Personality and Finance: The Effects of Personality on

Financial Attitudes and Behaviour

Joseph Davey, University of Hertfordshire, Hertfordshire, UK
Christeen George, University of Hertfordshire, Hertfordshire, UK

Abstract: Personality has been found to be associated with attitudes and behaviours in general but
limited research has focused on finances. Conscientiousness and extraversion have been shown to affect
saving and borrowing behaviours but minimal attention has been paid to how personality affects
broader financial matters. This study attempts to rectify this. Utilising a survey, personality profiles
and financial habits were established for 269 participants aged from 16 to 71 years, of whom 46.1%
were male. In line with expectations, the results indicated conscientiousness and locus of control to
have a profound impact on both financial attitudes and behaviours. Agreeableness, openness, and
neuroticism were also found to be important whilst extraversion was shown to impact on regular
saving patterns. These results supported the hypothesis that personality has a profound effect upon
financial matters.

Keywords: Personality, Financial Attitudes and Behaviour

1.0 Introduction

T
HE UK ECONOMY is currently substantially in debt. The average UK citizen has
twice the amount of unsecured debt of their European counterpart, largely due to the
‘buy now, pay later’ attitude that has been adopted in recent years. Although recently
there has been much work looking into student attitudes to debt, there has been very
little focus on how the general population looks after their finances. Furnham and Argyle
(1998) claimed that the reason for the relative lack of research is partly down to the study
of money being conceived as the domain of economists. However this has recently been
questioned and preliminary research into financial behaviour by Nyhus and Webley (2001)
has found that personality traits play a role in saving, particularly conscientiousness and
agreeableness. This new research, however, has not been extended into financial behaviour
as a whole. Financial behaviour in its broadest sense has received little attention. The overall
aim of this study is to find out how different personality types regard finances and whether
personality traits affect financial decisions and attitudes.
Lack of money is widely considered to be a major stressor and a source of many of the
problems present in modern society. Similarly, having more money is viewed as a primary
means of enhancing well-being and happiness. With this being a widely held belief, it would
be logical to assume that people will attempt to look after their finances and be economical
but this seems to rarely be the case. Indeed, with such great ‘error variance’, it can be argued
that personality may play a large role in the attitudes and behaviour people have concerning
finances. What is astonishing is that the research into finances has largely neglected the role
of personality, particularly given that a link was discovered by Kline in 1966.

The International Journal of Interdisciplinary Social Sciences

Volume 5, Number 9, 2011, http://www.SocialSciences-Journal.com, ISSN 1833-1882
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2.0 Personality and Financial Attitudes and Behaviour

Personality consists of stable tendencies to behave in certain ways and most social psycho-
logists, among them Digman (1990), agree in favour of the five-dimensional personality
structure; some aspects of which have previously been linked with financial behaviours. The
most widely adopted view of personality states that one’s personality comprises of the five
traits namely, conscientiousness, agreeableness, extraversion, openness and neuroticism
(Costa and McCrae, 1985).
Schmölder (1966) was one of the first researchers to compare personality with financial
behaviour, focusing particularly on the role of conscientiousness. This trait involves the extent
to which people are careful and self-disciplined, with those scoring high in this regard
tending to be organized, hard-working and reliable and those at the lower end more “care-
free”. Schmölder’s study was conducted on a representative sample of German households.
Participants were all over 15 years of age, which consisted of approximately 2500 people
across 1050 households. The results indicated that conscientious, self-disciplined people
were three times more likely to be regular savers compared to carefree people, with the
conscientious group saving on average 10 to 12 per cent of their income compared to the 5
to 7 percent that the carefree people saved. Similar results were later found by Harley &
Wilhelm (1992) where conscientious people were found to regularly save double the amount
of carefree people. This trait was also found to be associated with financial attitudes when
Routh and Burgoyne (1991) found people who scored low on conscientiousness tended to
be absentminded about their finances.
Conscientiousness, however, has not been the only trait previously seen to have a relation-
ship with finances. Bailey and Gustafson (1991) claimed that emotional stability influences
financial attitudes. Emotional stability is at the lower end of the personality trait of neur-
oticism. Those who score high in neuroticism tend to experience negative emotions and are
more likely to react badly to stress. The claim by Bailey and Gustafson (1991) has more re-
cently been supported by Spinella (2005) where, in a sample of 67 students, money attitude
scores were shown to be associated with levels of neuroticism.
Furthermore, Brandstatter (1996) found evidence that implies emotional stability and in-
troversion have the strongest impact on financial behaviour. Introversion is the term given
to those who score low on the personality trait of extraversion. Those who score highly in
extraversion, called extraverts, tend to seek out external stimulation, often through the
company of others whilst introverts are more reserved. The relationship between saving at-
titudes and saving behaviour found by Brandstatter (1996) was seen to be stronger among
introverts than among extraverts, and particularly for people who were emotionally stable.
As before, though, conscientiousness was still an important factor. Couples scoring highly
in the conscientiousness trait found saving attractive, especially if they were also introverted.
Some researchers may be inclined to argue that there is inconsistency amongst these
findings, specifically in terms of which of the ‘Big Five’ traits makes the biggest contribution
to financial behaviour. Warneryd (1996b) found conscientiousness to be the most important
of the ‘Big Five’ traits, whilst Brandstatter (1996) found extraversion and neuroticism to
have the greatest influence. What these studies have demonstrated, however, is that there is
good reason to believe that personality impacts on economic decisions, even though these
studies involve specific acts like saving rather than financial behaviour in the broadest terms.

