Everyone spends their money differently as they have varying needs and interests. But it is interesting to know that a person's spending habits can reveal a lot about their personality, say researchers.
People spend money in certain categories, and this can be used to infer certain personality traits such as how materialistic they are or how much self-control they tend to have.
Published in the journal Psychological Science, the study analysed over two million electronic spending records - from credit, debit cards and online transactions - from more than 2,000 volunteers.
Our findings demonstrate for the first time that it is possible to predict people's personality from their spending, said study co-author Joe Gladstone from the University College London.
The participants also completed a personality survey that included questions measuring materialism, self-control, openness to experience, conscientiousness, extraversion, agreeableness and neuroticism.
The researchers used a machine learning technique to analyse whether participants' relative spending across categories was predictive of specific traits. Overall, the correlations between the model predictions and participants' personality trait scores were modest.
Looking at specific correlations between spending categories and traits, the researchers found that people who were more open to experience tended to spend more on flights, those who were more extroverted tended to make more dining and drinking purchases, those who were more agreeable donated more to charity, those who were more conscientious put more money into savings, and those who were more materialistic spent more on jewellery and less on donations.
The researchers also found that those who reported greater self-control spent less on bank charges and those who rated higher on neuroticism spent less on mortgage payments.
The findings have clear applications in the banking and financial services industries, which also raises potential ethical challenges. For example, financial services firms could use personality predictions to identify individuals with certain traits, such as low self-control and then target those individuals across a variety of domains, from online advertising to direct mail, researchers said.