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The Big Five personality traits, material

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Journal of Economic Psychology 33 (2012) 11291142

Contents lists available at SciVerse ScienceDirect

Journal of Economic Psychology

journal homepage: www.elsevier.com/locate/joep

The Big Five personality traits, material values, and nancial well-being
of self-described money managers
Grant Donnelly a,, Ravi Iyer b, Ryan T. Howell a
a
b

Department of Psychology, San Francisco State University, United States

Department of Psychology, University of Southern California, United States

a r t i c l e

i n f o

Article history:
Received 24 December 2011
Received in revised form 2 August 2012
Accepted 3 August 2012
Available online 14 August 2012
JEL Classication code:
G02
PsycINFO Classication:
90
220
320
350

a b s t r a c t
Previous research has linked personality traits, material values, and money management to
savings, debt, and compulsive buying. To extend previous research, four online surveys
examined the Big Five personality traits and material values of those who manage their
money and determined the independent effects of money management on wealth, debt,
and compulsive buying. Results suggest that (a) individuals who believe that material possessions can provide happiness manage their money less and (b) highly conscientious individuals manage their money more because they have positive nancial attitudes as well as
a future orientation. Further, money management is signicantly related to increased savings, decreased debt, and less compulsive buying even after controlling for numerous
socio-demographic and dispositional variables. In the Discussion we suggest that materialists may experience a pain of knowing about their nances because money management
may highlight the discouraging implications of their purchasing behavior.
2012 Elsevier B.V. All rights reserved.

Keywords:
Money management
Conscientiousness
Materialism
Savings
Debt

1. Introduction
Over the past decade, millions of Americans have accumulated massive amounts of credit card debt accompanied by high
interest rates, fees and nes. Credit card use in 2010 increased 50% from 2000 levels (US Census Bureau, 2010), with the average household carrying a debt balance of $10,678 (a 29% increase from 2000; see Chu & Acohido, 2008). As Americans have
acquired more personal debt, the personal savings rate has declined from 8% in the 1980s to less than 4% in 2011 (US Department of Commerce: Bureau of Economic Analysis, 2011). Further, personal debt and decreased savings have impacted nancial institutions, as a number of consumers took out adjustable rate mortgages with little to no money down, leading to
massive foreclosures (Finke, Huston, Siman, & Corlija, 2005; Lang & Jagtiani, 2010). Thus, the dramatic shift in consumption
over the last few years has had a devastating effect on individuals personal nances and the economy in general. It has been
proposed that a lack of money management (i.e., the process of budgeting, saving, investing, spending, and otherwise overseeing the use of money; see Godwin & Koonce, 1992) may be a major factor in maladaptive consumption as the inability to
manage money has been found to predict debt above and beyond the impact of poverty (Lea, Webley, & Walker, 1995).
Corresponding author. Address: San Francisco State University, 1600 Holloway Avenue, San Francisco, CA 4132, United States. Mobile: +1 415 235 1392.
E-mail address: donnelly.grant@gmail.com (G. Donnelly).
0167-4870/$ - see front matter 2012 Elsevier B.V. All rights reserved.
http://dx.doi.org/10.1016/j.joep.2012.08.001

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G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

