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Listen: How your personality traits affect your relationship with money

Apr 21, 2023

In the second episode of a six-part podcast series entitled “Emotions and Money”, Maya chats with Paul Nixon, head of behavioural finance at Momentum Investments, about the different personality traits and how your personality could be affecting the way you manage your money.

A number of theories of personality have been developed and debated over time. The debates tend to centre around the nature/nurture question: is who we are dependent more on our genes or on the environment in which we are raised?

Those who lean towards the nurture side believe that being social or extroverted, for example, is a result of an environment that reinforces or encourages this behaviour. Supporters of the nature side believe that we are born with ‘factory settings’ and that those will dominate our behaviour regardless of our environment or social influences.

Recent studies of monozygotic or identical twins have shown that reality is likely somewhere in between, and that approximately 50% of our personality is passed down through our genetic code, with the environment playing a moderating (not dominant) role. An introvert growing up in an environment and social setting that encourages being sociable would become a more sociable introvert, but not an extrovert. This person would still need their alone time to recharge their batteries in contrast to an extrovert who is energised by social interaction.

The “big five” personality traits

How your personality traits affect your relationship with moneyThis is reflected well by the so-called big five personality traits that have been shown to be stable over time and highly heritable (inherited). The Big Five Model is the most widely applied and studied foundation of modern personality theory that has been linked to financial behaviour.

Using the acronym OCEAN, we can briefly unpack each of these personality traits and how they impact our relationship with money.

O: Openness is a trait associated with our inherent curiosity and as such has been linked to IQ. In these times of Zoom and Teams meetings, we can easily spot people with this trait by peeking at their bookshelves in the background. Being inquisitive usually comes with the belief that life is about experiences. This tends to make us more present-focussed making saving more of a challenge.

C: Conscientiousness by contrast is all about the future and consequences. People with this trait drive better, take their medicine, and tend to save more because of their ability to think of the future. They are able to delay gratification.

E: Extraversion is the trait associated with being sociable, energetic (sometimes dominant) and positive. This trait also comes with a natural inclination to take risk. This stems from elevated levels of self-confidence.

A: Agreeableness is the trait of being empathetic and relation-oriented. This trait perhaps has the weakest link to financial behaviour, although research may link this trait to preferences for ESG investing.

N: Neuroticism is associated with anxiety or interpreting a greater proportion of stimuli as a threat. The link to money behaviour here is likely one of the most destructive. Market volatility and high loss aversion combined usually result in behaviour tax.

Our personality traits affect our behaviour in most contexts, so these traits will invariably affect our relationship with money.  Understanding your own personality could help you improve your financial behaviour.

Emotions and Money is a six-part podcast series in partnership with Momentum Investments, in which we unpack the psychology behind our investment decisions and how our emotions could be sabotaging our financial outcomes. 


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Maya Fisher-French author of Money Questions Answered

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