Are You Outgoing? Well, That May Be Why You’re Broke
If you’re an extrovert, we have some bad news: you might be absolutely terrible with saving money. But chances are you know that already. A recent study conducted by University of Toronto associate professor Jacob B. Hirsh found that extroverts, who have been shown to make a higher salary, also tend to hold on to less cash.
“Extroverts are far more sensitive to rewards, which makes it harder for them to overcome their desire for immediate gratification. When making financial decisions, this can contribute to impulsive spending, higher credit card debts and reduced savings,” Hirsh said.
Introverts, on the other hand, tend to be better savers. They are more focused on the long-term rewards that come with squirreling away their cash. While extroverts tend to gravitate toward immediate rewards, introverts have been found to delay gratification. Furthermore, in a previous study, Hirsh found that when extroverts are in a good mood they are more likely to seek immediate rewards (which may be demonstrated through making a purchase, for example). However, mood had little effect on an introvert’s level of reward seeking.
- Hirsh studied how personality can influence one’s saving behavior. In order to accomplish this, he examined three separate sets of data. In the first study, a correlation was seen between extroversion levels and changes in the personal savings rate. For example, the study found that there was an increase in extroversion levels during the period of time that the U.S. savings rate went down sharply.
- The second analysis found that people in the United States with increased extroversion levels demonstrated a tendency to set aside money to be spent right away instead of placing that cash in savings.
- The last analysis took a look at how the average extroversion levels of various countries were linked to gross national savings as a percentage of gross domestic product. Hirsh found that higher levels of extroversion resulted in lower savings rates regardless of variances in age, income, or life expectancy. “…Higher nationally-aggregated extroversion predicted lower gross national savings in a global sample of 17,837 individuals from 53 nations,” said Hirsh.
Tips for saving money:
No matter what your personality type, there are a few things that can help you to save on a regular basis.
1. Automate savings
Allocate part of your paycheck just for emergency savings by setting up automatic withdrawals each pay period. This way, you’ll be less likely to miss your money when it’s gone. You won’t have to think about how much money you’re taking out of your check if you don’t have to make individual withdrawals every time you get paid.
2. Leave the plastic at home
Use cash to pay for purchases whenever possible. It’s just too easy to swipe your credit card when you’re at the store. Holding cash in your hands will remind you of how much you’re spending and make it a little easier to put your wallet away once you’re about to spend more than you should.
3. Devise a spending plan
Draft a budget or spending plan so that you can keep track of your purchases. Seeing how much you spend each month and what you spend it on will give you a clear picture of where your money goes each month. Once you get an idea of your spending habits, make the appropriate changes.