In order to understand why some people do not manage their money, a number of studies have demonstrated that individual differences (Brandstatter, 1996; Brougham, Jacobs-Lawson, Hershey, & Trujillo, 2011; Warneryd, 1996) and nancial
values (Garoarsdottir & Dittmar, 2012; Walker, 1996; Watson, 2003) impact nancial well-being. However, even as the Big
Five personality traits are fundamental to understanding personality (John & Srivastava, 1999), research has not fully explored the Big Five personality prole of those who actively manage their money or the mechanisms through which Big Five
personality traits impact money management. Also, while past research has suggested that money management is associated with less materialism (Garoarsdottir & Dittmar, 2012; Walker, 1996), these studies have not investigated the specic
materialistic motivations (i.e., the importance of acquisition, striving for success, or the search for happiness) that lead to
less money management. Finally, past research has not examined the independent effects of money management on nancial well-being holding constant Big Five personality traits and materialism, leaving open the question of whether the root
cause of nancial well-being is the result of behavior (i.e., how individuals manage their money), personality traits, or the
values that drive the pursuit of possessions (i.e., materialistic values).
Thus, the goals of this study are (a) to predict money management tendencies from Big Five personality traits and the
individual components of materialistic values to determine what traits and material values independently predict increased
money management and (b) to assess the independent effect of money management on wealth accumulation, debt accumulation, and compulsive buying.
1.1. The predictors and benets of money management
The money management literature has primarily focused on the benets of managing money. In addition to having less debt
and more savings (Antonides, de Groot, & van Raaij, 2011; Chau, Chan, & Chan, 2004; Dowling, Corney, & Hoiles, 2009; Garoarsdottir & Dittmar, 2012; Kamleitner, Hornung, & Kirchler, 2011), individuals who successfully manage their money report more
nancial satisfaction (Dowling et al., 2009; Joo & Grable, 2004; Mugenda, Hira, & Fanslow, 1990; Parrotta & Johnson, 1998; Robb
& Woodyard, 2011; Xiao, Sorhaindo, & Garman, 2006), less nancial stress (Joo & Grable, 2004; Xiao et al., 2006), less compulsive buying (Garoarsdottir & Dittmar, 2012; Pham, Yap, & Dowling, 2012), and more overall life satisfaction (Xiao, Tang, & Shim,
2008). These benets have produced an interest in knowing the predictors of active money management.
The investigation of the antecedents of money management have included nancial knowledge (Antonides et al., 2011;
Chang, Sun, & Shen, 2010; Godwin & Carroll, 1986; Grable, Park, & Joo, 2009; Mugenda et al., 1990; Parrotta & Johnson, 1998;
Perry & Morris, 2005; Robb & Woodyard, 2011), future time orientation (Antonides et al., 2011), risk tolerance (Joo & Grable,
2004), nancial attitudes (Parrotta & Johnson, 1998), and locus of control (Chang et al., 2010; Grable et al., 2009). However,
because it has been proposed that personality traits and values predict time management (Claessens, van Eerde, Rutte, & Roe,
2007), researchers have acknowledged the importance of determining the relations between personality traits and nancial
values with money management (Garoarsdottir & Dittmar, 2012; Parrotta & Johnson, 1998; Pham et al., 2012; Walker, 1996).
1.2. The Big Five personality predictors of money management
Though past research has called for the investigation of specic Big Five personality traits (i.e., conscientiousness; emotional stability) and money management (Parrotta & Johnson, 1998; Pham et al., 2012), no study has examined these potential relations. Previous ndings demonstrate that emotional instability (i.e., neuroticism) predicts more debt (Nyhus &
Webley, 2001) and more instances of compulsive buying (Brougham et al., 2011; Dittmar, 2005; Mowen & Spears, 1999),
while conscientiousness is linked to increased savings (Brandstatter, 1996; Warneryd, 1996), positive attitudes towards saving (Brandstatter, 2005), less instances of compulsive buying (Mowen & Spears, 1999), and never having been in debt (Webley & Nyhus, 2001). These results suggest that conscientious people have greater nancial self-control, which has been found
to predict both increased saving and decreased borrowing behavior (Warneryd, 1996). Considering these results, it seems
likely that Big Five personality traits may have an independent relation with money management. However, past research
has also suggested that nancial attitudes and time orientation are related to personality traits (Brandstatter, 2005) and
money management (Antonides et al., 2011; Parrotta & Johnson, 1998); these results suggest that Big Five personality traits
may have an indirect (i.e., mediated) effect on money management. Therefore, we hope to determine if Big Five personality
traits are related to money management, and if so, is this relation is direct or indirect.
1.3. The components of materialism and money management
Previous studies have demonstrated that materialists are willing to take on greater levels of debt (Ponchio & Aranha,
2008; Watson, 2003), have more positive attitudes toward debt (Pinto, Parente, & Palmer, 2000; Pirog & Roberts, 2007), report a higher willingness to use installment credit (Watson, 2003), and make more compulsive purchases (Dittmar, 2005;
Roberts, Manolis, & Tanner, 2003) than non-materialists. Not surprisingly then, individuals who use fewer money management strategies are typically more materialistic (Garoarsdottir & Dittmar, 2012; Walker, 1996). However, it is unclear why
materialistic individuals are not managing their money. Their lack of money management could be due to the conviction that
possessions indicate success, the extent to which the acquisition of material goods is a primary life goal, or the belief that
material possessions can provide happiness. We hope to extend previous ndings by investigating the relationship between
money management and the individual components of materialism (i.e., acquisition centrality, acquisition as the pursuit of
happiness, and possession-dened success), which may be differentially related to money management.

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G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

1.4. The current research

The current research seeks to determine the independent relationships between Big Five personality traits, material values, money management, and nancial well-being. Study 1 determines the Big Five personality prole of those who manage
their money. Study 2 attempts to replicate the effects of personality on money management while examining the independent effects of the components of material values on money management; Study 2 also examines the nancial benets of
money management controlling for personality traits, materialistic values and other socio-demographic variables. Studies
3 and 4 add other covariates to these models to test their robustness and further clarify the independent relationships.
2. Study 1: money management and personality traits
2.1. Method
2.1.1. Participants
Study 1 included 936 participants (MAge = 35.98, SD = 14.20; 51.6% male; 53.8% Caucasian), who visited YourMorals.org
between June, 2009 and January, 2012 and completed our money management questionnaire (see Appendix A), and the
Big Five Inventory (see John & Srivastava, 1999). We only included participants who provided their age, gender, and highest
education level attained during their registration with the website. YourMorals.org is a data collection platform where participants over 18 years of age are invited to take part in any of 3040 different studies and are given feedback about their
morality, personality, and ideology. Participants usually nd YourMorals.org through publicity about psychological research
or by typing keywords related to morality into an internet search engine.
2.1.2. Measuring money management
To assess money management, participants completed six Likert-style questions that measured participants sense of
nancial responsibility (e.g., When I reect on my past buying behavior, I have been most likely to over-spend [reversecoded]) and the degree to which they monitor their nancial accounts (e.g., Some people strive for nancial clarity: knowing account balances, monthly expenses, loan interest rates, fees and nes. To what extent does this characterization describe you?) on scales from 1 (not at all) to 7 (a great deal). The Cronbachs alpha demonstrated that the money
management scale (a = .85) was internally consistent, with all six items contributing to the reliability of the measure.
2.1.3. Results
First, we determined the bivariate relationships between personality traits and self-reported money management. Two
personality traits were strongly correlated with money management; conscientiousness was positively correlated with
money management (r = .33, p < .001) and, neuroticism was negatively correlated with money management (r = .19,
p < .001). We also found signicant negative correlations between age and education with money management (rage = .07,
p < .05; reducation = .13, p < .001), which suggests the need to control for demographic variables when predicting money
management.
Next, we conducted a two-step hierarchical regression analysis to determine the unique variance in money management
explained by personality traits while controlling for demographic variables (see Table 1). For Step 1, we included demographic
variables (i.e., age, gender, education), which together accounted for 2.1% of the variance in money management. In Step 2,
personality traits accounted for an additional 12.8% of the variance in money management with conscientiousness, extraversion and neuroticism being the most important predictors in the model.

