50% less. Want to make more money? Maybe it’s time to quit your job.

Where you live 

Geographic location matters a lot when it comes to earning potential. I live in Calgary, Alberta, one of Canada’s highest earning cities. A robust economy and an urban centre is your best bet when it comes to bringing home a big paycheque. 

I think we like to imagine that we can take full credit for our success, out of pure narcissism or ego, but the line is between what you’ve earned and what you were given is rarely obvious.

Many people will use their circumstances as a cop-out of changing their circumstances. It’s easy to blame the economy, your upbringing, or bad luck when you find yourself in unhappy circumstances.

Likewise, it’s easy to claim hard work, skills, and talents when things are going really well. This is where it benefits to check your financial privilege.  

Chances are, you probably fall somewhere in the middle: enjoying a leg up in some areas and having to work your tail off to get ahead in others.

To maximize wealth, you need to maximize opportunities.

Which is all it really comes down to. You will face some obstacles, but not others. You might have fewer or more than your peers, but regardless, you should try for your best. Whether or not someone is doing their “best” is not always immediately obvious.

Unfortunately, we can’t yet put all the factors I listed above into a formula that predicts your income potential, but it’s interesting to think of all the situations, characteristics, and circumstances that are at play when it comes to your paycheque. Thankfully, none of the above is destiny, so if you don’t like your odds, don’t consider them.

At the end of the day, each of us is merely a statistic, whether we are the norm or an exception to the rule.

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19 Comments. Leave new

  • I think ultimately for me I try to up my wealth opportunities by leveling up my “class”. A lot of it is as much about culture as it is about wealth (i.e. are you surrounding yourself with people, ideas, manners of speech and decorum etc. that coincide with the wealthy’s). Money is a fast fluid resource, but unless you have connections to it, then it won’t come to you. There are gates to entering different classes — the business exec class looks for MBAs upon entry, corporate for bachelor’s — but each is an enclave that you can direct your sights on unlocking. Some enclaves are less accepting of minorities and those without college educated parents may have a harder time earning a degree themselves (an easy ticket for some of us into the middle class). So it goes.

    Reply
  • I would agree with all of those factors. That said, I buck the trend on almost half of them, namely that I earn as much as my male counterparts (sometimes more), and am a good 15 years younger than anyone else I know. I’m also not a first born, never did an MBA and my father never completed high school either.

    Great list.

    Reply
    • haha I actually felt so predictable: white, oldest child, ENTJ. The only thing working against me is low parental educational attainment and being a woman =p

      I know there’s probably even more factors than this, but it’s kind of crazy to see them all in one place!

      Reply
  • I find the correlation of Myer Brigg personality types and work to be interesting. I read an infographic a little while ago that depicted the average annual salary based on Myer-Brigg personality types. It makes sense since some careers do have more of a certain type than others (something I’d like to read more research on).

    Reply
    • That’s a good point, your personality definitely impacts what you’re drawn to doing for a living. I think this must be why they always suggest jobs or career paths when you take a myers-briggs test — though I also think be should be cautious about limiting themselves just because they don’t think they might be cut out for a career they want.

      Reply
  • Fun statistics! The Meyer Briggs list indicated that more than the E, the J really drives the earnings, which isn’t surprising. The J (rather P) tend to be people with a plan and good execution to the plan. It would be interesting to see the distributions and how much they vary from the average.

    Although this focuses on earnings, not wealth. I wonder what would look different if it was measuring wealth, if anything.

    Reply
    • Interesting point. Wealth is typically correlated to income, but it’s true that some high earners are poor wealth accumulators (ie. doctors) while some modest earners are very high wealth accumulators (ie. accountants).

      Reply
  • Thanks for your interesting article Bridget. I always try to utilize almost everything you pointed out but in the end what really matters is how reasonably I am able to save and invest slowly.

    BeSmartRich

    Reply
  • Avatar
    Aleksandra Sagan
    March 5, 2015 7:53 pm

    ENTJ! I recently retook the Meyer Briggs online… I can never remember what my four letters are from the last time I took it, but every few years it changes ever so slightly except for extroversion. It’s the only one I show a strong preference for one over the other. Otherwise, my most recent results were: ESFJ, with moderate preference for SF, and marginal to no preference for J.

    Reply
  • INTJ, neither of my parents went to college and one didn’t finish high school. I’m the oldest child and if I have kids, it’ll be in my thirties. I’m also a female software engineer. I’ve done pretty well on the income front so far and saving – I’ve always been a saver.

    I remember reading somewhere that there is a high concentration of ‘NT’ personalities in the tech industry.

    Reply
  • I’m a semi-reformed hippie in his late 50’s who has done well in life SOLELY because my parents were able to give me a “headstart” in life. Once out of college I had no idea what I was going to do with my life. My Dad convinced me to go to a tech school to learn computer programming, and then got me a job at the same company where he was a second level manager.

    If you’re on the receiving end of it, nepotism rocks!

    Reply
  • People who are ENTJ only makes up 2% of the general population. But so far it appears they represent the 3rd most common personality type for personal finance bloggers, making up about 13% of our niche online community, with a fairly even split between the genders. I’m still gathering info from other bloggers though. 🙂

    Reply
  • ESFJ. 🙂

    Reply
  • INTJ here as well. My parents both have university degrees, I have 2 degrees, kids in my 30s, married a very supportive (and money conscious) spouse. Only child (although I would expect that’s similar to being the oldest in many ways).

    The only thing I tend to disagree with is the changing jobs. Now, I did change jobs 3 times in 9 years (twice internally) for various reasons, and I think I’m better off for it, but … I also think that you need to be really strategic about this, and have a very clear plan and goals for your job moves, and understand the risks and likelihood of rewards. It takes time to build up a reputation within an organization, and while some of that follows you to your next job (more so in some fields than others, perhaps), you will still need to go through a “proving yourself” stage each time you move, which can slow down your career progression a bit. You have to be able to know when that’s worth it, and when it’s not.

    Reply

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