An article at the RetireEarlyHomePage.com web site explores the connection between money and personality. John Greaney answers “yes” to the question posed in the article title — “Is There a Retire Early Personality Type?” I say “yes and no.”
Observation #1 on money and personality — The REHP survey is an unscientific survey.
The survey taken by Greaney is obviously not scientific research. The survey sample is small. And the sample is extremely biased. Participation was limited to people who used the internet, people who discovered the Motley Fool site, and people who visited the Retire Early Home Page discussion board at that site. Another factor is that only people who elected to participate in a survey taken over the internet were included.
A survey conducted in a scientific manner might generate very different results.
Observation #2 on money and personality — There are reasons for believing that the survey results are at least somewhat accurate all the same.
In recent years, I have participated on a number of discussion boards at which early retirement is a frequent topic of conversation. It is my impression that the ISTJ, INTJ, and INTP personality types (the personality types that Greaney identified as most drawn to early retirement) are over-represented at just about all of these boards.
The Greaney survey is not scientific research, but it does appear to me to point to something real — it really does appear to be the case that someone with the one of the three identified personality types is more likely to be drawn to seeking financial freedom early in life than someone with one of the other 13 personality types used in the Myers-Briggs personality assessment tool.
Observation #3 on money and personality — Money behavior is often counter-intuitive.
Greaney says in an October 2000 follow-up article on the same survey that: “There seems to be ample evidence that education and ‘brains’ don’t necessarily correlate with the ability to manage one’s finances. (I know several MBAs that graduated from business school with me 20 years ago that are no closer to retirement today than the day they entered college.) Personality and ‘temperament’ may explain the differences in outcomes that fly in the face of what we would expect with a degree from an elite university and high SAT scores.”
This statement points to something important, in my view. Greaney is quite right that, when we look about us to see where people stand in their efforts to accumulate wealth over the course of their lives, the results we see are not at all what we would intuitively expect. I know people with modest incomes who are doing quite well. And I know people with six-figure incomes who are less than one paycheck away from being candidates for admission to the poorhouse.
These realities are not at all in accord with what the conventional money management advice tells us is important. The usual advice is numbers-oriented. We are told to develop skills that enable us to earn bigger salaries, to save a higher percentage of our incomes, to invest in ways that yield a higher return, and so on. All of that advice is fine in its place, but much of it misses the critical starting point in the money management project — development of the proper attitude to the task.
Motivation is everything, in my experience. Those who are motivated to save do so. Those who are not do not. The connection between income earned and amount saved is far weaker than what we would intuitively expect it to be. Those with big incomes do save more than those with small incomes. In extreme cases, they almost cannot help doing so. In general, though, bringing home more dollar bills is not the route to accumulating more dollar bills in one’s investment accounts.
Observation #4 on money and personality — There is a connection between one’s personality type and one’s ability to develop the level of motivation needed to save effectively.
Different sorts of people are drawn to doing different sorts of things. That’s so obvious a truth that I worry that I am insulting you by having those words appear on your computer screen.
But here’s the thing.
As obviously true as the statement above is, most conventional money advisors pay little heed to it.
Do most money advisors say that those with Personality Type X should invest mostly in stocks while those with Personality Type Y should invest mostly in real estate? They do not. Do most money advisors say that those with Personality Type X should aim to save X percent of their income while those with Personality Type Y should aim to save Y percent of their income? They do not.
It is not how much you earn that determines how rich you become over time. It is what you do with what you earn. It is behavior that matters.
Personality drives behavior. Most money advice doesn’t pay much attention to this personality jizz-jazz. Perhaps not so coincidentally, most money advice doesn’t produce much in the way of results in the real world.
Greaney has put his finger on something terribly important with his publication of the Retire Early Personality Survey, in my estimation. He is very much not offering the advice you would expect to hear from a conventional money advisor. Ask a conventional advisor how to retire early, and she will tell you to try to get a job where you earn more and then to try to save a high percentage of what you earn. Greaney is suggesting something very different.
I don’t think that Greaney would reject the conventional advice. He is certainly not saying that it is a bad idea to earn a big income or to save a big percentage of your income. He is suggesting, though, that these are not the most important factors in determining who is going to be successful in seeking early retirement and who is not. He is saying that what matters most is the attitude you apply to money questions.
