Positive Personality Traits of Financially Fit People

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https://learn.extension.org/events/2592

Positive Personality Traits of Financially Fit People

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MFLN Intro

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Dr. Martie Gillen

•Assistant Professor & Extension Specialist for the Department of Family, Youth and Community Sciences in the Institute for Food and Agriculture at the University of Florida.•Dr. Gillen teaches the undergraduate research methods course and graduate course in the areas of personal and family finance including income tax, retirement, estate planning and insurance.•Dr. Gillen services as the co-leader of the Family Financial Management priority work group.•Her Extension work focuses on promoting healthy financial behaviors among families throughout the lifecycle.

Today’s Presenter

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Martie Gillen, Ph.D., MBAPositive Personality Traits of Financially Fit People

+Webinar Objectives

Explore the Big 5 personality traits

Examine personality traits as related to financial behaviors and outcomes

Discuss implications for use with clients

Provide resources and references

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+Personality

Personality is a relatively enduring pattern of thoughts, feelings, motives, and behaviors unique to each individual and determines how we perceive and response to the environment differently (McCrae & John, 1992).

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+Personality Traits

Personality traits can be seen in the actions one takes and the decisions one makes. For example, either you are a patient person, or not; a responsible person,

or not.

Personality traits are relatively enduring personal characteristics that reveal themselves in a particular pattern of human behavior in a variety of situations (Bratton et al. 2007).

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+ Time for a poll question

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+Big 5 – Personality Traits

Common measure of personality traits OCEAN

1. Openness2. Conscientiousness3. Extraversion4. Agreeableness5. Neuroticism

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+Openness to experience

Intellect or culture Imagination and insight Those high in this trait also tend to have a broad range

of interests

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High levels of thoughtfulness, with good impulse control and goal-directed behaviors

Those high in conscientiousness tend to be organized and mindful of details

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Conscientiousness

+Extraversion

Excitability, sociability, talkativeness, assertiveness, and high amounts of emotional expressiveness

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+Agreeableness

Trust, altruism, kindness, affection, and other prosocial behaviors

“Softhearted”

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+ Neuroticism

Emotional instability Individuals high in this trait tend to experience anxiety,

moodiness, irritability, and sadness

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+ Time for 2 poll questions

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+Personality Traits in Relation to Financial Behaviors

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+ Personality Traits Financial Outcomes & Behaviors

Personality traits are closely related to financial outcomes and behaviors such as Earnings and savings (Duckworth & Weir, 2010) Response to an economic downturn (Duckworth &

Weir, 2011) Financial expectations (Brown et al., 2008) Amount of household debt (Brown et al., 2005) Quality of retirement experiences (Robinson et al.,

2010)

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+Openness to experience

Intellect or culture Imagination and

insight Those high in this

trait also tend to have a broad range of interests

Save less

Spend more

Higher levels of unsecured debt

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Behaviors Financial Behaviors

+Conscientiousness

High levels of thoughtfulness

Good impulse control Goal-directed

behaviorsOrganized Mindful of details

Save money

Plan

Goal oriented,

Spend less

Higher lifetime earnings

Better able to manage “fixed” retirement income

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Behaviors Financial Behaviors

+Extraversion

Excitable Social TalkativeAssertiveHigh amounts of

emotional expressiveness

Change financial plans after talking to friends, family, or colleagues

Good support network

Higher levels of unsecured debt

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Behaviors Financial Behaviors

+Agreeableness

Trust Altruism Kindness Affection Other prosocial

behaviors “Softhearted”

Accept financial assistance

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Behaviors Financial Behaviors

+ Neuroticism

Emotional instability

Anxiety Moodiness IrritabilitySadness

Pessimistic

May put off saving and financial planning

May liquidate assets in times of turmoil

Lower lifetime earnings

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Behaviors Financial Behaviors

+ Time for a poll question

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+ Research Findings

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+ Research Findings

Conscientiousness is a predictor of asset accumulation among young Americans (Letkiewicz & Fox, 2014). A one-standard-deviation increase in

conscientiousness is correlated with a 40% increase in net worth 53% increase in illiquid asset holdings33% increase in liquid asset holdings

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+Research Findings

Those with low self-control are more likely to buy on impulse and have money management and credit problems (as cited in Letkiewicz & Fox, 2014 ).

