Knowing Me

Jonathan Clements

DOES OUR PERSONALITY help determine our financial success? It seems it does, or so says academic research.

Psychologists have zeroed in on five key personality traits: extraversion, conscientiousness, agreeableness, neuroticism and openness to experiences. Think of each trait as a spectrum from, say, very conscientious to not at all. Each of us sits somewhere on the five spectrums. Maybe we’re a bit of an extravert, somewhat inclined toward neuroticism, and extremely open to new experiences and ideas.

There’s a host of websites where you can take a relatively quick quiz and get scored on the five dimensions, including FiveThirtyEight, OpenPsychometrics and Truity. You don’t have to pay or give your email address to get the results at these three websites, though Truity has a more in-depth report that’s available for purchase. My scores from the three sites were remarkably similar, so taking just one test will likely suffice. What should you make of the five traits?

  • Conscientious individuals are organized and disciplined. They don’t leave their clothes on the floor or the dishes in the sink.
  • Openness measures our willingness to embrace new experiences and ideas. Those who score high in this area tend to be more curious and imaginative, while those with low scores are inclined to resist change and new ideas.
  • Agreeable individuals aren’t posting snarky comments on the internet or barking at you because you are—or aren’t—wearing a mask. Instead, they’re friendly, trusting, upbeat, concerned about others and slow to criticize.
  • Folks who score high on neuroticism aren’t necessarily “neurotic” in the colloquial sense. Rather, they struggle with emotions such as moodiness, sadness, anger and anxiety. At the other end of the spectrum are those who are emotionally stable and even-tempered.
  • Extraverts are the ones you hear talking at parties. They’re exactly what you would expect: They’re outgoing, sociable and enjoy being the center of attention.

No doubt all of us recognize some of these traits in ourselves and in those around us. But I’d pay particular attention to whichever trait seems to be most pronounced. Understanding who we are—and the mistakes we’re inclined to make—won’t necessarily prevent us from messing up, but it’s clearly a step in the right direction.

So what do our key personality trait or traits mean for our career and how we manage money? I pulled insights from a fistful of academic studies, including papers from 2008, 2011, 2012, 2015, 2016, 2017 and 2018. These studies don’t always 100% agree with each other, though their findings largely line up. Here’s what I learned:

  • Neuroticism is linked to less career and financial success, longer periods of unemployment and lower levels of happiness. Meanwhile, more even-tempered individuals tend to have high career earnings, perhaps because these folks are drawn to more stressful, but also more lucrative, occupations.
  • Like neuroticism, agreeableness tends to hurt career and financial success. It seems, alas, that nice guys really do finish last. Why? Perhaps those who are most agreeable don’t push hard enough to get pay raises, they’re too trusting of Wall Street salespeople and they simply don’t care enough about amassing money. There’s also evidence suggesting that the most agreeable among us tend to borrow too much and save too little.
  • Openness to experiences is associated with higher salaries. People who score high on openness may not be as meticulous as those considered conscientious, but perhaps they’re more proactive, tackling work tasks with energy and imagination. Openness may also lead to higher spending, because these folks may be more inclined, say, to go to concerts or to travel.
  • Extraversion is associated with higher salaries and greater happiness, no doubt because extraverts are good at building strong connections with colleagues and friends. Extraverts also tend to favor riskier investments. But like those who score high in agreeableness, extraverts tend to borrow too much and save too little, perhaps because they’re concerned with outward appearances—the old pitfall of “keeping up with the Joneses.”
  • Conscientiousness is associated with career and financial success, including lower levels of debt, shorter periods of unemployment and (no surprise here) planning for the future. Indeed, conscientious individuals typically express satisfaction with their life, though they don’t seem to be as happy as extraverts. Still, if the goal is a successful, contented financial life, this appears to be the most desirable personality trait.

Indeed, I suspect that those who are conscientious are likely best able to manage their own money. What if you’re best described by one of the other four traits? You may want to seek out advisors, coaches or mentors to help with your career or your finances, and perhaps both. That said, those who score high in agreeableness should be especially careful about who they turn to for advice. The reason: These folks tend to be too trusting—not always a good idea when dealing with Wall Street.

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include The Road BackLook Forward and Take Heart.

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