Table 1
Predicting money management from demographic variables and personality traits.
Step 1

Age
Gender (male = 1)
Education
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
DR2
Model R2

Step 2

Sig.

.06
.06
.12

.17
.07
<.01

.021***
.021***

Sig.

b
.00
.04
.08
.11
.06
.30
.14
.06
.128***
.149***

.94
.24
<.05
<.01
.07
<.01
<.01
.06

N = 936
Note: Personality traits were measured by the Big Five Inventory (John & Srivastava, 1999). Gender
(female = 0; male = 1).

p < .05; p < .01. *** p < .001.

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G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

2.1.4. Brief discussion

These results suggest the importance of personality traits in predicting money management. However, past research suggests that materialism is also associated with less money management behavior (Garoarsdottir & Dittmar, 2012; Walker,
1996). Because of the signicant relations found between individual differences and money management in Study 1, we
investigated the relationship between money management, personality traits, and materialistic values in Study 2. Additionally, to determine the benets of money management, we investigated the relationships between money management and
nancial outcomes (e.g., wealth, credit card debt, and compulsive buying), holding personality traits, materialistic values,
and demographic variables constant.
3. Study 2: money management and material values
3.1. Method
3.1.1. Participants
Study 2 included 993 students (MAge = 27.45, SD = 12.70; 72.5% female; 32.8% Caucasian) from either San Francisco State
University or Old Dominion University. In exchange for participation, students received class credit. Originally 1079 students
started the survey; thus, with 993 students completing the survey, our response rate was very high (92%).
3.1.2. Materials
To assess money management, participants completed the same six items as in Study 1. The Cronbachs alpha demonstrated good reliability (a = .76), with all six items contributing to the internal consistency of the questionnaire.
Participants also completed: (a) the Big Five Mini Marker scale (Saucier, 1994) to measure personality; (b) the Material
Values Scale (MVS; Richins & Dawson, 1992) to measure materialistic values; and (c) the Compulsive Buying Scale (CBS; Faber
& OGuinn, 1992) which measured compulsive buying. In this study we scored the three facets of the MVS to predict money
management. The dening success (MVS-Success) sub-scales measures the degree to which a person regards possessions as
indicators of success and achievement in life. The acquisition centrality (MVS-Centrality) sub-scale measures the extent to
which the pursuit and acquisition of material goods is a primary life goal. The pursuit of happiness sub-scale (MVS-Happiness)
measures the extent to which a person believes that material possessions can provide happiness.
Finally, because self-reported saving and debt levels are common measurements in the money management literature
(Antonides et al., 2011; Dew & Xiao, 2011; Garoarsdottir & Dittmar, 2012; Kamleitner et al., 2011), participants reported
their age and gender (education was not measured as all students had attained the same level) as well as their current nancial circumstance, which was measured with the proxy developed by Howell, Kurai, and Tam (2012); i.e., current income
[What is your household income after taxes are taken out?], savings [What is the amount in all your savings and money market
accounts?], investments [What is the value of all your investments (such as CD, stocks, or bonds)?], credit card debt levels
[What is the balance on all your credit cards? and During the past year, how many of your credit cards have carried half or
more of the maximum balance?]). Following the procedures by Howell et al., the rst three items are scored to measure
wealth accumulation and the last two items are used to measure current debt levels.
3.2. Results
3.2.1. Measuring and predicting money management
First, we conducted a two-step hierarchical regression analysis to determine the unique variance in money management
explained by personality traits and materialistic values while controlling for age and gender (see Table 2). For Step 1, we
include demographic variables (i.e., age and gender), which together accounted for less than 1% of the variance in money
management. In Step 2, personality traits and material values accounted for an additional 19.3% of the variance in money
management. Those who actively managed their money tended to be more conscientious, less materialistic (both in their
pursuit of happiness and the goal to acquire material goods), and slightly more agreeable.
Next, we investigated the independent effect of money management (controlling for personality traits, materialistic values,
and demographic variables) to predict (a) wealth accumulation (i.e., income, personal savings, and investments), (b) debt accumulation (i.e., credit card balance and number of maxed credit cards), and (c) compulsive buying (i.e., CBS; Faber & OGuinn,
1992; see Table 3). First, and most importantly, money management was the strongest predictor of decreased credit card debt
and compulsive buying. Those who actively manage their money also had signicantly higher levels of wealth (with only age
being a stronger predictor). Interestingly, personality traits had mostly small relations with wealth, debt, and compulsive buying. Though, at least one of the three dimensions of materialistic values had a relation to wealth, debt, and compulsive buying.
3.2.2. Brief discussion
These results suggest that specic material values, believing that material values are central and will lead to happiness,
and the personality trait of conscientiousness are most important in predicting money management. In Study 3, we attempt
to replicate these regression models using both our scale and a money management scale (i.e., the Financial Management
Behavior Scale; Dew & Xiao, 2011) that was developed using a nationally representative sample. Further, because it has been
suggested that education and marital status may have an impact on money management (Godwin & Carroll, 1986; Joo & Grable, 2004; Robb & Woodyard, 2011; Xiao et al., 2006) we include these variables in our regression models.

