New study with Vanquis reveals how your personality type affects how you handle your finances

Conscientious, extraverted and honest people have a better handle on their finances as they are more likely to pay bills on time, monitor for fraud and maintain their credit score.

Unexpectedly, high levels of stubbornness and being reserved can impact negatively on a person’s finances as they are more likely to make impulse purchases and not have a budget.

This is according to research developed by social psychologists at Universities of Lincoln and Swansea and UK credit card provider Vanquis, which examined the relationship between personality traits and how people manage their finances.

The research distilled financial behaviour into core catagories¹ and ranked the respondents on:

• Financial confidence – how confident they are in making decisions about money
• Financial restrictiveness – how controlled or impulsive they are when it comes to budgeting and spending
• Financial anxiety – how challenging they find managing money

A team of social psychologists then investigated links between the different types of financial behaviour and six key personality traits; extraversion, agreeableness, conscientiousness, emotionality, honesty-humility, and openness.² It found people who demonstrated high levels of conscientiousness, extraversion and honesty were more likely to feel confident with managing money (19%) than the typical Brit (13%).

Extraverted and confident people tend to take more positive steps to manage their money compared to others. For example, they find it easier to maintain their credit score and put financial plans in place for the future.³

To access the full Academic Report click here

Financial Coach and Author, Clare Seal, comments:

“Confidence is such a huge factor when it comes to managing your money well. For many people, there remains a huge gap between where they are financially, and where they’d like to be – and I believe that increasing financial education and confidence is a key part of closing that gap.”

“It stands to reason that more extraverted and confident people might feel more able to negotiate on things like utility and phone contracts, feel less worried about checking their bank account and Direct Debits, helping them keep on top of their balances, and have fewer reservations about making big future plans.”

On the flipside, being stubborn or reserved can lead to being less confident and controlled when managing money. For example, these personalities appear to budget less and have a ‘life’s too short’ mindset when it comes to finances. These personality traits also increased the likelihood of having a higher number of financial products, using credit more than often than needed, and being short on money at the end of the month. This additional complexity could result in less financial control and increased financial anxiety, making managing money more difficult.

Thomas Allder, Customer Director from credit card provider, Vanquis, comments:

“Our work with the Universities of Lincoln and Swansea has shown us how peoples’ personality traits can impact their financial decisions. These findings help people consider how the personality traits they recognise in themselves could be impacting their finances. A greater understanding of factors that affect money management can help people better find their way financially through these difficult economic times.

“All personality types can have great money skills. What’s key is being aware of any personal challenges and addressing these head on, in order to make progress towards money goals.”

Dr Robin Kramer, Senior Lecturer in the School of Psychology at the University of Lincoln said:

“After surveying such a large sample from the general public, we were able to draw some interesting links between our personalities and how we behave financially.

“As you might predict intuitively, who we are plays a significant role in how we approach our finances. Of course, this doesn’t mean that certain types of people are doomed to fail financially – there’s always a solution to suit every kind of person when it comes to staying on top of things.”

Clare Seal adds:

“One of the issues that I often come across in my work is that a lot of people don’t feel included in the conversation about personal finance, because there tends to be a very ‘one size fits all’ approach by many of the most dominant voices in this space.

“I really believe that everyone can manage their money in a way that suits their personality, priorities and circumstances. Focussing on mindset and behaviour change, rather than prescriptive generic advice, is the way forward.”

The  Universities of Lincoln and Swansea created a unique methodology, using a three-stage research process to get a clear understanding of the topic.

Stage 1: Survey

1,632 people completed a survey which included a personality questionnaire (based on the six HEXACO personality traits), and a range of questions on their spending habits, financial behaviours and attitudes towards saving and spending.

Stage 2: Factor analysis

The social psychologists used factor analysis, to distil financial behaviour into four areas:

• Financial confidence = how confident or not they are in their financial decisions
• Financial restrictedness = how controlled or impulsive they are when it comes to budgeting and spending
• Financial anxiety = how challenging they find managing their money
• Covid financial change = how the pandemic impacted their finances

[COVID financial change showed negligible impact, so we removed this from the results.]