I think that Greaney is right about that.
Observation #5 on money and personality — The three personality types identified in the Greaney study as likely to seek early retirement probably do possess a natural edge.
The personality types identified in the Greaney study as being likely to pursue early retirement are generally personality types that enjoy planning. A willingness to plan is critical to the success of a quest to win financial freedom early in life.
Forget the fact that the Greaney study is not scientific research. It confirms what Financial Freedom Community members have seen by taking note of the personality types who participate most frequently on our discussion boards. More importantly than that, the study’s findings make sense.
So Greaney came to a proper understanding of the connection between money management success and personality type, right?
No, I don’t think that’s right.
I think that Greaney put his finger on something important. I also think he jumped too quickly to inappropriate conclusions.
Observation #6 on money and personality — INFJs are capable of developing the love of planning needed to win financial freedom early in life.
I am an “INFJ.” INFJs are not particularly good at planning. Ask my wife. She loves me, but she is an honest person. Ask her about my planning skills and she will tell you some good stories.
So my Retire Early hopes are doomed, right?
No, I don’t think that’s right.
I am living proof that INFJs can become planning machines in the right circumstances.
INFJs do not naturally enjoy planning in the way that INTJs do. INFJs are naturally drawn to other pursuits. It does not follow that INFJs cannot plan. INFJs just need to find a reason to plan that makes sense to someone of their personality type. Once they do that, they can begin planning every bit as effectively (or perhaps more so!) as their INTJ counterparts.
INFJs are driven to understand what goes on in the world. They are “seers” — they see connections between seemingly unrelated things that other personality types often fail to grasp. You turn an INFJ on to financial planning by showing him how financial planning can help him make progress on life goals that he previously did not see as money-related goals.
I have never in my life felt driven to accumulate lots of green pieces of paper. The idea bores me. Until I reached age 35, I was not a good candidate for early retirement. I earned a good income, but I saved nothing.
I was driven to advance in my writing career. Communication with other humans is what turns me on. The day that a switch was flipped in my money management life is the day that I discovered that saving effectively would permit me to take my writing career to new and more exciting places.
From that day forward, I was a planner. Not in general. In the area of money management. I plan what I do with my money today not because I am naturally drawn to planning. I plan what I do with my money because I care deeply about communicating with other humans, and I now know that planning what I do with my money permits me to communicate with other humans in more effective ways.
The Greaney survey does not show that INFJs are particularly suited to early retirement. That’s not because INFJs do not possess what it takes to pull off a successful quest for early financial freedom. It’s because most INFJs just flat-out do not care about money stuff all that much.
Most INFJs do not seek early retirement. So they do not participate in surveys held on Retire Early discussion boards. But show an INFJ how financial freedom can be put to use achieving goals he or she does care about and — watch out, world! INFJs can be extremely determined in their efforts in pursuit of goals they come to care about.
Observation #7 on money and personality — Financial freedom is a sufficiently flexible goal that it can be structured to possess appeal to all personality types.
I don’t know of any reason why what worked for me cannot work for all of the other personality types too.
I don’t believe that any one personality type has a permanent edge in the quest for financial freedom. Personality types that naturally enjoy planning possess an initial edge. But those with other personality types just need to find something in the financial freedom quest that speaks to them to get the bug.
Once they get the bug, those with non-planner personalities become effective planners. And that’s not all they then have going for them. Those with non-planner personalities bring things to the financial freedom quest that those with planning-oriented personalities do not. Those who are not naturally strong at planning are naturally strong at other things that help them win financial freedom early in life so long as they also engage in planning.
Observation #8 on money and personality — We need more aspiring early retirees with non-planning personalities participating on our discussion boards if our movement is to achieve its full potential.
We need ISTJs, INTJs, and INTPs at our discussion boards. We need the other 13 personality types too. It is only by listening to what all of the various personality types bring to the table that we can continue to advance in our understanding of what it takes to win financial freedom early in life.
When the conversations at our boards get stale (and I see staleness at a number of Financial Freedom Community boards today), the answer is to open the floor to new types of discussions. I look forward to hearing more from the other 13 personality types in days to come.
Watch out, all of you ISTJs, INTJs, and INTPs. You started out with a natural edge. But the rest of us are quickly gaining on you!