People save more money when their goals fit their personality traits

People whose savings goals align well with their dominant personality traits are more likely to save money, according to research published by the American Psychological Association (of which both Alicia and I are members).

In the U.S. and around the world, savings rates are critically low. In October 2022, the Bureau of Economic Analysis reported Americans save just 2.3% of their income, the lowest in nearly two decades. Although people report wanting to save more money, saving is difficult – in part because it requires people to overcome the psychological hurdle of making a sacrifice in the present to benefit themselves in the future.

Researchers from a number of universities wanted to see if aligning people’s savings goals to their personality traits might make it easier for them to save.

The research was published in the journal American Psychologist.

Previous research by the same team found that people high in agreeableness are less likely to save than others, possibly because they’ve been taught that valuing people and valuing money are at odds with one another, and that “nice people” don’t value money.

What the researchers say: “We tried to think of ways we could motivate agreeable people to save more,” the lead author said. “Could we simply highlight how saving money would help them protect their loved ones? This suddenly makes money a means to an end that they care about.”

More generally, she and her colleagues hypothesized that some goals might be a better fit for people with certain personality traits compared with others. For example, a person high in conscientiousness might be more likely to plan for the future and thus more motivated to save for retirement.

They tested the hypothesis in a survey and a field experiment. First, they analyzed data from 2,447 participants in the United Kingdom who answered questions about their Big Five personality traits (agreeableness, conscientiousness, neuroticism, openness and extraversion), as well as their savings goals. Independent raters coded the savings goals into categories of fit for the personality traits. Goals included such things as saving for a future purchase such as a car, saving for leisure/vacation spending, saving for a “rainy day,” and saving for retirement.

Overall, the researchers found that people whose self-reported savings goals were a good fit for their personality traits had a bigger nest egg, on average. The effect held true across both poorer and wealthier participants. Not surprisingly, people who earned more money had more savings, on average, but personality-goal fit explained about 5% of the variance in savings amount across all income levels.

Next, the researchers conducted an experiment with 6,056 participants, all of whom were taking part in a savings incentive program. Participants in the study had less than $100 in savings when they joined the program and were given the goal of saving at least $100 more in one month.

Each participant took a 30-item personality assessment, and then the researchers divided them into five groups. One group received five emails during the month encouraging them to save toward a goal that was a good fit with their most salient personality trait. Another group received emails with a goal mismatched to their personality type, a third group received randomly selected goal messages, a fourth group received emails with a generic message encouraging saving but no particular goal, and a fifth group did not receive any emails.

For those who opened their emails, the researchers found that participants who received the personality-matched condition had the highest success rate, with 11.4% reaching the $100 savings goal. That compared with 7.42% in the standard message group, 7.46% in the random message group, and 7.85% in the personality-mismatched condition. Only 3.4% of those in the no-email control condition met the savings goal. Participants who were in the email groups but didn’t open their emails had about a 3% success rate.

Overall, according to the researchers, people who received the personality-tailored intervention were 3.57 times more likely to achieve the $100 savings target than those in the control condition.

“It was wonderful to see this approach worked,” the team members said. “It was important for us from the get-go to not only contribute to the existing literature and have a vigorous research study, but also to deploy the findings in the real world and come up with something companies could actually use and implement. Given the dire facts about savings in the U.S. and elsewhere, we were particularly interested in helping to alleviate some of the challenges low-income and distressed households face in managing their finances. The recent economic downturn, including rising prices and higher challenges around achieving personal savings goals, made this pursuit even more important to us.”

So, what? Encouraging saving is a much-researched topic and the idea that different personality types would have different motivations for saving (or not) is not particularly world-shatteringly new.

More problematic is the researchers’ acceptance of a rather dated view of personality. That there are five main personality types is generally accepted. Recent research has confirmed that about 25% of a person’s personality traits can be put down to genetics.

Personality is not fixed, rather it is conditional on three factors: genetics, experience—including family, school and work history—and context. A number of recent studies have found that context may be the most powerful of the three. Since we are social animals that context is primarily based on our need to fit in with and be accepted by the group(s) to which we belong.

We can have one dominant personality type in one setting and quite another in a different one. If saving is important to a group that’s important to us then we’ll probably save more regardless of our genetics. Of course, our previous experience may have predisposed us to belong to that group and our genetics may be a reinforcer of that choice.

It may be the case that saving, and personality type are linked, as the researchers say, but a change in context or experience can alter both.