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In addition to these three traits, agreeableness has also been demonstrated to interact with
personal finances. Warneryd (1996b) found inflexibility (related to agreeableness, the extent
to which someone is pleasant and accommodating to others) to be significantly related to
saving behaviour and the intention to save, again demonstrating the impact of personality.
However, Nyhus and Webley (2001) subsequently found evidence for the contrary, with
highly agreeable people seeming to be more likely to have fewer savings and indeed borrow
more. At present there has been limited focus on the role of openness, which involves the
extent to which people are imaginative, intellectually curious and have a preference for
variety.
In addition to the ‘Big Five’ personality traits, Wärnyerd (1989) proposed that locus of
control will influence financial behaviour. Locus of control is a psychological construct that
assesses the extent to which people perceive that their life is controlled by their own actions
and not external forces. People with an internal locus of control believe that their own beha-
viour determines the rewards that they obtain, while those with an external locus of control
believe that their own actions have little impact and that rewards in life are generally outside
of their control. The results from Lunt & Livingstone (1991) supported this notion and found
that those with high internal locus of control were indeed more financially viable; locus of
control played a role in discriminating savers from non-savers, not to mention the fact that
it can be used to help predict the amount that people save. More recently, Tang (1993) used
his Money Ethic Scale and showed that locus of control was associated with the ability to
create and stick to a money budget. Tokunaga (1993) also regarded that those who have high
external locus of control are more likely to get into debt.
Overall, there has been much research to suggest that personality plays an important role
in financial behaviour. However, with four of the “Big Five” traits seemingly important,
further research is required to ascertain which traits have the biggest impact on financial
behaviour overall. This technique seems to have been largely neglected in previous work
although identifying potential relationships with specific financial actions still has its merits.
Indeed, individually assessing the motivation behind certain behaviours (such as the reasons
behind saving or for using a credit card) does provide insight into the ways that personality
may affect economic behaviour.
Brandstatter (1995) argued that the predictive power of personality would improve if the
dependent variables set against personality measures were broad categories of acts rather
than specific. Unfortunately this view was overlooked by Nyhus and Webley (2001) when
they compared savers with debtors. The findings here showed that people who have previously
had debt are less conscientious than those who have never been debtors. Nevertheless,
Webley and Nyhus (2001) did subsequently adopt the broader technique later that same year
and still found conscientiousness to be important. This study also found that higher discre-
tionary savings are made amongst conscientious people, again corroborating previous findings.
The conclusions drawn from this research were that personality influences attitudes, which
then in turn impact on behaviour, rather than a direct relationship between personality and
behaviour. Such a relationship had also been found by Lunt & Livingstone (1991) where
attitudes towards saving had affected saving behaviour, although was shown to have very
low predictive power.
It appears that researchers are beginning to understand that general behaviour should be
assessed rather than comparing pre-designated groups such as savers and debtors, or contrast-
ing people who actually ‘plan-and-do’ save with those that ‘plan-in-vain’, as has been explored

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by Rabinovich & Webley (2007). This is an important step forward since it is most common
for people to engage in both saving and borrowing simultaneously, whether it be going into
their overdraft before receiving wages, purchasing items like a new car on credit, not to
mention undertaking a mortgage. This is why future research should address the whole array
of a person’s financial management. Furthermore, debtors should not be labelled in such a
concrete way since some debtors may be forced into using credit to tide them over before
receiving their wages, which is psychologically different to someone who is constantly in
debt of their own volition.
In the past, saving and debt have been addressed separately, but since many people often
fluctuate between the two positions, it can be argued that a better approach would be to
consider them two ends of a continuum which can be assessed in one measure, an objective
measure of one’s net savings. Likewise, rather than focusing on one area such as saving, if
assessments are made concerning various financial scenarios from saving and investment
to credit and loans, bank charges and interest rates and attitudes toward spending, an accurate
assessment of an individual’s financial attitude can be obtained. Once aggregated, this
measure can take place over a continuum with being thrifty placed at one extreme on a
continuum, and being profligate at the other extreme. Similarly, asking participants to rate
what they actually do can get a similar measure for financial behaviours, and an assessment
of how well people manage their financial accounts.
In addition to the issues over measuring broad financial behaviours, there is another issue
when it comes to measuring the amount people save regularly. To economists, anything that
is not spent is, by definition, saved. However, unintentionally not spending is psychologically
quite different to intentionally saving, which suggests intention should also be assessed in
conjunction with monetary values. Additionally, some individuals will save regularly to be
able to afford a specific purchase, which is psychologically different to purchasing on credit
because it shows the ability to delay gratification. In this example, traditional research falls
short. Clearly someone saving up before making a purchase has saved but this would not
always be recognised. If the assessment is made before the purchase, it will register as saving,
however this would not be the case if the measurement were made after the purchase.
In a similar fashion, by measuring the bank balance at one moment in time, it is possible
that some regular savers would not appear to be saving because of the timing of the measure-
ment; some people may have had to spend the money they would typically save on an un-
foreseen event, such as paying to repair their car, or indeed any other arbitrary event that
can occur throughout the year and affect typical financial decisions. Therefore, measuring
at one point in time is an inadequate measure. It would instead be more prudent to measure
the typical amount that people save each month. This would be a more systematic indicator
because it would remove any unforeseen circumstances that could attribute to people saving
more or less during a particular month than usual. Similarly, typical savings will be made
due to the intention of saving, which means unintentional savings will be discarded. Assessing
the amount of savings one has at a specific point in time would only seem practical when
specifically researching savers, although this technique can still be employed for assessing
a person’s net savings. Also, to avoid the fact that high earners can both spend and save
much more than low earners, assessing the percentage of their income that is typically saved
may reveal more insight as it conveys the proportional amount they consider important.
The aim of this study was to corroborate previous findings regarding personality and fin-
ancial behaviour and to test the relationships previously stated. Personality traits were

