The Surprising Way Birth Order Decides Your Money Habits

Ashley Eneriz — Wed, 16 Mar 2016 10:00:06 +0000

The order in which you were born can say a lot about you. There have been many studies done that suggest your birth order is directly connected with your personality, achievements, and even who you marry. Your birth order might even give some significant insight in how you save and spend money.

Oldest Child

Being the eldest of the family usually means you are more responsible and driven. Firstborns tend to be more organized and punctual, too. You have probably been in charge of your younger siblings on multiple occasions. And there were also many times when your parents depended on you.

All of these personality traits translate to healthy financial habits. Firstborns are more likely to pay bills on time, spend responsibly, and calculate financial risks thoroughly. Their driven behavior might be why many firstborns also make more money or have prestigious careers, such as a profession in the medical or law field.

Firstborns can also come with flaws. Their perfectionist nature can drive them too far. Firstborns are more likely to suffer burnout and mid-life crises. Your finances will suffer if you reach burnout and give up on your career or savings goals. (See also: Are You Smarter Than Your Sibling?)

Middle Child

Middle children tend to be the family's peacemaker. They are good at solving problems and coming up with inventive solutions to conflict and issues. Middle children can fall into the trap of not wanting to look upstaged by their older sibling. Middle children are more likely to hide their true financial situation, so that parents and siblings will think the middle child is responsible and successful.

Middle children will benefit the most financially by being honest with themselves and others about money. You will only put your budget in trouble if you pretend that you can afford everything your older sibling can. While the pressure to compete might have you embellishing how much is in your savings account, don't let your pride cause you to overspend or forgo asking for help when you are in financial hot water.

As an inventive problem solver, middle children can tend to deal with financial problems in a creative, but unhelpful way. Shuffling debt around to new 0% APR credit cards might seem smart, but it does not address the root issue — debt.

Youngest Child

As the baby of the family, you are used to being in the spotlight. Family members are more likely to dote on the youngest and provide extra leniency as far as responsibility goes. The youngest tend to be more social and fun-loving, too.

All of these traits can lead to poor money habits. The youngest child might rely on their parents for financial support much longer than their other siblings and have a hard time developing financial responsibility. They can tend to blame bad financial consequences on others instead of owning up to mistakes. For example, a late bill is not their fault since the company forgot to send the bill or they were working too many hours to have time to pay it.

The youngest children can tend spend their money carelessly, especially in social and fun settings. They might complain about not having enough money to fix their car or pay rent, but they always seem to have money for a dinner out with friends or a Starbucks latte.

Don't let your youngest-child status ruin your finances though. You can still enjoy fun, social nights out, but learn to budget for it and find creative and more affordable solutions. A potluck with friends can be just as fun — and much less expensive — than going out for a dinner and a movie.

Only Child

Only children share many of the great financial habits of firstborns. They tend to have great credit scores and be driven to make more money. Since only children have spent most of their lives around adults, they also tend to be more mature. However, only children can also feel more inclined to impress others and take risks. They might overspend and live above their means to impress others and to fit in.

Only children might also take riskier financial moves, such as putting their money in a new startup or risky investment. Their higher level of risk can either work for them, or against them. Some risks will pay off in big ways, while others will drain their bank accounts.

It is important to remember that birth order is a theory and not a law. While your birth order might mean you have natural inclinations to certain personality quirks and spending habits, it should by no means be what defines you. Don't write off your bad money habits just because you are the youngest child. Instead, learn what your natural inclinations are and work against them to create healthy money habits.

Did we nail your money habits right on the head or were we completely wrong? Share your how your birth order affects your money management.

This article is from Ashley Eneriz of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Quiet Millionaire: Part 1 – What is Important about Money to You?

Julie Rains — Thu, 18 Oct 2007 19:51:11 +0000

You’ve heard of The Millionaire Next Door (see Nora’s post on this book), now there’s The Quiet Millionaire. Whereas Next Door considers the mindset of the millionaire, Quiet offers practical advice on building and preserving wealth, beginning with an exploration of your life goals, reasons that money is important to you, and your possible motivations for desiring wealth. Its author is Brett Wilder, a Certified Financial Planner and President/CEO of Financial Management Group, Inc., a fee-only financial management and investment advisory firm. Through Wise Bread, I’ve been given a copy of the book so that I can give you an idea of what it has to offer.

Topics for most chapters are straightforward and cover issues such as borrowing intelligently, winning at investments, and making college affordable. In the first chapter, however, Mr. Wilder builds the platform for helping you make financial decisions and provides guidance on defining what is truly important; he proposes that

Money is the fuel for achieving your life goals and objectives.

He also suggests that each of us have a money personality and specific reasons that money is important, such as:

Security (you may fear being impoverished, which is motivating to save but may lead you to be too risk adverse)
Freedom (you have enough money to live the way you choose and work with enthusiasm)
Gaining Love (you feel that money helps you to attract persons who will love you)
Respect (you associate having money with being respected)
Power (you want to influence people with the power that money can bring)
Happiness (you enjoy the experiences and items that money can buy)
Self-worth (you equate self worth with net worth)
Accomplishment (you consider wealth a measure of success)
Entitlement (you feel deserving of money because you have endured years of struggling without money)
Helping others (you want to use your money to help others, possibly because you have been helped yourself)

Mr. Wilder recommends exercises to detect what drives you the most:

The objective is to discover what you really feel and truly believe is important about money to you in order to understand the reasons behind your earning, saving, and spending activities, which can be financially healthy or unhealthy and may require adjustments to be made.

I enjoyed the “building block” method, which might go like this:

Q. What is important about money to you?
A. Security. I like the security that money can bring.

Q. Why do you like security?
A. Because once I am secure, then I can focus on the things that are important.

Q. What are the things that are important to you?
A. Being able to pursue work that is meaningful, being able to spend time with my family, being able take part in activities that are rewarding to me.

Q. What about money allows you to do those things?
A. Enough money will give me freedom with my time.

It’s up to you to decide whether your reasons for wanting money are valid or not, and if you need to reshape your approach to money. (For further insight, read what Wise Bread writers and readers had to say in What Did Your Parents Teach You About Money?) While you’re pondering money motivations, I’ll be reading The Quiet Millionaire and sharing strategies (in future posts) for saving, investing, and protecting wealth so that you can realize your dreams.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: