Impact of personality traits on financial planning: an empirical evidence from Pakistan

Abstract

PurposeThis study examines the role of the big five personality traits: conscientiousness, openness, extroversion, neuroticism and agreeableness in financial planning.Design/methodology/approachThe research design is a quantitative approach. The study has used structured questionnaires to collect data from 403 business students. The hypotheses were tested through structural equation modeling using AMOS.FindingsThe findings revealed that extroversion of personality traits have a significant negative influence on financial planning, neuroticism and conscious personalities have a significant positive effect on financial planning. However, two personality traits, namely openness and agreeableness, have no significant influence on financial planning. The study confirmed that out of five, three personality traits have significant impact on financial planning.Research limitations/implicationsThe results suggest that all personality traits do not influence financial planning among students. Financial planning is deemed an essential decision in life. Although some people are very conscious about their future expenditures, others are not much concerned. Based on the findings, this study recommends that policymakers may conduct workshops and arrange seminars and conferences for the promotion of financial planning and individual's financial well-being. The government needs to promote financial education that can directly and indirectly enhance the saving planning capabilities of the people.Practical implicationsThe results suggest that not all personality traits facilitate financial planning. Financial planning is deemed as a crucial decision in life. Some students are very conscious about their future expenditures, while others are not much concerned. This study recommends that policymakers conduct workshops and arrange seminars and conferences to promote financial planning and individuals' financial well-being. The government of Pakistan needs to promote financial education that can, directly and indirectly, enhance the savings and planning capabilities of the students.Originality/valueThis research contributes to the personality literature, the theory of planned behavior and the life cycle theory by testing the model based on empirical evidence. The current study is the first to focus on the role of the big five personality traits in financial planning among students in Pakistan, an emerging economy.