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measured and used as predictors, whilst the participant’s financial attitudes and behaviours
were the criterion. As an initial exploratory study, of interest here is whether any of these
variables correlate with one another. Furthermore, in accordance with Nyhus and Webley
(2001), it was expected that personality ratings would correspond to a greater extent with
attitudes than with behaviours, since attitudes are considered to impact on behaviours, rather
than behaviour being directly influenced by personality. In addition, with locus of control
having been found to correlate both with regular saving (Lunt & Livingstone, 1991) and
with debt (Tokunaga, 1993), it is expected that this personality characteristic will have a re-
lationship with the net savings of individuals. Similarly, it is likely that extraversion will
have an indirect relationship with regular saving with those scoring high in extraversion
saving a lower proportion of their income. This is anticipated to be an indirect relationship
since extraverts are more likely to spend a higher proportion of their disposable income on
social pursuits.

3.0 Participants
In all, 269 respondents took part in the study, of whom 124 (46.1%) were male. Ages ranged
from 16 to 71 years, the mean being 29.6 years (S.D. = 12.4). Of the sample, 102 participants
were single, 159 in a relationship or married and 7 were separated or divorced. 101 (37.5%)
of the participants lived with their parents, 24 (8.9%) lived alone, and 52 (19.3%) only with
their partner. The remaining 92 participants had other people living with them. The majority
of participants (200) had some form of post school qualification. 50 participants had obtained
GCSEs or the equivalent, whilst 91 had studied for A-Levels and 101 had studied for a degree
or higher. Only 14 respondents had no formal qualification. Participants had also been
working for an average time of 10.2 years (S.D. = 11.3). The sample was recruited through
snowballing sampling technique starting with friends and family of the lead researcher.

4.0 Measures of Personality, Locus of Control and Financial Attitudes

and Behaviour

4.1 Personality Structure

The key focus of the study was to establish the personality profile of participants. The first
questionnaire was the FFPI (Five-Factor-Personality Inventory) developed by Hendriks,
Hofstee, & De Raad (1999). Despite being shorter than many personality inventories, this
measure has been shown to be reliable and to have construct validity. It consisted of 50 brief
statements to establish the ‘Big Five’ factors of personality. Each factor was represented by
10 items, with half of the items phrased in a positive manner and the remaining five negatively
phrased and were ordered to alternate between the two. All items were basic sentences,
easily comprehensible to participants with a low standard of education. The five factors and
their respective cronbach alpha levels were as follows: Extraversion (0.86), Agreeableness
(0.77), Conscientiousness (0.81), Neuroticism (0.86) and Openness (0.82). To complete the
inventory, participants were asked to mark, on a 5-point likert scale, their agreement with
the statement as it applied to them. Strongly disagreeing would score a mark of -2, whereas
strongly agreeing would score 2 points. A neutral view would result in a zero score. Reversing
the negative comments and aggregating would give each personality trait a range of scores

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from -20 to 20. As such, those who obtained a negative score on the extraversion scale would
be introverts, and those scoring above zero on the neuroticism scale would be considered
emotionally stable.

4.2 Locus of Control

Respondents were also asked to answer a 13-item assessment of locus of control developed
by Rotter (1966). The scale measures generalized expectancies for internal versus external
control of reinforcement, that is whether the participant feels that they are in control of their
life or whether they deem many events to be beyond their control. This measure involved
reading pairs of statements concerning the world, one of which expressed that events in life
are due to our own actions and within the control of the individual (internal locus) whilst
the other statement conveyed events to be outside of their control. Participants were required
to choose the statement from each pair that most closely resembles their opinion on the
matter. Statements of internal locus of control were given a score of 0, whilst external re-
sponses scored 1. The aggregate scores ranged from 0 to 13, where 0-6 would indicate in-
ternal locus of control, whilst 7-13 constitutes external locus of control.

4.3 Financial Measures

To measure attitudes and behaviours, respondents were asked to rate how much they agree
or disagree with various statements concerning finances and financial services on a 5-point
likert scale. Half of the statements were positive and half were negative and they were
presented alternately. This inventory was to establish the extent to which respondents are
aware and careful about their finances, or whether they are unaware and careless. This
measure was split into 3 sections that pertained to subtly different aspects. The first section
concerned the respondents’ attitudes and feelings toward finances from a variety of resources,
some of which had been adapted from the money scale developed by Lim and Teo (1997).
This involved 25 statements and respondents were asked to reveal the extent to which they
agreed with said statements, with a score from 0 (strongly disagree) to 4 (strongly agree).
Aggregate scores ranged from 0 to 100 after appropriate items had been reversed (α = 0.84).
The same technique was also used to assess financial behaviours (α = 0.93) and financial
account management (α = 0.85). These questionnaires had 24 and 26 items respectively,
with possible scores ranging from 0 to 96 and 0 to 104.

4.4 Reported Financial Behaviours

To further research the relationship between personality and financial attitudes and behaviours,
respondents were also asked to answer a set of categorical questions:

1. Do you have any form of savings? (1=yes, 2=no)

2. Do you have any form of credit/debt (not including mortgages or student loans)? (1=yes,
2=no)
3. Do you like to use all of your money? (1=yes, 2=no)
4. How aware are you of your account balances? (1=always/mostly, 2=sometimes,
3=rarely/never)

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5. How often do you pay off your credit card before getting charged interest? (1=always/of-
ten, 2=sometimes, 3=rarely/never)
6. What are your reasons for saving? (1=for the sake of it, 2=for the future/retirement,
3=for specific purchases, 4=for a rainy day, 5=to spend in the future, 6= I do not save)
7. What are your reasons for using a credit card? (1=avoid thinking about how much you
spend, 2=to earn cashback on purchases, 3=spend money you can not otherwise afford,
4= tide you over until you receive wages, 5=because credit card payments are secure,
6=do not use credit card).

