PERSONALITY TRAITS AND HOUSEHOLD FINANCIAL MANAGEMENT

Abstract

The paper investigates the possible influence of Big Five personality traits on financial behaviors
in regarding to saving to cover future expenses and household finances manageability
based on the dataset of Dutch people in 2005. The Confirmatory Factor Analysis and
Structural Equation Model techniques are used. We find that extraversion, conscientiousness, and emotional stability have significant influence on saving for future expenses as well as on the ability to manage household finances. Agreeableness plays a significant role on management ability of household finance but not on saving. When savings is added to the model as mediator between personality traits and the ability of household finances, the significances of conscientiousness and extraversion disappear. This indicates that savings fully mediates the effect of these personality traits