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  • Writer's pictureConvergent Financial Group

Personality-Driven Decision-Making

human characters representing personality-driven decision-making

Case studies have shown that investments in health are key to boosting wealth. Healthy people live longer, more productive lives. Another study concluded that those who contributed to their retirement plans had improved health-related behaviors. These studies point to the health and wealth connection. In other words, investing in your physical health has positive financial outcomes. Likewise, investment in your financial health has positive physical health outcomes.

So what’s really behind the connection? At first glance, it seems logical to conclude that people who are healthier have more opportunity to work and earn money. Or those with more money have better access to healthcare. But there’s actually more to it than that. Both decisions, to invest in health and wealth, are linked to our personalities.

The Key Personality Trait

definition of conscientious

In other studies, researchers found that when measured side by side, a certain personality trait produces better results long-term. What was it, you ask? Conscientiousness. The study participants with the personality trait of conscientiousness were more often able to choose delayed rewards compared to the non-conscientious.

Here’s how that played out in the study:

Participants were offered the option of $8 now or $10 in five days.

For the non-conscientious person, the cost of waiting was so high to them that they only valued the $10 in five days as $4.87. Let me say that again: The wait itself devalued the $10 down to $4.87 in their minds! Since that value of $4.87 is lower than the value of $8 right now, they took the $8 now.

The highly conscientious person devalued $10 in five days to $9.93 because of the wait. But their valuation of $9.93 was still higher than the subjective value of $8 right now. So, given the same offer, the highly conscientious person chose the $10 in five days. (But please note that both personality types associate a cost, whether large or minimal, to waiting for the payoff.  We can all agree that it's hard to wait!)

Now we can look at those results and likely agree that both types of people FEEL like they’ve chosen the best value whether they took the lesser immediate payout or waited for the higher payout. But we can also probably agree that the FEELING doesn’t necessarily reflect the REALITY of the objective value of their choices. Regardless of what the participant FELT, five days from the offer, the conscientious person who received $10 was objectively wealthier than the non-conscientious person who received $8.

graphic representing how different personalities handle money
Regardless of what the participant FELT, five days from the offer, the conscientious person who received $10 was objectively wealthier than the non-conscientious person who received $8.

How Are You Wired?

young child with glasses and flower hair bow

This reminds me of a study my daughter participated in at the College of Charleston when she was 2 years old. One of the things that the researcher did with her was offer her 3 m&m’s. She was allowed to eat those m&m’s right then, but was told that if she would wait a few minutes instead (while the researcher briefly left the room), she would be given 5 more m&m’s if she hadn’t eaten the original 3. What did my then-2-year-old do? Much to our surprise, she waited! Now as much as I’d like to take credit for that decision, there’s only so much you can teach a 2-year-old about delayed gratification. So I would say that she already had a more conscientious personality based on her choice.

Going back to the earlier study I referenced, the researchers actually showed that the areas of the conscientious and non-conscientious persons’ brains are activated in very different ways at decision time. In other words, in making the exact same decision, two different people can have two different levels of mental effort and two different experiences in the process of deciding. Maybe you’re like my daughter, and it comes relatively naturally to you to delay gratification in the here and now in favor of the better long-term outcomes. Or maybe you relate more to the YOLO culture that we live in. Either way, I have some advice for you based on what I see in my line of work.

For the Lovers of Right Now

YOLO or tomorrow graphic with hour glass

This isn’t my personality style, but I have a front row seat to watch this play out in my wife sometimes. We were about to go out of town for a business trip and my free-spirited wife tried talking me into ditching the work conference in lieu of a few days of fun and sightseeing. Likewise, when it comes to going to the gym for lunch, she’s the temptress trying to lure me to a lunch date instead. (This literally just happened again yesterday. But, hey, I had a date with my wife so I can't complain about that!)

If you identify with my wife, just being aware that your tendency to prefer immediate gratification could trip you up is key. Then, whether it’s related to health or wealth, partner up with someone who can help you shift your thinking towards the long-term while still upholding the value of the short-term. And don’t forget to see the gift in your personality type… when you put the effort into attaining the long-term benefits, you are likely very good at making sure you don’t sacrifice all of the fun in today to do that. There’s a balance in enjoying life today while still responsibly planning for the future.

For the Patient Personalities

If it comes naturally to you to wait for future gain, you might think you’re set up for success by default. But here’s where I see us getting tripped up on the financial side: sometimes we can get so future-focused that we forget we’re meant to be living in the here and now. In a marriage, that can cause a lot of financial tension if your spouse doesn’t have the same personality type. Other times it can look like “analysis paralysis” where we just don’t know the right steps to take so we do nothing.

When I was discussing these case studies and personality types with my wife, she made the assumption that my clients are all the non-conscientious types. The truth is that I have a good mix of both.

man and woman walking down sidewalk holding hands

The less obvious value that I bring to the conscientious client is usually two things:

1. finding the common ground in their financial relationship with their non-conscientious spouse, and

2. helping them execute strategies for their long-term goals (after all, excelling at waiting doesn’t mean you know exactly what to do while you’re waiting).

What Now?

So now you know how personality affects our decision-making, especially as it relates to short and long-term gains. The question now is: what will you do with the information? How can you use the insight about yourself to make decisions that give you the quality of life you want today and in the future? Better health and greater wealth await you...

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Personality Influences Temporal Discounting Preferences: Behavioral and Brain Evidence. Neuroimage, 2014 Sep; 98: 42–49.

Investment in health is key to boosting wealth. The Lancet, Volume 393, Issue 10176, 16–22 March 2019, Page 1072.

Healthy, wealthy, and wise: retirement planning predicts employee health improvements. Psychol Sci. 2014 Sep 25:1822-30.


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