In addition, the survey asked participants to state the percentage of their income that they
typically save each month, the percentage of their income they have in savings, and the
percentage of their income that they are in debt by. Given that this research was an initial
exploratory study and it is recognised that student loans and mortgages are quite unique
forms of debt compared to conventional credit, respondents were asked to dismiss these
types of debt when asked about their financial accounts. These responses established parti-
cipants’ net financial standing.

5.0 Procedure
The survey was posted on an internet survey website and each participant worked through
the survey at his/her own pace. Participants were also given the lead researcher’s email address
if they had any questions prior to undertaking the survey and if they wished to complete the
survey in paper form. For those who chose this method, paper questionnaires were delivered
to willing participants with a return envelope. Participants were also informed that if there
were any questions that they did not wish to answer, they were allowed to leave the fields
empty and continue. Participants were recruited through word of mouth and a group on the
website Facebook (www.facebook.com) was created to promote the survey to others.
The respondents who had completed the survey on paper were instructed to visit a webpage
after completing the survey, which served as their debriefing. This webpage was established
once the deadline for paper surveys had been reached, to ensure the debriefing was not read
by participants before they completed the survey. Pilot work indicated that it took between
15 and 30 minutes to complete the questionnaire. BPS ethical procedures were followed and
informed consent was sought before participants proceeded to undertake the survey.

6. Results

6.1 Financial Attitudes and Behaviours

The first research hypothesis was concerned with the relationship between personality
structure and financial attitudes and behaviours.
High levels of conscientiousness were found to be associated with financial attitudes. This
relationship was significant. Pearson’s r = .257, p < 0.001, two-tailed. The results also showed
that high levels of agreeableness appear to relate with financial attitudes. This relationship
is significant. Pearson’s r = .195, p = 0.001, two-tailed. Openness also seems to share a rela-
tionship with financial attitudes. Pearson’s r = -.124, p = 0.019, two tailed and finally, locus
of control appeared to relate with financial attitudes. Pearson’s r = -.216, p < 0.001, two-

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tailed. Overall, these results seem to indicate that financial attitudes are influenced by per-
sonality. More specifically, high conscientiousness and internal locus of control seem to
have an impact on how people regard their finances.

Figure 1: The Relationship between Personality Traits and Financial Attitudes

The first hypothesis also stated that personality would be related to financial behaviour and
account management. Similar results were obtained comparing personality with the individu-
al’s financial behaviour. Conscientiousness and locus of control had a similar relationship
with financial behaviour as they did with financial attitudes but rather than openness relating
as it does with financial attitudes, neuroticism instead appears to be associated with financial
behaviour. High levels of conscientiousness were found to be associated with being financially
thrifty. This relationship was significant. Pearson’s r = .294, p < 0.001, two-tailed.
As it did with financial attitudes, agreeableness seems to have a significant relationship
with financial behaviour. Pearson’s r = .209, p = 0.001, two-tailed. In addition, low levels
of neuroticism seem to relate with highly organised financial behaviour. This relationship
is also significant. Pearson’s r = -.143, p < 0.001, two-tailed and, as before, locus of control
appears to be associated with financial behaviour. External locus of control seems to coincide
with poor financial management whilst those with internal control are more economical in
their behaviour. Pearson’s r = -.296, p < 0.001, two-tailed. These results seem to indicate
that personality scores do correlate with financial behaviour.

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Figure 2: The Relationship between Personality Traits and Financial Behaviour

Furthermore, the nature of the relationship was of relevance to the second research hypothesis.
The relationship between behaviours and personality appears to be stronger than the relation-
ship personality has with financial attitudes. For example, neuroticism correlates with beha-
viour while there is no obvious relationship with neuroticism and financial attitudes. The
same variables that correlated with financial behaviour also correlated with account manage-
ment. Agreeableness appears to be associated with account management. This relationship
was significant, Pearson’s r = .185, p = 0.002, two-tailed. Neuroticism had a significant re-
lationship, Pearson’s r = -.163, p = 0.008, two-tailed. Conscientiousness also had a significant
relationship, Pearson’s r = .255, p < 0.001, two-tailed, as did locus of control, Pearson’s r =
-.294, p < 0.001, two-tailed.
Another research hypothesis was concerned with the impact of extraversion on the amount
of regular savings people make. This analysis used a sample size of 163, after values of over
100% were removed. The findings are illustrated in Table 1 and indicate that those who
score higher on extraversion typically save a lower proportion of their income.

Table 1: Mean Percentage of Monthly Income Regularly Saved by Introverts and

Extraverts
Mean Std. Deviation
Introvert 18.5 26.0
Extravert 11.2 16.9

The percentage of monthly income that participants typically save was regressed on level
of extraversion. A significant negative relationship was noted: r(163) = -.93, p<0.001. Reg-
ular savings and extraversion shared 4.5% of the variance (r2=.045). The regression equation
was as follows: Percent of monthly income regularly saved = 28.03 – 0.62 Extraversion.

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6.2 Self-Reported Financial Behaviours

Further support of the relationship between financial behaviour and personality came from
the categorical questions. Table 2,below, shows that different personality traits all contribute
to constituent aspects of financial behaviour.