1133

G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

Table 2
Predicting money management from demographic variables, personality traits, and materialistic values.
Step 1

Age
Gender (male = 1)
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
MVS-Success
MVS-Centrality
MVS-Happiness
DR2
Model R2

Step 2
Sig.

b
.01
.02

Sig.

.70
.65

.10
.01
.05
.07
.29
.05
.01
.03
.17
.09
.193***
.194***

.001
.001

<.01
.73
.17
<.05
<.01
.16
.82
.41
<.01
<.05

Note: Personality traits were measured using the Big Five Mini Marker scale (Saucier, 1994). MVS success = material values scale
possession dened success sub-scale; MVS-Centrality = material values scale possession centrality sub-scale; MVS-Happiness = material
values scale acquisition as the pursuit of happiness sub-scale. N = 993.

p < .05; p < .01. *** p < .001.

Table 3
Predicting wealth accumulation, credit card debt and compulsive buying from money management, demographic variables, materialistic
values, and personality (Study 2).

Variable
Age
Gender (male = 1)
Money management
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
MVS-Success
MVS-Centrality
MVS-Happiness

Wealth accumulation
b
.42***
.06*
.23***
.00
.01
.03
.05
.01
.06
.07*
.14***

Credit card debt

b
.17***
.01
.29***
.00
.02
.14***
.01
.08*
.07
.07
.09*

Compulsive buying
b
.08**
.10***
.54***
.05*
.09*
.01
.09*
.03
.06
.12***
.05

Note: The model was signicant in predicting wealth accumulation, (F[11, 969] = 36.02, p < .001; R2 = .29). The model was signicant in
predicting credit card debt, (F[11, 976] = 14.11, p < .001; R2 = .14). The model was signicant in predicting compulsive buying,
(F[11, 981] = 84.08, p < .001; R2 = .48). N = 993.
*
p < .05
**
p < .01
***
p < .001.

4. Study 3: testing the generalizability of the money management models

4.1. Method
4.1.1. Participants
Study 3 included 355 participants (MAge = 33.42, SD = 13.77; 70.2% female; 65.2% Caucasian) who were either students
from San Francisco State University or were recruited on social media websites (e.g., Craigslist, Facebook). In exchange for
participation, students received class credit while non-students volunteered. Originally 831 participants started the survey;
thus, our response rate was 42.7%.
4.1.2. Materials
To assess money management, participants completed the Financial Management Behavioral Scale (Dew & Xiao, 2011
a = .82; very similar to the original study [a = .81]) in addition to our money management measure (a = .75). These two scales
were positively correlated (r = .55, p < .001).
Participants also completed: (a) the Big Five Inventory (BFI-10; Rammstedt & John, 2007) to measure personality, (b) the
Material Values Scale (MVS-15; Richins, 2004) to measure materialistic values, and (c) the Compulsive Buying Scale (CBS;
Faber & OGuinn, 1992). Participants reported their age, gender, education, their current relationship status (e.g., married,
divorced, never married, or in a domestic partnership) as well as their current economic standing using the ve-item proxy
developed by Howell et al. (2012) that was used in Study 2.

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G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

Table 4
Predicting money management from demographic variables, personality traits and materialistic values.
Step 1

Age
Gender (male = 1)
Education
In a current relationship
Not in a current relationship
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
MVS-Success
MVS-Centrality
MVS-Happiness
DR2
Model R2

Step 2
Sig.

b
.05
.07
.11
.11
.02

Sig.

.50
.23
.08
.08
.76

.03
.03
.08
.04
.02
.15
.02
.20
.10
.03
.08
.11
.20
.110***
.157***

.046**
.046**

.70
.52
.15
.54
.80
<.01
.74
<.01
.09
.53
.24
.09
<.01

p < .05.
p < .01
***
p < .001.
N = 355.
**

4.1.3. Results
Replicating the analytic plan from Study 2, we conducted hierarchical regression analyses to determine the unique variance in money management and nancial management behavior explained by personality traits and materialistic values
while controlling for age, gender, education, and marital status [Table 4 displays the regression coefcients for money management as the outcome and Table 5 displays the regression coefcients for nancial management behavior (Dew & Xiao,
2011) as the outcome]. When predicting money management, for Step 1, we include demographic variables (i.e., age,
gender), which together accounted for 4.6% of the variance in money management. In Step 2, personality traits and material
values accounted for an additional 11% of the variance. When predicting nancial management behavior, demographic variables explained 26.5% of the variance; personality traits and material values accounted for an additional 6.7% of the variance.
Specically, extraversion, conscientiousness and the extent to which a person believes that material possessions can provide
happiness are signicant predictors of money management and nancial management behavior.
Next, we investigated the independent effects of money management and nancial management behavior (controlling for
personality traits, materialistic values, and demographic variables) to predict (a) wealth accumulation, (b) debt accumulation, and (c) compulsive buying (see Table 6). Because of the similarity between the regression models when using money
management or nancial management behavior, and because of the high correlation between the two constructs, we
aggregated the two money management constructs. In all three regression models, money management was a signicant

Table 5
Predicting nancial management from demographic variables, personality traits and materialistic values.
Step 1

Age
Gender (male = 1)
Education
In a current relationship
Not in a current relationship
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
MVS-Success
MVS-Centrality
MVS-Happiness
DR2
Model R2


p < .05.
p < .01
p < .001.
N = 355.

