Spending Habits can tell your behaviour

A current study on human psychology confirmed that how we spend money can display whether or not we're materialistic or have self-discipline.

Researchers say every individual spend their money in several ways as per their needs and wants as everyone has their own wishes and interests. People spending cash in various categories could help infer certain character developments consisting of how materialistic they're or how much self-control they possess. However, it's far thrilling to know that someone's spending habit can display loads about their character and personality.

The study was published in the journal ‘Psychological Science’ where over 2 million spending records were examined from 2,000 Volunteers that participated in the study. The spending records included credit cards, debit cards and online transactions.

Study co-author Joe Gladstone from the University College London concluded that it is possible to predict people's personality from their spending. Along with the in depth study which was done the volunteers were asked to fill in the survey about certain attributes surrounding their personality which included openness to experience, conscientiousness, extraversion, agreeableness, self-control  and neuroticism.

A machine learning technique was used to analyse whether the volunteer’s relative spending across categories were predictive of specific traits. Therefore if the spender was someone that was gambling loads, were they the same people defaulting on their card payments. People who have greater self-control spent less on bank charges and those who rated higher on neuroticism spent less on mortgage payments, researchers said.

By analysing the correlations between these factors one can infer great deal about individuals spending habits. For example, it was found that people who are adventurous and are open to new experiences tended to spend more on flights, similarly those who were more happy go lucky and are willing to socialise tended to spend more dining and drinking, people who are more conscientious put their money into savings, and those who are more materialistic spent more on shopping clothes, jewellery etc. and less on donations.

Obviously one thing that everyone asked post this study was, Can this study influence financial and banking practices? Yes of course, this study has a huge impact on the financial and banking sector as they can target the right set of customers for their products! For example people who are materialistic and spend more on shopping, they can be offered higher credit limits on their credit cards and similarly people who are more of saving in nature can be offered various schemes for their savings- high interest rates on Fixed Deposits etc.

Hence this study can play a vital role in the growth of financial and banking sector companies as they would be able to target people according to their spending habits and thus the products can be customised basis these traits. In all, not only can the banking industry, even the individuals can benefit from such findings as they can change their habits to align it more with their personal goals.