Table 2: Financial Behaviours and Contributing Personality Traits

Financial Behaviour Personality Trait χ² P value
Having savings Agreeableness 5.915 0.015
Having savings Conscientiousness 4.935 0.026
Regularly saving Neuroticism 5.669 0.017
Having debt Extraversion 4.639 0.031
Using all money Agreeableness 8.275 0.004
Saving for future Locus of control 7.377 0.007
Avoid thinking about expenditure Locus of control 3.904 0.048
Getting charged interest Extraversion 10.491 0.005
Awareness of finances Conscientiousness 6.211 0.045
Awareness of finances Locus of control 6.204 0.049

The first question asked whether participants had some form of savings and 246 people took
part. Of those who scored high on agreeableness (n=208), 78% said they have savings.
However, of those who scored low on agreeableness (n=38), 60.5% have some form of
savings. It would seem that highly agreeable people were twice as likely to have savings as
people who score low on agreeableness (OR = 2.43). The relationship was significant, c2(1,
N = 246) = 5.915, p=.015.
Similarly, conscientiousness was found to appear to impact on saving behaviour. Of those
who scored low on conscientiousness (n=54), 24% do not seem to save. However, of those
who scored high on conscientiousness (n=192), 12% said they did not save. This relationship
was significant, c2(1, N = 246) = 4.935, p=.026. It would seem that highly conscientious
people were twice as likely to save as those who score low on conscientiousness (OR =
2.33).
In addition, neuroticism was shown to vary with regular saving. This question had 244
respondents. Of those who rated as emotionally stable (n=169), 53.8% claimed to save reg-
ularly. However, of those who scored high on neuroticism (n=75), 37.3% claimed to save
regularly. It seems that emotionally stable people are twice as likely to regularly save com-
pared to those who score highly in neuroticism. (OR = 1.96). This relationship is significant,
c2(1, N = 244) = 5.669, p=.017.
When asked whether respondents had any form of debt, 246 participants replied. Of those
who scored high on extraversion (n=178), 51% said they have some form of debt. However,
of those who scored low on extraversion (n=68), 40% reported having some debt. Here, it
appears that extraverts are nearly twice more likely to have some form of debt than introverts
(OR = 1.86). The relationship between extraversion and debt was significant, c2(1, N = 246)
= 4.639, p=.031.
In addition, participants were asked whether they like to use all their money or not. 241
participants responded to this question. Of those who scored high on agreeableness (n=203),

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31% claimed to like to use all their money. However, of those who scored low on agreeable-
ness (n=38), 55.3% stated that they like to use all of their money. It would seem that people
who score low on agreeableness are three times as likely to use all of their money compared
to those who score highly (OR = 2.75). The relationship between agreeableness and money
usage is significant, c2(1, N = 241) = 8.275, p=.004.
A further question asked the reasons people saved. Participants were able to give multiple
answers as to why they save, including saving for retirement, for precautionary reasons, and
saving to spend on a certain purchase. There was also an option to say that they do not save.
Regarding saving for the future (particularly retirement), 211 participants took part. Of those
with internal locus of control (n=105), 66% do save for the future. Of those with external
locus (n=106), 47% save for the future. It would seem there is a relationship between locus
of control and saving for one’s future, and that people with internal control are twice as
likely to save for the future (OR = 2.15). The relationship between locus of control and
saving for the future is significant. c2(1, N = 211) = 7.377, p=.007.
In addition, reasons behind using a credit card were also examined. Out of those who use
a credit card, respondents were asked to select their reasons for using one. 137 respondents
took part. Of those with internal locus of control, (n=71), 4% use a credit card to avoid
thinking about how much they spend compared to 13.8% of those with external locus of
control (n=65). Again, it appears locus of control has a relationship with the reasoning behind
using a credit card. It appears that people with external locus of control are over 3 times
more likely to use a credit card to avoid thinking about their consumption than those with
internal (OR=3.58). The relationship between locus of control and dismissing consumption
is significant. c2(1, N = 137) = 3.904, p=.048.
The next question concerned how often people pay off their credit card before getting
charged interest. The options were often, sometimes and rarely. 148 participants took part.
Participants had also been categorised into introverts and extraverts. How often participants
paid off their credit card balance before getting charged interest was significantly related to
their score in extraversion. c2(2, N = 148) = 10.491, p=.005. Inspection of the adjusted re-
siduals showed that people scoring low in extraversion were 6 times more likely to pay their
outstanding balance off before being charged compared to those who scored highly
(OR=5.83), who were more likely to rarely pay their balance off in time.

6.3 Financial Standing

Another hypothesis was concerned with the relationship between locus of control and an
individual’s net savings. In order to research this, firstly the dependent variable net savings
was calculated. This was done by subtracting the participants reported level of debt from
their reported total savings, both of which were given as percentages of their annual income.
In addition, the data was cross-checked with answers from the question ‘Do you have any
form of savings?’ All of the responses that specified that they had 0% of their income in
savings but also stated that they do have some form of savings were removed, since these
responses were inconsistent with each other. Similarly, participants who had reported they
had some form of debt but specified that the amount they are in debt by was 0% of their
annual income were also removed. These modifications were made to ensure that the results
were as accurate as possible since researchers have long found people are reluctant to disclose
their financial standing. After filtering the data, there was a total sample size of 130 for this

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research question. Table 3 shows that those individuals with internal locus of control tended
to have a higher proportion of net savings than externals. Residential status was also shown
to contribute.

Table 3: Mean Amount of Individuals’ Net Savings as Percentage of Annual Income

Locus of Control Residential Status Mean Std. Deviation
Internal With Parents 8.8 26.0
Live Alone 30.0 43.6
With Partner 37.5 105.5
With Children 139.4 287.3
With Others 12.0 44.8
Children Left Home 233.3 152.8
External With Parents 7.6 42.4
Live Alone 26.3 69.1
With Partner -5.7 21.9
With Children 31.8 44.6
With Others -15.1 74.7
Children Left Home -15.0 -

Locus of control accounted for 4.6% of the variability in the amount that participants have
as net savings as a percentage of their annual income, whereas residential status attributed
to a further 2.5%. The percentage of monthly income that participants typically save was
regressed on level of locus of control and residential status. These two predictors accounted
for just under one tenth of the variance people have in savings (R2 = .071), which was highly
significant, F(2,128) = 5.931, p=.003. Both the locus of control (β = -11.069, p=.018) and
the residential status of the individual (β=10.092, p = .039) demonstrated significant effects
on the amount saved.
Admittedly this regression consists of one extreme value (1000% of income) that possibly
should be considered an outlier and excluded from the data, but given the values of 400%
toward the mid range of locus of control, this value was considered to be accurate. In addition,
of the 13 participants who reported to have savings but stated 0% when asked to divulge the
amount of savings, 10 of them had scores of internal locus of control. Similarly, 12 of the
21 respondents who reported that they had debt but stated that it was 0% of their annual in-
come had external locus of control. Had these results been answered consistently, it would
have likely added to the weight of this regression, rather than skewing the data towards a
horizontal position. In addition, due to the nature of recruiting participants, a large proportion
of the sample were young people, who by definition will have had spent little time in em-
ployment, restricting the amount of people with high net savings.
Finally, the survey questioned how aware people are of their financial standing. The options
were often/always, sometimes and rarely/never. 231 people responded and had also been
assessed in terms of how conscientious they were. The awareness of one’s account balances

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was significantly related to their level of conscientiousness. c2(2, N = 231) = 6.211, p=.045.
In addition, locus of control was also associated with how aware people were of their financial
standing. This relationship was also significant. c2(2, N = 231) = 6.024, p=.049. Those with
internal locus of control are much more likely to be aware of their financial standing.

7.0 Discussion
This study attempted to find additional support for the notion that personality has an influence
on financial attitudes and behaviours, following on from findings by Schmölder (1966) and
Lunt & Livingstone (1991) who have found limited evidence in favour of this notion. The
results indeed showed that a number of personality traits appear to have relationships with
financial behaviours and attitudes, most of which were in line with previous expectations.
More specifically, conscientiousness and internal locus of control were both found to be
important for economical behaviour. This is in line with previous findings from Harley
(1992) and Lunt & Livingstone (1991).
Although conscientiousness was found to be the most important constituent factor of the
“Big Five” personality traits, extraversion, neuroticism and agreeableness were also found
to be important. The first hypothesis was concerned with whether personality traits correlate
with financial attitudes and behaviour and the results showed that many did. Indeed, four of
the six variables correlated with financial attitudes, and four were correlated with financial
behaviour including account management. However, one trait (neuroticism) was correlated
with the behaviours but not with attitude, whilst openness was seen to be related with financial
attitudes but not with behaviour.
Interestingly, previous literature has found little, if any, evidence that openness has an
impact upon financial decisions. Nevertheless, this study found openness to share a positive
relationship with parsimonious attitudes, although this relationship did not hold for parsimo-
nious behaviour. This means people who scored higher in openness were more inclined to
think about finances in a frugal manner but not necessarily behave in such a way. Openness
is associated with being open to ideas and values, not to mention re-appraising social values,
so it is quite plausible that people who score high in this respect consider financial values.
However, openness is also associated with trying new things, which are likely to come with
a cost, both in time and in money. This could be why the trait did not correspond with beha-
viour, because scoring high in openness, by definition, may make it hard for people to live
in a prudent manner. Nevertheless, the precise relationship that openness has with finances
remains unclear, and perhaps should be addressed in future research.
Neuroticism was also assessed to see how it is associated with financial decisions and,
following a priori expectations, was found to correlate negatively with financial behaviour.
This means that the participants who scored high in neuroticism appeared to be less econom-
ical in terms of their behaviour, whilst those who were deemed emotionally stable appeared
to behave in the contrary manner. This finding also coincided with research from Brandstatter
(1996) who found that emotionally stable people were more likely to save, and again findings
here substantiated this further because there was a significant relationship between participants
who were categorised as emotionally stable and their reports of saving regularly. This finding
is not surprising given that emotional stability encompasses self-control and planning. As
such, it follows that emotionally stable people are more able to regulate their behaviour and
save. However, the matter does not seem to be that clear cut because research from Bailey