**

***

Step 2
Sig.

b
.27
.01
.18
.21
.02

.265**
.265**

<.01
.84
<.01
<.01
.74

Sig.

b
.21
.02
.19
.16
.02
.15
.03
.19
.06
.09
.05
.04
.15
.067***
.333***

<.01
.73
<.01
<.01
.69
<.01
.57
<.01
.25
.08
.43
.48
<.05

1135

G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

Table 6
Predicting wealth accumulation, credit card debt and compulsive buying from money and nancial management, demographic variables, materialistic values,
and personality.
Variable

b
Wealth accumulation

Age
Gender (male = 1)
Education
Current relationship
No relationship
Money management
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
MVS-Success
MVS-Centrality
MVS-Happiness

***

.36
.02
.18***
.02
.10*
.48***
.01
.02
.04
.02
.06
.02
.01
.04

Credit card debt

.10
.02
.12*
.11
.12*
.37***
.04
.01
.09
.06
.02
.10
.01
.05

Compulsive buying
.08
.05
.04
.01
.02
.43***
.03
.04
.02
.07
.08
.18**
.05
.11

Note: The model was signicant in predicting wealth accumulation, (F[14, 325] = 27.26, p < .001; R2 = .54). The model was signicant in predicting credit
card debt, (F[14, 324] = 4.28, p < .001; R2 = .16). The model was signicant in predicting compulsive buying, (F[14, 326] = 12.79, p < .001; R2 = .36). N = 355.
*
p < .05
**
p < .01
***
p < .001.

predictor of increased wealth, as well as decreased debt and compulsive buying. Also, in all three models, money management was the strongest predictor of the nancial outcomes.
4.1.4. Brief discussion
When we examine the results from Study 2 and Study 3, there are two consistent resultsthose who actively manage
their money tend to be more conscientious and less materialistic in their pursuit of happiness. To test the robustness of these
relations in a materially different sample and control for further possible extraneous variables, in Study 4 we attempt to conrm these regression models on an adult sample while controlling for future orientation, locus of control, nancial attitudes,
risk tolerance, and nancial knowledge. We also examined the possibility that these attitudes and dispositions explained
why conscientious and less materialistic people managed their money.
5. Study 4: testing the robustness of the money management models
5.1. Participants
To achieve more age, gender, and income diversity than is typically expected with a student sample, Study 4 recruited 201
adults (MAge = 34.93, SD = 12.51; 65.8% female; 71.8% Caucasian) from Amazon Mechanical Turk (MTurk), which is a webbased application that provides instant access to potential participants for survey-based psychological research. Data collected via MTurk is as reliable as laboratory data (Buhrmester, Kwang, & Gosling, 2011). Participants were paid 20 cents
for their participation in the study. Originally 211 adults started the survey; thus, with 201 adults completing the survey,
our response rate was very high (95.3%).
5.2. Materials
To assess money management, participants completed the Financial Management Behavioral Scale (Dew & Xiao, 2011

a = .81) in addition to our money management measure (a = .75). These two scales were positively correlated (r = .60,
p < .001).
Participants also completed: (a) the Big Five Inventory (BFI-10; Rammstedt & John, 2007) to measure personality, (b) the
Material Values Scale (MVS-15; Richins, 2004) to measure materialistic values, (c) the Compulsive Buying Scale (CBS; Faber &
OGuinn, 1992) which measured an individuals tendency to compulsively purchase, (d) the Financial Products Knowledge
Scale (Antonides et al., 2011) to measure nancial knowledge, (e) the Financial Risk Tolerance Scale (Grable, 2000) to measure risk tolerance, (f) a brief measure of Zimbardos Time Perspective Scale (ZTPI-Brief; Zhang, Howell, & Bowerman, 2012)
was used to measure future time orientation, (g) the Financial Attitude Scale (Parrotta & Johnson, 1998) to measure nancial
attitudes and (h) locus of control was measured using the Locus of Control Scale (Rotter, 1975). Participants reported their
age, gender, education, their current relationship status (e.g., married, divorced, never married or in a domestic partnership)
as well as their current economic standing using the ve-item proxy developed by Howell et al. (2012) and used in Study 2
and Study 3.

1136

G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

Table 7
Predicting money management from demographic variables, personality traits, materialistic values, nancial knowledge, future orientation, locus of control,
risk tolerance and nancial attitudes.
Step 1

Age
Gender (male = 1)
Education
In a current relationship
Not in a current relationship
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
MVS-Success
MVS-Centrality
MVS-Happiness
Financial knowledge
Future orientation
External locus of control
Risk tolerance
Positive nancial attitudes
DR2
Model R2

Step 2
Sig.

b
.06
.11
.18
.08
.04

.053
.053

.42
.14
<.05
.31
.59

Step 3
Sig.

b
.14
.10
.15
.08
.06
.11
.11
.16
.14
.08
.15
.05
.31

.126**
.179***

.08
.18
<.05
.32
.46
.14
.13
<.05
.06
.21
.15
.64
<.01

Sig.

b
.17
.04
.13
.05
.05
.12
.13
.06
.12
.10
.12
.05
.24
.08
.14
.08
.02
.18
.073**
.252***

<.05
.54
.06
.53
.53
.11
.06
.45
.14
.15
.27
.58
<.01
.31
.10
.42
.84
<.01

p < .05
p < .01
p < .001.
N = 196.

