Does Birth Order Affect Financial Decisions?

Does birth order affect your personal finances? According to Derrick Kinney, an Ameriprise Financial Advisor, your birth order position as the eldest, youngest, middle or only child may impact your finances. In fact, according to psychiatrist Dr. Soroya Bacchus, birth order traits like independence, creativity and secrecy subtly affect the financial decisions we make each day. Are birth order traits affecting how you manage finances? Read on to see if you agree with Dr. Bacchus’s assessment.

Eldest children:

Firstborns love to be seen as stable and independent. According to Dr. Bacchus, you’re punctual about paying bills and managing finances. Since 35 percent of a FICO score is thanks to on-time bill pay, firstborns typically have strong credit scores. However, this perfectionism can also backfire, leading to burnout and unrealistic financial expectations. Do you expect a 30 percent annual return on your 401(k)? Are you trying to double your savings account while also building your IRA and emergency fund? Too many financial priorities at once can lead to unnecessary financial stress. Prioritize your short-term and long-term goals, and take steps each month to achieve these goals.

Middle children:

As natural problem solvers, middle children believe that they can handle anything themselves. When it comes to paying bills, Dr. Bacchus says that your independent, inventive streak may backfire. You’re more likely to move money around between different cards to hide financial problems. You’re also more likely to hide money troubles from the spouses. This can mean that your spouse is blindsided by financial troubles, such as a home loan rejection. Resist the urge to “get creative” with your accounting and be honest with your partner—together, you can build financial stability and trust.

Youngest children:

Parents often dote on younger children, giving in to their demands for new toys or clothing while growing up. Unfortunately, Dr. Bacchus says that this precedent makes it difficult for you to impose any self-discipline on your own financial affairs. Younger children are often more social than older children, prioritizing dinners with friends, shopping trips, and expensive vacations over financial prudence. To combat overspending, Bacchus recommends that you create a “social budget” for each month. Set aside a fixed amount of cash for social expenditures, like coffee with friends or dinner and a movie. Using cash helps keep you accountable for how much you spend—teaching you to make responsible spending choices.

Only children:

Like firstborns, only children are perfectionists who are extremely responsible with their money. You pay your bills on time and have a great credit score. However, Dr. Bacchus says that approval from others is essential, which means that you’re more likely to overspend in an effort to impress. Are you living beyond your means? Even if you pay bills on time, you may not be saving for future goals or investing in your retirement. If you spend beyond your means, cut down on shopping and social expenses. Instead, make regular savings a required part of your monthly budget.


What do you think—do your birth order traits affect your personal finances?