Research shows that if your spending matches your personality, you’ll live a happier life
The best comedians have jokes that make you say, “Why didn’t I think of that!?”
I’ll never forget the Seinfield bit where he described how we all deal with the single hair stuck to the side of the shower wall, using the water from the showerhead to slowly push it down the wall and eventually down the drain.
The best tips on money are the same way: incredibly obvious in hindsight, but something you had never acted upon before.
One of these “obvious tips” is that if you want to use money to be happy, you should buy things that best match your personality.
Read also: 7 lessons about money by Benjamin Franklin
Continue reading to learn:
What we know about spending money and happiness
How to figure out your personality traits
How to match your spending with your personality traits to increase happiness
General truths about spending money and happiness
Here’s what we know about how “many” people can spend their money to be happier:
Spend money on experiences rather than things.
Give money to causes you believe in.
More frequent but smaller purchases are better than one big splurge
These are general truths, not universal truths.
Some people will enjoy buying a new electronic gadget more than spending on experiences like travel or concerts, feel no joy in giving money to charity, and love to make one big splurge every year.
A 2016 study found that a simple way to instantly increase your happiness is to spend money on purchases closely related to your personality. That sounds like a stupidly obvious finding, but almost no personal finance writer talks about how you can actually do it.
Step one to matching your spending to your personality is understanding your personality traits.
What are the big five personality traits?
A 1992 study details the big five personality traits as follows:
Openness — Very open people tend to be creative and adventurous. In contrast, those with a low level of openness are more practical people that focus on the traditional ways of doing things.
Conscientiousness — Highly conscientious people have a high degree of self-control, while those with low levels of conscientiousness tend to be impulsive.
Extraversion — Extraverts are outgoing, while introverts are more reserved.
Agreeableness — Agreeable people often put other people’s needs ahead of their own and look to cooperate rather than compete. Non-agreeable people tend to lack empathy and focus on their advancement.
Neuroticism — Describes how frequently someone feels negative emotions like fear, anxiety, guilt, or sadness.
Studies have sown that people are attracted to like-minded people — those who share the same values. Money is no different. Spending money on purchases closely aligned with your personality traits will increase your happiness.
Let’s start with an obvious example.
Extroverts will be happier when they spend their money on social activities like concerts, eating out, or traveling. A $300 ticket to a live concert is money well spent for an extrovert but it might be a nightmare for an introvert who would be better off buying the album and a nice set of speakers and listening at home.
The researchers in the study on linking spending to your personality trait tested two hypothesis:
People tend to spend more on things that match their personality traits.
Those whose spending best matches their personality will have higher life satisfaction.
To test these hypotheses, they sent a personality survey to 625 people who also consented to allow the researchers to track their banking transactions for six months.
They also hired experts to assign how closely different purchases matched the big five personality traits.
For example, eating out at restaurants was highly correlated with extraversion and negatively correlated with conscientiousness. This makes sense because eating at restaurants is a highly social activity, but given the higher cost of eating out instead of cooking at home, it does imply a lack of fiscal self-control.
Check out Table 1 in the paper for a full breakdown of all the spending categories and how they match up with each of the big five personality traits.
Does personality-based spending increase happiness?
The study found that people who spent more money on purchases that best matched their personality reported a significantly higher level of life satisfaction.
An obvious finding, but if we go one step further, it is powerful.
If you clearly understand your personality traits, you can use Table 1 of the study to get a clearer picture of what you should — and shouldn’t — spend money on.
If you are an extrovert with high self-control, it will make a lot of sense to buy a gym membership. Spending on your health matches your self-control, and being in a gym with other people matches your extroversion.
But, if you were an introvert with a high level of self-control, it might make more sense to buy a workout video to get the benefits of exercise without the social component.
Do you see where I am going with this?
If you know your personality and which items match that personality, you can start buying more happiness.
Step one is to determine your score on the big five personality traits. I just took this free test and found that my highest score was on conscientiousness, and my lowest score was on extraversion. Right away, that tells me that writing is a good career for me as it requires a high level of self-control but is an isolating profession.
Read also: Financial habits that will make you rich
Start by testing your personality traits here.
Step two would be to go to Table 1 of the study and look at how each spending category matches the big five personality traits.
Step three would be to track your spending and examine how much of your money is spent on purchases that closely align with your personality. The goal would be to start spending more money on purchases that match your personality and less money on purchases that don’t.
If you haven’t been tracking your expenses, here is a free spreadsheet to help you get started, and here is a post explaining how to use it.
Best of luck matching your spending with your personality. If you have any questions about anything covered in this post, let me know in the comments or the MOAM chat.
Contributed by Ben Lefort
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