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+Research Findings

Those who scored high in the trait of conscientiousness were more likely to consume in line with their expectations (as cited in Letkiewicz & Fox, 2014) .

Conscientiousness was successful in predicting credit risk and credit scores (as cited in Letkiewicz & Fox, 2014) .

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+Research Findings

Older adults who were more conscientious and emotionally stable had higher lifetime earnings and saved more money over their lifetime as compared with older adults who were less conscientious and emotionally unstable (Duckworth & Weir, 2010).

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+Research Findings

During the recent economic recession, conscientious older adults saved more and spent less of their income compared to older adults who exhibited higher levels of openness to experience (e.g., adventurous, sophisticated) who saved less and spent more of their income (Duckworth & Weir ,2011).

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+Research Findings

Having financially optimistic expectations is positively associated with one’s level of unsecured debt.

The more positive thinking individuals are about their finances, the more likely they are to have higher levels of unsecured debt such as credit card debt (Brown et al., 2005) and secured debt such as mortgage debt (Brown et al., 2008). They may sincerely believe they will financially succeed

and be able to pay off the debt.

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+Research Findings

Extraversion and openness to experience influenced household debt levels and assets held, whereas conscientiousness and neuroticism were not influential (Brown & Taylor , 2011). Suggests that personality traits have different

effects across the various types of debt and assets held

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+Research Findings

Extraverted and agreeable older adults generally have a better support network in retirement and therefore enhanced life satisfaction in retirement (Reis & Gold, 1993).

Regarding gender, women are more likely than men to exhibit higher levels of neuroticism and agreeableness and these differences generally remain constant across the lifecycle (Chapman et al., 2007).

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+Research Findings

Agreeable older adults are more likely to receive financial assistance (Gillen & Kim, 2014).

Older adults with relatively higher levels of neuroticism show less resistance to receiving financial assistance (Gillen & Kim, 2014).

Conscientious older adults were less likely to receive financial assistance (Gillen & Kim, 2014).

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+ Time for a poll question

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+Research Findings

Older adults who had relatively higher levels of neuroticism were more likely to receive financial help from individual sources (e.g., credit card debt) (Gillen & Kim, 2014).

Agreeable older adults were more likely to receive financial help from family members (Gillen & Kim, 2014).

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+Research Findings

Conscientiousness may be associated with both positive health and financial practices Those who reported frequent planning behavior had

higher health behavior scores than others (O’Neill, Xiao, & Ensle, 2016).

Those who reported frequent planning behavior had higher financial behavior scores than others (O’Neill, Xiao, & Ensle, 2016).

Those who had higher health behavior scores also had higher financial behavior scores (O’Neill, Xiao, & Ensle, 2016).

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+Implications

Can an individual's personality be changed?Research is mixed

They are not fixed traits and can potentially be altered by experience and investments (as cited in Letkiewicz & Fox, 2014).

At best, changing personality traits is difficult.May be able to bring about

Awareness of behaviorsBehavior change

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Understanding personality can provide invaluable insights for financial advising and interventions based on unique personality traits.

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Implications – Financial Practitioners

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Approach clients with messages compatible to their personality traits

People may react differently to the same message.

Targeting outreach efforts and messages based on personality differences may help practitioners reach potential clients.

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Implications – Financial Practitioners

+Implications – Financial Practitioners

Efforts directed toward increasing conscientiousness may have positive effects (Letkiewicz & Fox, 2014).

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What are some ways that you might help clients to increase their

conscientiousness?

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+ Implications – Financial Practitioners

Consider clients’ personality traits, health practices, and personal finances holistically (O’Neill, Xiao, & Ensle, 2016)The strengths and challenges in one aspect of a

client’s life often affect others.