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and Gustafson (1991) and Spinella & Lester (2005) have both previously found emotional
stability to influence financial attitudes but this relationship was not found in this study. This
is an interesting result is because it would be expected that one needs to have the attitude or
desire to save before actually regulating one’s savings.
The second hypothesis stated that personality will be associated more with financial atti-
tudes than with financial behaviour, since it is thought that attitudes influence financial be-
haviours, as reported by Nyhus and Webley (2001). This, however, does not appear to be
the case. In fact, apart from openness, which did not correspond with behaviour, all the re-
maining traits examined correlated more strongly with behaviour than with attitudes. An
even more intriguing finding is that neuroticism appeared to have no relationship with finan-
cial attitudes despite this.
Another interesting finding from this study concerned agreeableness. This trait was indic-
ated to have a positive relationship with saving, given that the majority of participants who
reported that they had savings were found to score highly in this characteristic. Similarly,
agreeableness was shown to correlate positively with the measures of attitude and behaviour.
However, this result poses more questions. Warneryd (1996b) had previously found agree-
ableness to be related with intention to save whilst Nyhus and Webley (2001) had found
agreeable people to be more likely to have fewer savings and indeed to borrow more. The
results are intriguing because a priori expectations would anticipate findings more in line
with what was found by Nyhus and Webley (2001). This is because scoring low on agree-
ableness encompasses the notion of self-interest. For this reason, low-agreeable people would
be thought to be most likely to hoard their money and engage in thrifty practices rather than
extravagance. Hence this finding also requires further research.
Given previous work, the one personality trait out of the ‘Big Five’ that was expected to
have the most substantial relationship with finance was conscientiousness. This trait has
been long been associated with saving behaviour. Early research from Schmölder (1966)
and, more recently Warneryd (1996b), has indicated it is the personality characteristic that
has the greatest influence on financial behaviour. However, with the majority of previous
research closely focusing on just saving and debt, rather than finances in a broader sense, it
is possible that these claims were unfounded. Nevertheless, the results of this study concurred
with the results of previous research. Indeed, when measured and compared with attitudes
in this study, conscientiousness had the strongest correlation coefficient (r=.294) of the ‘Big
Five’ personality traits. In addition, conscientiousness was found to have a significant rela-
tionship with saving specifically, and financial behaviours in general. Locus of control,
however, was found to be even more significant still and the direction of this relationship
supported the previous findings of Lunt & Livingstone (1991), with people who have external
locus of control being less frugal and those with internal locus of control more likely to claim
that they save for the future. These findings make sense in that people who feel that they are
responsible for the events that happen to them will be aware that they need to save to ensure
they can support themselves in later life, whereas those with external locus of control are
more inclined to feel their financial situation is out of their control, and so are less likely to
attempt to save.
Extraversion was also examined. Previous research particularly that of Brandstatter (1996),
had found this trait to be related to financial behaviour but no such relationship was found
in this study. The reason for this is that previous research, which has found a relationship
with extraversion has focused specifically on savings and debt, whereas this study researched

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finances in a broader sense, which included spending, the ability to delay gratification, fin-
ancial account use, and also assessed peoples’ financial priorities and intentions. Extraversion
is associated with a need for stimulation and social contact. This, in itself, is not likely to
impinge on a multitude of financial decisions but rather solely affect one’s levels of spending.
The resultant impact on disposable income by default affects the amount that can be saved.
One research hypothesis anticipated this and therefore regarded that extraversion would have
a negative relationship with the amount of income that people regularly save each month.
This relationship was indeed found. Introverted people tended to save higher amounts of
their income regularly than their extraverted counterparts. Similarly, people high in extraver-
sion were found to be more likely to be in debt, and also less likely to pay their credit card
off before being charged interest. Again, this is unsurprising. With extraverts likely to use
more of their disposable income, it increases the likelihood that they will go into debt and
similarly not have the resources to settle their credit balance. These findings indicate that
extraversion is not as significant at affecting financial behaviour as Brandstatter (1996) had
suggested, although as aforementioned, his research focussed specifically on saving behaviour.
Nevertheless it seems clear that extraversion has an impact on the ability to save. Also, since
no relationship was found between extraversion and financial attitudes, the indication is that
the effect that extraversion has on behaviour is direct, rather than mediated by attitudes.
The final hypothesis was interested in the net savings of individuals and whether this
relates to one’s locus of control. This follows on from work by Lunt & Livingstone (1991)
that suggests that locus of control may play a role in financial matters, since it was predictive
in discriminating savers from non-savers. Tokunaga (1993) also showed people with external
locus of control were more likely to get into debt. From this, it seemed plausible that locus
of control will play a role in a person’s net savings and the results indeed support this. Those
with internal locus of control were likely to have a greater amount of net savings; however
this relationship was only made significant because of an outlier.
In the process of running this analysis, it was found that 34 participants’ answers were
inconsistent; hence their answers were removed before the analysis. The inconsistency was
that some participants had reported that they have savings but when asked to divulge the
amount, they answered 0%. The same was also true with debt; 21 respondents claimed to
have some form of debt but stated on the later question that this amount was 0%. Such in-
consistencies in some participants answers were somewhat expected due to the nature of
this research. Indeed, Goldberg & Lewis (1978) noted how finances are still considered taboo
in society and are rarely discussed even amongst family members. Although not substantial
enough to draw firm conclusions, it was found that of the 13 participants who were incon-
sistent regarding their savings, 10 had an internal locus of control. Similarly, the majority
of the 21 respondents who were inconsistent regarding debt were categorised as having an
external locus of control.
Assuming that the participants’ categorical answers were correct, which seems most likely
to be the case, and that participants did not wish to disclose their financial status, it would
then follow that the majority with internal control were likely to have a positive value of net
savings. Following the same logic, it also follows that the majority of those with external
locus of control were more likely to have a negative value of net savings. This also seems
likely because it was found that those with external locus of control were more likely to use
a credit card in order to avoid thinking about how much they had spent. Consequently, it
appears that if these contradictory answers had been answered more accurately, the results

