Have you ever wondered what it takes to become very wealthy? A new psychology study suggests that personality traits might have more to do with wealth than you first think.
The study, which was conducted by researchers at the Open University and the Norwegian School of Management, assessed the attributes of around 3,240 people. The traits were then compared to the participants’ wealth, including property, savings and investments, and valuable physical items.
The findings suggest personality influences your relationship with money to a greater extent than you may expect. In fact, personality could be more important for accumulating wealth than factors like education.
The researchers caution that the study is just a “snapshot” and state that there is a mix of personalities across all income brackets. However, the research provides an interesting insight into the typical mindset of the super-wealthy.
Speaking to Psypost, Mark Fenton-O’Creevy, author of the study, said: “We were somewhat surprised that personality came out as more important than the level of education in wealth accumulation. Whilst education has important associations with income level, it may be that conscientiousness is more helpful in managing spending and care with savings and investments.”
So, what were the “big five” personality traits the researchers assessed, and how were they linked to wealth?
The research found that wealthier people tend to be more conscientious with a strong sense of responsibility and organisation.
This finding probably isn’t that surprising. While a handful of people may gain wealth quickly, for most it’s a long-term process of careful planning and making savvy decisions over years, rather than weeks or months.
Conscientious people may demonstrate self-control and think of the bigger picture when making decisions. Being aware of goals and what you need to do to achieve them could mean you’re more likely to accumulate wealth. So, conscientiousness is a trait that’s positively linked to building wealth.
Wealthy people are less likely to be impulsive, the study finds.
It’s easy to see why this trait is linked to wealth. Those who are neurotic are more likely to make snap decisions about spending. In fact, the researchers found people who were neurotic tended to have lower savings but spent more on expensive goods.
Impulsiveness can affect other areas of finance too. For instance, when investing, someone who is likely to make snap decisions may be more tempted to try and time the market rather than stick to a long-term plan. It could mean they miss out on long-term growth opportunities.
The study indicates that being agreeable is associated with less wealth. The researchers suggest this is because agreeable people are more likely to spend generously and buy over-the-top gifts for their loved ones.
While supporting your family and friends may be an important goal for you, the findings could be a useful reminder to balance this with other long-term aspirations you have.
Openness was found to have both positive and negative links to financial success.
On one hand, open people took greater care when choosing financial products. However, they were also less likely to plan ahead. Overall, the research found that people who are less open to new experiences tend to be wealthier.
While new experiences could provide opportunities for wealth creation, the study indicated that open people are less likely to be tied down. For example, fewer open people owned property. This tendency could mean some people miss out on potential long-term growth.
Higher levels of sociability and assertiveness were also found to potentially affect wealth in both positive and negative ways. But wealthy individuals tend to be less extroverted.
There was evidence that extraversion is linked to career success, particularly in industries where establishing relationships is important. So, being more sociable and assertive could boost income potential.
Yet, the study also linked extraversion to impulsiveness which leads to poorer financial outcomes, such as more extravagant spending. So, on balance, extraversion could harm wealth building.
Contact us to talk about how to create an effective financial plan
While the research indicates some traits affect your relationship with money and becoming wealthy, a financial plan can help you establish positive habits. If you want to talk about what you can do to boost your wealth, please get in touch.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.