Stage 3: K-Means clustering

These four areas were mapped against the personality questions and placed into two ‘financial profiles’ using K-Means clustering. They found there were two clear groups of people that displayed different financial behaviour.

High financial confidence and restrictedness & low financial anxiety

Low financial confidence and restrictedness & high financial anxiety

Stage 4: Finding correlation

The HEXACO personality traits were used to map an individual to either profile, revealing that high conscientiousness, honesty, and extraversion were associated with higher individuals scoring high on confidence and restrictedness; and lower agreeableness and emotional stability being associated with the opposite.

The research found people who are extraverted, open and confident are more likely to undertake the following financial behaviours than other people.

Financial behaviour	People who index highly on being extraverted, conscientious and honest	Average person
Pay bills on time	92%	90%
Be on the electoral roll	79%	77%
Monitor for fraud	73%	64%
Maintain a credit score	89%	81%
Make financial plans for the future	87%	69%

The research found people who are stubborn and reserved are less confident and controlled when it comes to managing money. This means they are more likely to take the following financial behaviours than other people

Financial behaviour	People who index highly on being stubborn and reserved	Average person
Not budgeting	41%	34%
Having a life’s too short mentality	33%	22%

The research found people who are stubborn and reserved are more financially anxious. This means they are more likely to undertake the following financial behaviours than other people:

Financial behaviour	People who index highly on being stubborn and reserved	Average person
Having 3 or more financial products	34%	24%
Using credit more often than needed	68%	35%
Being short on money at the end of the month	82%	34%

Top tips from financial coach and author Clare Seal on how understanding your personality traits can help you improve your money management.

Use tools to organise yourself

Not everybody is naturally organised, and this can be especially difficult for neurodivergent people, like those with ADHD. It can cause people to miss payments, spend more on last-minute impulse purchases and cause financial stress. One way to help improve organisation is to use tools such as standing orders, Direct Debits, budget planners and calendar reminders to help manage your money and payments. This will help you stay on top of your finances and instil a sense of financial control.

Try and create good habits

Another way to inject a sense of organisation into your finances is to focus on small, consistent habit changes. Try tacking a new positive financial habit onto something that you already do regularly – like going through your budget right after Sunday lunch or checking your current account balance while you brush your teeth in the morning.

Start small and work up to the big stuff

Highly reserved people might find it very difficult to engage with their finances, because facing money mistakes or opening up about any worries might feel almost unbearable. A great tip here is to start with something very small and work up to the big stuff – for example, commit to checking your balance every day, until this doesn’t feel uncomfortable anymore. Then move onto something bigger, like analysing your spending on a weekly basis or making a plan to pay off debt.

Suspend your stubbornness

Stubbornness can be a very useful trait when it comes to advocating for yourself, but it can also get in the way if you’re looking to improve your financial wellbeing. It can be difficult to accept that others might know something that we don’t or perhaps have a better way of approaching things, but sometimes an external point of view can be really helpful. If you can suspend that stubbornness for long enough to let someone else help you, you might find that you’re able to see things in a different light and tackle the problem in a new way.

Don’t compare yourself to others

It can be very difficult, especially in the age of social media, not to fall victim to ‘comparisonitis’ and allow your material possessions to dictate your self-worth. If you think you might be spending more than you can afford in order to ‘keep up’ with others, try spending a few minutes each morning reminding yourself of all of the non-material qualities you have. This can help change your mindset and boost your inner confidence – the more confident you are, the less likely you are to compare yourself to others.

Be honest

Being open and honest about money is really difficult, especially given the culture we live in, where talking about money is seen as taboo. But being a little more honest about your financial situation – to yourself and those around you – can really help you to keep things under control. If you’re pretending everything is fine when it’s not, this can lead to bigger problems later on. Being honest about money also benefits others who might also be struggling alone!