**

***

5.3. Results
First, we conducted two three-step hierarchical regression analyses to determine the unique variance in money management explained by personality traits and materialistic values while controlling for demographic variables [which replicates
the models from Study 3; Table 7 displays the regression coefcients for money management as the outcome and Table 8
display the regression coefcients for nancial management behavior (Dew & Xiao, 2011) as the outcome]. We also examined if these relations hold when controlling for numerous possible confounds (i.e., nancial knowledge, future orientation,
external locus of control, low risk tolerance, and positive nancial attitudes) in Step 3. When predicting money management
(a) demographic variables explained 5.3% (though non-signicant) of the variance in money management and (b) personality
traits and material values accounted for an additional 12.6% of the variance. When predicting nancial management behavior, demographic variables explained 17% of the variance; personality traits and material values accounted for an additional
7.0% of the variance.
When examining the signicant predictors from Step 2, the only signicant predictors across both models were (a) education and conscientiousness increased money management, while (b) believing that material possessions can provide happiness decreased money management. These patterns are fairly consistent with the results from Study 3. However, though
believing that material possessions can provide happiness was related to decreased money management and nancial
behavior management in Step 3, conscientiousness no longer was a signicant predictor. This indicates that these additional
nancial predictors may by mediating the relation between conscientiousness and money management. To test for mediation, Baron and Kennys approach was used (1986) and mediation was tested using the Preacher and Hayes (2008) multiple
mediation script with (a) conscientiousness as the predictor, (b) nancial knowledge, future orientation, external locus of
control, low risk tolerance, and positive nancial attitudes as the mediators, and (c) money management or nancial management behavior as the outcome. In both mediation models, conscientiousness was related to more positive nancial attitudes and increased future orientation and these two mediators were signicantly related to both money management and
nancial behavior management. The bootstrap results demonstrated the statistical signicance of the indirect paths through
both nancial attitudes and future orientation. Thus, the mediation models suggests that highly conscientiousness
individuals have both positive nancial attitudes as well as a future orientation and this attitude and time perspective explains why conscientiousness individuals are more likely to manage their money.
Finally, we tested the independent effects of an aggregate money management variable (the average of our scale and the
nancial management behavior scale) in predicting (a) wealth accumulation, (b) debt accumulation, and (c) compulsive buying (see Table 9). Following the same pattern as in Study 2 and 3, even though we controlled for demographic variables, personality traits, material values, and a host of other nancial predictors in all three regression models, money management
was the strongest predictor of the three nancial outcomes.

1137

G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

Table 8
Predicting nancial management behavior from demographic variables, personality traits, materialistic values, nancial knowledge, future orientation, locus of
control, risk tolerance and nancial attitudes.
Step 1

Age
Gender (male = 1)
Education
In a current relationship
Not in a current relationship
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
MVS-Success
MVS-Centrality
MVS-Happiness
Financial knowledge
Future orientation
External locus of control
Risk tolerance
Positive nancial attitudes
DR2
Model R2

Step 2

Sig.

.05
.02
.30
.29
.01

.49
.75
<.01
<.01
.92

.170***
.170***

Step 3
Sig.

b
.03
.04
.26
.27
.03
.08
.07
.15
.04
.01
.21
.01
.26

.73
.58
<.01
<.01
.77
.26
.29
<.05
.58
.89
<.05
.90
<.01

.070*
.239***

Sig.

b
.01
.07
.21
.24
.03
.10
.06
.05
.01
.03
.15
.02
.18
.24
.11
.07
.04
.11
.099***
.338***

.91
.29
<.01
<.01
.73
.18
.32
.45
.90
.44
.14
.82
<.05
<.01
.17
.46
.60
.12



p < .01.
p < .05
p < .001.
N = 196.
*

***

Table 9
Predicting wealth accumulation, credit card debt and compulsive buying from money and nancial management, demographic variables, materialistic values,
and personality.
Variable

b
Wealth accumulation

Age
Gender (male = 1)
Education
Current relationship
No relationship
Money management
Extraversion
Agreeableness
Conscientiousness
Neuroticism
Openness
MVS-Success
MVS-Centrality
MVS-Happiness
Financial knowledge
Future orientation
External locus of control
Risk tolerance
Positive nancial attitudes

.14
.02
.04
.02
.05
.63
.07
.05
.03
.06
.12
.27
.09
.06
.02
.08
.09
.13
.01

Credit card debt

.19
.06
.17
.21
.05
.23
.08
.03
.01
.05
.02
.05
.01
.13
.04
.13
.20
.20
.11

Compulsive buying
.07
.09
.01
.18
.03
.49
.15
.01
.04
.03
.06
.09
.13
.02
.18
.02
.18
.04
.13

Note: The model was signicant in predicting wealth accumulation, (F[19, 175] = 9.94, p < .001; R2 = .52). The model was signicant in predicting credit card
debt, (F[19, 176] = 2.57, p < .01; R2 = .22). The model was signicant in predicting compulsive buying, (F[19, 177] = 6.72, p < .001; R2 = .42). N = 196.

