To think being intelligent or successful doesn’t necessarily mean you’re good with money?

[HeartyMintLurker]

It sometimes surprises me how often people assume that if someone is very successful or highly skilled in their field (e.g. a lawyer, dentist, etc.), they must also be good with money. To me they feel like completely separate skill sets.
AIBU?

But you know what you are doing wrong.

I agree @Bellyblueboy

I don't think intelligence or education correlate with 'being good with money'.

I also don't think it's a skill. A skill suggests it's something you have naturally or are able to learn when I think people just have different attitudes to money and spending.

Agreed. I can barely add 2 numbers together…but worked in financial services for over 40 years 🤣 it’s only been in the last couple of years that I’ve become more financially competent…thank gos for Excel spreadsheets!

We all have a spiky profile to one degree or another. I'm amazing with language and abstract reasoning but pretty poor at number concepts and because I never liked it, my arithmetic is therefore unpractised and poor.

I have no ability to use common sense when looking at numbers. DH might say "how much was that Sainsbury's shop?" and I could easily say "£500!" or "£29!" without a sense that one is hugely over and one hugely under what a weekly shop price might be. I would have to stop and really think about it. He can't believe I don't remember how much things cost and I can't believe he doesn't remember exactly what people said. (Me: "So you say MIL didn't really like the trip to Winchester, but what aspect of it, how do you know that, how did she phrase it?" DH: "......?")

I work in a finance related profession. I manage multi million £££ budgets on a day to day basis, very successfully. I am shit with my own money.

I don't think that maths ability equates, odd though it sounds. I am thick as shit at maths, didn't pass GCSE, couldn't add if you took away my fingers, BUT...I am very financially astute.

I don't need to be able to work out compound interest precisely. I just need to know it exists and if I put X in, I can potentially get y out.

I understand what a higher interest rate means in terms of savings versus what it can mean in terms of mortgage payments (though I no longer have that worry, fortunately). All my lack of maths ability means is that if I want to know the actual numbers, I need a calculator.

On the whole, I'd say the most important financial understanding, above all other things, was drilled into me as a child. Income needs to be higher than expenditure.

I think we do tend to make budgeting and general financial comprehension into rocket science. It really isn't, and you don't need to be good at maths per se to understand it. In fact, some of my far more mentally capable friends understand less than I do.

I sometimes think that precisely because I am so poor at maths, I've had to simplify things. People who aren't so afflicted, like my husband who is much my superior intellectually in that regard, have a tendency to over-complicate that which is, in actual fact, quite a simple concept at its roots.

I think if you've got a brain, you have more chance of being astute with things such as saving, investment pensions etc. But totally agree it doesn't always follow. Intelligence comes in very different forms. My siblings are all doctors, incredibly intelligent and at the top of their game. But one of them in particular is useless at life. It's a standing joke that they wouldn't have a clue how much money they have, how to switch on a washing machine, how to buy a mobile phone (that was the most recent one!). Intelligence has replaced their common sense!

Look at David Beckham. His football brain is one of the best in the world, he has also just become a billionaire, but you wouldn't want him to do surgery on you. We're all different.

I agree.

I’m amazing with money and it’s because I never had it, so had to budget it for every penny (literally).

Many women on MN are awful with money because they’ve never had to seriously budget.

I don’t think it has anything to do with professions or intelligence though.
I think it’s more to do with privilege and independence.

My sister is on a crap wage but was always rubbish with money because her DH was on a good wage and sorted all of the finances out.
She never needed to learn how to budget (until he broke up with her).

Obviously you get people on a low income who do not have basic numeracy skills and therefore get into a lot of debt because they simply can’t figure out how to budget.

But then you get other people on a high income who simply don’t need to budget.

Neither of which is more intelligent than the other when it comes to finances and budgeting.

I know some genuinely intelligent people who I'd also describe as a bit arrogant about it - which has caused them to make unwise investment decisions and also not seek advice about things that "less" intelligent people would.

It's taken them a long time to realise they are not as astute as they thought they were.

I don’t believe any functioning adult doesn’t know how to turn on a washing machine or buy a mobile phone. If this person is practicing medicine they need urgent cognitive testing.

I am not being flippant - if your sibling genuinely struggles to understand the basic functions of a washing machine (most ten year olds can figure it out) then there is no way they passed exams at school never mind medical training. Therefore this must be a more recent decline. They need urgent medical attention.

I think it’s a personality thing. My FIL was a proper old school bank manager, personally approving the mortgages and loans etc of half the town. He said the doctors and lawyers were the worst for spending it all, ridiculous mortgages requests they had no idea how they would pay back, no pension plans, flash cars and (in those days) wives who were spending far more than was in the account.

Ive learnt to be better with money and to understand it, well paid, got savings etc. DH is similar. I know other people on similar salaries who don’t know how they are ever going to retire….

Oh, my ex husband. Heart surgeon, one of the most respected in the country.