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would add to the weight of the regression. In addition, this research question was limited
due to the nature of recruiting respondents. Due to the age of the principal researcher, and
the use of the networking site Facebook to recruit some of the participants, a large proportion
of participants were young adults who would have had limited time in employment. This
would restrict the possible net savings these participants could achieve.
Overall, the results of this study build upon existing research on the relationship between
personality and economic behaviour, and further clarify the role that extraversion plays.
Specifically, extraversion seems to impede on disposable income and in turn affects one’s
savings and debts, but this does not appear to be the case with financial decisions in the
broadest term. In addition, the role of agreeableness appears more ambiguous, with the
findings contradicting those of Nyhus and Webley (2001). However, it should also be made
clear that, although personality was significantly associated with attitudes and behaviour,
they attribute to less than 20% of the variance recorded, which means other factors contribute
in these processes.
Unlike most previous research, this study investigated a broad array of financial behaviours
to have an overview measure of attitudes and behaviour, which there were two extremes;
being thrifty and careful or the contrary. The advantage here was to see the extent to which
personality plays overall on finances, and to discern whether some traits affect constituent
aspects of financial actions, as was seen with extraversion. Furthermore, this study attempted
to explore motivations for some behaviour, including particular reasons for using credit cards
and reasons behind saving. Although this method produced some results, unfortunately they
were impeded by a limited number of responses. In addition, the aforementioned inconsistency
amongst participants’ answers may have compromised the validity of the results. Other issues
included a large proportion of the sample consisting of young people.
Despite certain methodological issues, many of the findings in this study substantiated
previous research, and also realised the importance of demographic variables, particularly
residential status. This variable was likely to have an impact because living with one’s parents
likely relieves some financial burden, whilst having children living with you will have the
opposite effect. Future research should perhaps expand on this point and ask specific details
about participants’ dependents, particularly their ages and employment status. Additionally,
this study assessed a person’s financial position using percentage of income, which most
likely increased the level of responses as it is likely some respondents would be unwilling
to reveal their financial status, as shown by some participants being inconsistent amongst
their answers and some participants choosing not to disclose their annual income. However,
such measures could still be improved upon, and realising whether participants are renting
or paying a mortgage is an important issue that was overlooked, since these are necessary
payments and are at the core of many financial worries, whereas if people do not have this
expense, it leaves more disposable income to consume or save. In addition, assessing one’s
financial position is also important and was overlooked. Some participants may choose to
save if they had the choice but their income may only be sufficient to meet their needs.
Likewise, higher incomes do not necessarily mean that these people have less financial
burdens, since it is possible some people will have higher mortgage repayments, and greater
expenses on food and bills due to the number of children they have. Consequently, establishing
how well participants are doing financially compared to their financial needs should also be
addressed. Another important consideration is the timing of this study. For the first time in
over a decade, there is much media attention regarding the ‘credit crunch’.

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Finally, assessing a person’s true disposable income would also be of great use. Mortgage
payments or rent, food costs and bills could all be assessed with income. This measure would
be better in establishing what people do with the money they have available, although this
method was not employed in this study because it would be very time-consuming for parti-
cipants to answer so many questions, and many would be unwilling to work out such items.
If this method were employed, it would be best for participants to keep a diary of such items
to ensure accuracy.
Given how four personality variables significantly correlated with attitudes, and likewise
four correlated with behaviour, further research in this area could establish whether people
who score highly in all four variables perform in a way that corresponds to the results estab-
lished here. In addition, it may be interesting to see whether personality has any influence
on couples’ finances, and if it varies with couples that share responsibility of finances, couples
that assign specific financial responsibilities to each other and for couples that assign one
person to oversee all financial decisions.
The implications of this study indicate that encouraging and informing people to change
their financial habits will have little impact. As a result, if the government is concerned about
people’s financial habits, particularly debt, and also want to ease the problem of people not
being able to afford their retirement, which is of great concern now that there are more people
over the retirement age than there are people aged 16 and under in the United Kingdom, it
would be useful to get people to feel in control of their lives. Generally, the development of
locus of control stems from family, culture, and past experiences leading to rewards. Most
internals have been shown to come from families that focused on effort, education, and re-
sponsibility. On the other hand, most externals come from families of a low socioeconomic
status where there is a lack of life control. This relationship is intriguing and may be of interest
to future researchers. Specifically, Tokunaga (1993) deemed being in debt might be the cause
of people developing external locus of control. It would be interesting to explore whether a
person’s initial financial experiences are a result of their locus of control or whether their
financial experiences in the first instance actually contribute to whether they feel in control
of their lives or not.
To summarize, this study provided further support for the notion that personality is related
to people’s economic attitudes, behaviour and decisions. Despite some methodological issues,
this study nonetheless provides future researchers with the impetus to discern whether per-
sonality traits relate to specific financial attitudes, as they do with the broad category of
financial decisions, and whether other psychological constructs have such influences. Such
findings may lead to the development of specific policies, whether educational or motiva-
tional, to make people develop an internal locus of control. This could then enable people
to take better care of their financial position, which could lead to fewer people in financial
hardship since people with an internal locus of control are more likely to save, particularly
for their own future. This would possibly lead to reduced levels of stress, fewer health-related
issues as a consequence and, overall, a lesser burden on the economy, which could make
way for a higher standard of living.

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About the Authors

Joseph Davey
Joseph Davey studied Economics and Philosophy at the University of East Anglia before
completing a Master's in Psychology at the University of Hertfordshire. His main research
interests focus around the psychological aspects of financial behaviour and the development
thereof. Other interests include decision making, opinion formation and personal beliefs.

Dr. Christeen George

Christeen George is the Programme Tutor for the MSc in Occupational/Organisational Psy-
chology at the University of Hertfordshire. She is a Chartered Occupational Psychologist
and her main interests focus around people’s behaviour in the workplace and employment
relationships. She is particularly interested in psychological contracts, organisational and
professional commitment and positive psychology. She has recently published a book con-
cerned with the psychological contracts of professional workers which is published by Open
University Press.

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