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+ Implications – Financial Practitioners

When financial planners understand a client’s health status and personality traits, they can provide more comprehensive, individually targeted advice (O’Neill, Xiao, & Ensle, 2016).

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+Implications – Financial Practitioners Recommend alternative sources of financial assistance or education

programs for those who have specific personality traits. For example, neurotic older adults have relatively high level of

credit card debt at older ages. Practitioners could advise neurotic individuals to consider public

assistance when they need help, and complete financial education on saving and spending even at older ages as well as at younger ages.

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+Homework

Take a Big 5 Personality Quiz http://personality-testing.info/tests/IPIP-BFFM/ https://sapa-project.org/ http://www.personalityassessor.com/bigfive/

How could you use this in your own work with clients?

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Focus on Money Personalities https://www.extension.purdue.edu/extmedia/CFS/CFS-727-2-W.pdf

Which of These 5 Money Personality Types Are You? http://www.dailyfinance.com/2015/04/30/which-of-these-5-money-perso

nality-types-are-you/

The personality types that make the most and least amount of money http://www.businessinsider.com/the-personality-types-that-earn-the-mos

t-and-least-money-2015-2

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Resources

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5 Personality Traits That Lose You Money http://www.forbes.com/sites/thestreet/2012/01/26/5-personality-traits-

that-lose-you-money/#5fef5b85f6ff

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Resources

+ Bratton, J., Callinan, M., Forshaw, C., & Sawchuk, P. (2007). Work and

organizational behavior. Hampshire, England: Palgrave Macmillan.

Brown, S., Garino, G., & Taylor, K. (2008). Mortgages and financial expectations: A household level analysis. Southern Economic Journal, 74, 857-878.

Brown, S., Garino, G., Taylor, K., & Wheatley Price, S. (2005). Debt and financial expectations: An individual and household level analysis. Economic Inquiry, 43(1), 100-20. doi: 10.1093/ei/cbi008

Brown, S. & Taylor, K. (2011). Household finances and the ‘Big Five’ personality traits. Sheffield Economic Research Paper Series, SERP Number: 2011025.

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References

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Chapman, B., Duberstein, R., Sorensen, S., & Lyness, J. (2007). Gender differences in five factor model personality traits in an elderly cohort: Extension of robust and surprising findings to an older generation. Personality and Individual Differences, 43(06), 1594-1603.

Duckworth, A. & Weir, D. (2010). Michigan Retirement Research Center. Personality, lifetime earnings, and retirement wealth (#2010-235). Ann Arbor, MI.

Duckworth, A. & Weir, D. (2011). Personality and response to the financial crisis (#2011-260). Ann Arbor: Michigan Retirement Research Center.

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References

+References

Gillen, M. & Kim, H. (2014). Older adults’ receipt of financial help: Does personality matter? Journal of Family and Economic Issues, 35(2), 178-189.

Letkiewicz, J. C., & Fox, J. J. (2014). Conscientiousness, financial literacy, and asset accumulation of young adults. Journal of Consumer Affairs, 48(2), 274-300. doi:10.1111/joca.12040

McCrae, R. R., & John, O. P. (1992). An introduction to the five-factor model and its applications. Journal of Personality, 60, 175-215.

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+References

O’Neill, Barbara, Jing Jian Xiao, & Karen Ensle. 2016. “Propensity to Plan: A Key to Health and Wealth?” Journal of Financial Planning 29 (3): 42–50.

Reis, M., & Gold, D. (1993). Retirement, personality, and life satisfaction: A review and two models. Journal of Applied Gerontology, 12(2), 261–282.

Robinson, O., Demetre, D., & Corney, C. (2010). Personality and retirement: Exploring the links between the Big Five personality traits, reasons for retirement and the experience of being retired. Personality and Individual Differences, 48, 792-797. doi:10.1016/j.paid.2010.01.014

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+Questions or Comments

Martie Gillen, Ph.D., MBAAssistant Professor

Family and Consumer Economics for Older Adults Specialist

Department of Family, Youth and Community SciencesUniversity of Florida

[email protected]

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