6. General discussion
The goals of the current studies were to predict money management tendencies from Big Five personality traits and materialistic values and to assess the independent effects of money management on wealth accumulation, debt accumulation,
and compulsive buying. Across four studies using varied samples, we show that the extent to which a person believes that
material possessions provide happiness has a strong negative relation to money management, and that conscientiousness
predicts improved money management because highly conscientious people have more positive nancial attitudes and a

1138

G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

future time perspective. Additionally, money management was consistently a signicant predictor of wealth, debt accumulation, and compulsive buying.
6.1. Why do conscientiousness people manage their money?
Although no past research has examined the relation between Big Five personality traits and money management, studies
have suggested that conscientiousness should be related to money management because conscientious people have more
nancial self-control (Brandstatter, 1996; Warneryd, 1996; Webley & Nyhus, 2001). Our rst three studies conrmed that
conscientiousness is the most important Big Five personality trait when predicting money management (even when controlling for demographic variables). In addition, Study 4 suggests why conscientiousness is related to money management. Our
mediation models suggest that nancial attitudes and future orientation mediate the conscientiousnessmoney management relation. This nding is consistent with previous research, which has found that conscientiousness has been linked
to positive nancial attitudes (Brandstatter, 2005) which increased money management (Parrotta & Johnson, 1998; Pham
et al., 2012); nancial attitudes also mediate the relation between conscientiousness and saving behavior (Brandstatter,
2005). Further, our mediation models extend previous ndings that have demonstrated a relation between money management and future orientation (Antonides et al., 2011). Thus, these models extend past work by suggesting that conscientiousness individuals have increased money management because of their positive nancial attitudes and future orientation.
6.2. Why do materialists not manage their money?
Although past studies demonstrate that materialism is associated with poorer nancial management practices (Garoarsdottir & Dittmar, 2012; Walker, 1996), these studies do not explain why materialists are not managing their money. We
demonstrate that a specic facet of materialism (believing that material possessions can provide happiness) is a consistent
driving force behind the negative impact material values has on money management. Interestingly, none of the ve attitudinal or dispositional variables measured in Study 4 (future orientation, locus of control, nancial attitudes, risk tolerance,
and nancial knowledge) mediated the relation between materialism and money management. However, escape theory (a
causal chain of motivations to escape from aversive self-awareness; see Baumeister, 1990) may explain why materialists
pursuit of happiness through material consumption may lead to less money management. Escape theory predicts that, when
individuals fall short of their own standards and expectations, and become aware of these inadequacies, they experience
negative affect. They then cope with these negative emotions by avoiding meaningful self-awareness and this leads to irrational behavior. So how does escape theory predict materialists poor money management skills?
Future research should examine these relationships directly, but materialists may fall short of their standards and expectations because they reference themselves against people from higher socioeconomic backgrounds (Richins & Dawson, 1992)
and have unrealistically high standards (Sirgy, 1998). It has been proposed they are aware of this gap between their ideal
(e.g., high standards) and real self and this awareness may explain why materialists are less satised with life (Garoarsdottir,
Dittmar, & Aspinall, 2009; Otero-Lopez, Pol, Bolano, & Marino, 2011), more depressed (Norris & Larsen, 2011), stressed (Burroughs & Rindeisch, 2002), anxious (Kashdan & Breen, 2007), and have lower self-esteem (Richins & Dawson, 1992). Not
surprisingly, materialists dissatisfaction with their life and their value system results in the pursuit of happiness through
material possessions (Richins & Dawson, 1992) as they attempt to reduce the discrepancy between their real and ideal selves
by making irrational nancial decisions (Dittmar, 2005; Richins, 2011). Thus, materialists may avoid meaningful self-monitoring of their nances because self-awareness of ones current nancial situation may encourage restraint from the acquisition of the material items they feel will reduce the discrepancy between their real and ideal selves. Also, because
materialists experience pleasure from material purchases (Rook, 1987) and are more likely to avoid negative thoughts, feelings, and sensations (Kashdan & Breen, 2007), they may experience a pain of knowing about their nances because such
awareness may highlight how the nancial implications of their purchasing behavior is rather discouraging (Garoarsdottir
& Dittmar, 2012).
6.3. The importance of money management on nancial well-being
Our results suggest that money management (not Big Five personality and materialistic values) is the most signicant
predictor of nancial well-being. These results hold true even when controlling for a variety of demographic and dispositional variables. Our results challenge previous ndings that suggests materialism is a stronger predictor of debt than money
management skills (Garoarsdottir & Dittmar, 2012), however our studies do conrm that the pursuit of happiness through
materialistic values is an important predictor money management, which has an important impact on nancial well-being. A
possible explanation for the discrepancy in ndings is that Garoarsdottir & Dittmars debt measure included mortgage debt
and auto loans, where our studies focused purely on credit card debt.
6.4. Limitations and future directions
It is possible that self-reported nancial behavior may not equate to actual nancial management behavior. Though a
number of previous studies have measured self-reported money management behaviors and correlated these self-reports