Shit with money. I met him when he was 26 and he had already jacked up 40k on credit cards buying utter shit. He lived in an overdraft, as soon as his wages went in, he was -4k.

He’s in his mid 50s now, been bankrupt once and had IVAs.

🤣🤣🤣 Maybe don't take things quite so literally.

on a thread about intelligence and life skills you said a recent example w of your sibling who is a doctor is that they couldn’t figure out how to buy a mobile phone. So is that not true? So you mean they are just uninterested in basic life chores - which is completely different and irrelevant to this thread?

Why did you post? Are you saying your highly educated sibling isn’t clever enough to manage their finances?

Skills, abilities and intelligence are very broad. Spending and money is often led by impulsive and emotional choices rather than actual IQ.

I agree OP. And other things too. People are surprised a surgeon is bad at spelling or surprised a barrister is bad at maths. I was quite academic as a younger woman but bad at general knowledge, i remember being criticised for this in a way my friends werent. Its a bias. I'll bet they are also surprised if a plumber is good with tech or a builder is brilliant at crosswords

Yes and no. People with less money certainly tend to be better at conserving money through budgeting etc.

But that can breed a kind of risk aversion which is itself unhelpful.

Sometimes you have to invest to make money and take some risk. If your North Star is always spend as little money as you can you are sometimes missing opportunities to make a lot more money in the long term.

My DP is a good example: he chose not to put money into a house he shared with his then partner: he comes from a poor family and is very careful with money and was worried at the time about the risk. The value of the house accumulated massively and he missed out on about £300k of profit.

So, swings and roundabouts: budgeting and looking after pennies will certainly make your existing money go further but it might limit you in making much more.

We earn very average money and we have no choice but to budget.
we were told we could have a mortgage of a certain amount we chose to buy a house meaning we needed a mortgage of 75% of what we could borrow
I write everything down every month in a book ( old school here) and we sit down and work everything out that needs paying that month and what we have over (not a lot)
maybe people who don’t have to worry about what’s coming in/out and what’s left buy stuff they don’t need and waste money a bit?

One of my really good friends is a lot better off than us, but always pleads poverty but they have a massive mortgage and have 2 cars on finance and expensive holidays.

Even if we all of a sudden became much better off, I think we would always be careful as we’ve always had to be watching the pennies.

My dh is good at making money, investments etc but wastes it on ridiculous rubbish he doesn’t need.

The mathematical understanding required is very basic but it’s more than just YR2 level (adding and subtracting). To make competent financial decisions people need to be able to understand percentages, compounding (and therefore the non-linear growth in both investments and debt) and make comparisons between the net effect of this compounding plus tax implications etc.

It’s still primary school level mathematics so very simple but there are evidently many people who still don’t grasp it, for example: people who say they are living/ planning to live only on state pension in retirement and are surprised they are poor when they saved nothing throughout their live even though tiny amounts per month would have grown immensely over their lifetime; people who leave savings in cash (other than emergency funds); people who seem proud to have used excess income to have overpaid mortgages when mortgage rates have been far lower than average investment returns for almost all of the last 7 decades; etc. The irony is that many people in this group actually seem to think they are financially literate when clearly they are anything but.

I am involved in a charity which goes into primary schools to try to rectify this financial illiteracy for those growing up now, at least with the basics.

Exactly. One of the main reasons so many people made wealth in property is because of the leverage available through mortgages where in effect they received the full rise in asset price even though the money they had invested was a small proportion of the full asset value. That kind of leverage is not available to ordinary members of the public through many easily accessible routes. But obviously due to the relationship between risk and return, higher leverage means higher risks.

It’s shocking how many people don’t seem to grasp the relationship between risk and returns so leave their pension funds invested in low risk/ return assets in their 20s/ 30s/ 40s, for example. And their savings in cash, or wasted savings paying off mortgages at sub-5% rates or even now. There were even crazy people making mortgage overpayments regularly when mortgage rates were 1%!!

I used to work as a debt advisor but have racked up ridiculous credit card debts myself. Definitely a case of ‘do as I say, not as I do’ 😬

Edited to say: Also have ADHD!

Yes, people look at me in horror when I tell them they may be better off considering an interest only mortgage and investing their capital(obviously caveat that they should discuss this with an IFA).

I never understood overpaying for those of us who had a 25 year mortgage at low interest rates. I would say, though, that low-risk/low-yield investment isn't a bad idea for lower earners because they might not be able to weather losses through high risk investment. Invested money can go down as well as up and, as shown by the endowment fiasco, some people can end up losing a lot.

We had a part repayment, part endowment. Over the years, we were able to.put aside the difference, should there be a shortfall. We were lucky, we even made a bit on ours, but many with 100% endowments lost the lot.

Higher risk is great, but people do need to understand there's no guarantees. In the case of pensions, higher risk can be disastrous if you aren't able to contingency plan for not getting out what you expected. Over-reliance on single sources is never a good idea. Spread it, don't put all your eggs in one basket.

I am hopeless at maths, but very good at paying attention to the small print...