G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

1139

with various nancial, well-being, and demographic predictors and outcomes (Antonides et al., 2011; Chang et al., 2010;
Chau et al., 2004; Dowling et al., 2009; Godwin & Carroll, 1986; Godwin & Koonce, 1992; Grable et al., 2009; Joo & Grable,
2004; Kamleitner et al., 2011; Lea et al., 1995; Mugenda et al., 1990; Parrotta & Johnson, 1998; Perry & Morris, 2005; Walker,
1996; Webley & Nyhus, 2001; Xiao et al., 2006, 2008), future studies should investigate alternative measures of nancial
management (e.g., nancial account activity or surveying assessments from other informants [i.e., close relatives, spouses,
children, or credit card companies]) to ensure our ndings are not the result of self-presentation bias.
Another limitation is the use of a convenience sampling strategy. Future research should extend these ndings by recruiting a stratied sample (e.g., stratied on age, gender, and SES). However, it is important to note that, the goal of this study
was not to determine the mean values of the population, but rather to determine the relationships between specic variables
of interest. Also, as our goal was to determine the benets and predictors of money management, it is encouraging that our
models demonstrate the same relationships across four samples that vary in age, geography, education, and perhaps most
importantly, in recruitment methodology. While none of these samples are free from self-selection bias, the type of selfselection bias in each recruitment technique varied as some participants were intrinsically interested in learning about
themselves (Study 1), while others were motivated purely by nancial gain (Study 4). Research has also shown that internet
samples, used in these four studies, are more likely than telephone samples to give truthful data about sensitive topics like
nances (Gosling, Vazire, Srivastava, & John, 2004).
Finally, our samples consisted of participants living in the United States, surveyed via the internet during a specic time
period, and may not be generalizable to other cultures, time periods, or to individuals who do not have internet access. Because our samples were recruited via the internet, our samples tended to be younger, and better educated than the population at large. While this reduces the variability in our population, increasing the chances that the variables of interest
are directly related, it also reduces the generalizability of our results to unrepresented groups. It is an open question as to
whether our results would hold for older and less educated groups, and we encourage future researchers to test these models
in different cultures/groups to ensure the generalizability of these ndings. As well, our data was collected following the
nancial collapse of 2008 (Lang & Jagtiani, 2010), which may have impacted the money management behaviors of our participants. Future researchers may want to examine whether these relationships hold during periods where the economy is
perceived to be doing well.
9. Conclusion
Many Americans are facing high levels of debt that may be the result of poor money management and detrimental consumption behaviors. Our results imply that in order to minimize debt accumulation and overspending we must increase
money management skills. It seems though, that at least in part, a lack of money management is fueled by reduced conscientiousness and increased belief that material things can lead to happiness. We hope that the current ndings help illuminate the psychological barriers towards money management that exist for individuals, especially those striving for happiness
through material consumption.
Appendix A. Instructions: please select the option that best describes you
Money Management
MM1
MM2
MM3
MM4

MM5

MM6

Think about last month: When I reect on my past buying behavior, I have been most likely to: (1) Over Save to
(7) Over Spend
Think about last month: In order to be happy, I tried to: (1) Save my money to (7) Spend more than I make
Think about your life in general: I would say that I typically spend more money than I have: (1) Infrequently to
(7) All the time
Some people are unclear about their nancial situation: not knowing account balances, monthly expenses, loan
interest rates, fees and nes and have difculty meeting basic nancial or personal obligations. They have a
tendency to live paycheck to paycheck and have a live for today, dont worry about tomorrow attitude toward
their money. They are frequently borrowing items or small amounts of money from friends and failing to return
them. To which extent does this characterization describe you? (1) Not at all to (7) A great deal
Some people have nancial clarity: knowing exact account balances, monthly expenses, loan interest rates, fees
and nes, and live below their means. They have a tendency to save large portions of their paychecks often
denying themselves of comforts in their daily lives, and feel dened by their savings account balances. They are
often planning for future events. To which extent does this characterization describe you? (1) Not at all to (7) A
great deal
Some people strive for nancial clarity: knowing account balances, monthly expenses, loan interest rates, fees
and nes. To which extent does this characterization describe you? (1) Not at all to (7) A great deal

Note: MM1, MM2, MM3 and MM4 are reverse coded. All items contribute to the internal consistency of the factor and demonstrate adequate stability.

1140

Appendix B. Correlation matrix of all variables (Study 4)

SD

1. Money
4.73 1.03
management
2. FMBS
3.37 0.76
3. Male
N/A N/A
4. Age
33.42 13.76
5. Education
5.63 1.05
6. MVS-Happy
2.60 0.85
7. MVS-Success
2.41 0.84
8. MVS-Centrality
2.72 0.72
9. Extraversion
3.23 0.99
10. Agreeableness
3.47 0.91
11. Conscien3.84 0.86
tiousness
12. Neuroticism
2.90 1.04
13. Openness
3.71 0.95
14. Financial
2.84 1.00
knowledge
15. Wealth
4.05 2.12
accumulation
16. Debt accumulation 2.07 1.21
17. Compulsive
1.79 0.62
buying

10

11

12

13

14

15

16

.55
0.06
.13
.16
.27
.15
.19
0.07
0.05
.26

0.03
.44
.34
.32
.16
0.08
0.06
0.01
.33

0.02
.12
0.06
0.06
0.06
0.05
0.01
.17

12
0.01
.29

.12
0.00
.44

0.09
0.02
0.09





0.01

.52

.43

.14
.41

0.04
0.01

0.10
.16

0.06
.22

.40

.31
.46

.68

.40
.32
.17
0.02
0.02
0.02
.27

.23
.18
0.10
0.07
0.07
.23

.55
.43
.12
.10
.25

.56
0.00
0.05
.25

0.06
0.05
.15

.12
.20
.31

0.05
.26
.12

.24
0.04
.23

.15
.14
0.05

.12
0.02
.10









.33

.11
.37

.15

0.10
.36

0.07
.14
.21
.11
.14

0.09
.19
0.00
0.04

.14
.12
.15


0.08

0.03

0.05

.22

0.09
.27

0.03
0.03

0.02
0.08

0.03
.20

0.09
.19

0.02

0.07

0.06

0.00
.17

0.01
.11

.33
0.06
0.09

.10
.41 .38

G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

Measure

G. Donnelly et al. / Journal of Economic Psychology 33 (2012) 11291142

1141

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