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The wealthy: A financial psychological profile

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Drawing from the theories of money ambivalence, cognitive dissonance, envy, and relative deprivation, this study sought to explore stereotypes of the wealthy. Specifically, it examined the financial psychology, demographics, and financial behaviors of a sample of wealthy individuals and a sample of other relatively high-income and high-net-worth individuals, and it compared these characteristics to see what, if any, differences exist. Results show that wealthy individuals exhibited significant psychological differences, including lower levels of money avoidance, loss aversion, and financial stress; higher levels of life and financial satisfaction, financial knowledge, internal locus of control; and a fundamental drive to follow their passions and increase their wealth. With regard to financial behaviors, the wealthy spent significantly more on their most recent purchases but were not more likely to be financially dependent on nonwork income and were not more reclusive. A deeper understanding of the wealthy can help mental-health providers better serve this population and help individuals aspiring to increase their income and net worth by challenging inaccurate beliefs about this population’s psychology and financial behaviors.
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THE WEALTHY: A FINANCIAL
PSYCHOLOGICAL PROFILE
Bradley T. Klontz
Kansas State University
Paul Sullivan
New York Times, New York,
New York
Martin C. Seay and Anthony Canale
Kansas State University
Drawing from the theories of money ambivalence, cognitive dissonance, envy, and
relative deprivation, this study sought to explore stereotypes of the wealthy. Specfically,
it examined the financial psychology, demographics, and financial behaviors of a sample
of wealthy individuals and a sample of other relatively high-income and high-net-worth
individuals, and it compared these characteristics to see what, if any, differences exist.
Results show that wealthy individuals exhibited significant psychological differences,
including lower levels of money avoidance, loss aversion, and financial stress; higher
levels of life and financial satisfaction, financial knowledge, internal locus of control;
and a fundamental drive to follow their passions and increase their wealth. With regard
to financial behaviors, the wealthy spent significantly more on their most recent pur-
chases but were not more likely to be financially dependent on nonwork income and
were not more reclusive. A deeper understanding of the wealthy can help mental-health
providers better serve this population and help individuals aspiring to increase their
income and net worth by challenging inaccurate beliefs about this population’s psychol-
ogy and financial behaviors.
Keywords: wealthy, mass affluent, financial psychology, money beliefs, money scripts
Since the 1970s, economic trends have served to create a growing wealth gap between the top
earners and average Americans (Stone, Trisi, Sherman, & Chen, 2013). In recent years, political
candidates and media alike have highlighted this gap, with the “One Percent” emerging as a popular
phrase to describe Americans whose income and/or net worth was in the 99th percentile. Much has
been written about this group of individuals in the popular press, often from a place of frustration
and anger. In the 2012, the gap between the 1% and the 99% became a rallying point in the
presidential election (Dewan & Gebeloff, 2012). Stereotypes of the reclusive, multigenerational
Bradley T. Klontz, College of Human Ecology, Institute of Personal Financial Planning, Kansas State Univer-
sity; Paul Sullivan, New York Times, New York, New York; Martin C. Seay and Anthony Canale, College of
Human Ecology, Institute of Personal Financial Planning, Kansas State University.
We thank United Capital, Platinum Advisor Strategies, Intrinsic Wealth Counsel, and Envision Wealth
Planning for their assistance with this research project.
Correspondence concerning this article should be addressed to Bradley T. Klontz, College of Human
Ecology, Institute of Personal Financial Planning, Kansas State University, 312 Justin Hall, Manhattan, KS
66506-1403. E-mail: btklontz@aol.com
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Consulting Psychology Journal: Practice and Research © 2015 American Psychological Association
2015, Vol. 67, No. 2, 127–143 1065-9293/15/$12.00 http://dx.doi.org/10.1037/cpb0000027
127
money-hoarding, spoiled, private-schooled, antitax, and nefarious wealthy seemed to have gained
popular support, with help in part from media attention received by the Occupy Wall Street
Movement (Dunn, 2012).
In recent years, resentment toward wealthier individuals has seemed palpable. Interestingly,
empirical evidence has lent support to the connection between wealth and a propensity toward
malfeasance. For example, researchers from the University of California-Berkeley observed that,
because of more access to material resources and a higher social rank, wealthy people have less
compassion for the suffering of others than do those in lower socioeconomic classes (Stellar, Manzo,
Kraus, & Keltner, 2012). Researchers have documented incidences in which individuals from
upper-class families are uncomfortable identifying themselves as such and try to distance them-
selves from those with a similar socioeconomic status (SES) because of negative stereotypes of
upper-class privilege (McDowell et al., 2013). However, it is uncertain the extent to which negative
stereotypes of the wealthy are the result of consistent patterns of negative behaviors on the part of
the wealthy or psychological factors of those who hold them in ill-regard.
What follows is a discussion about negative money beliefs and antiwealthy sentiments and an
exploration of three psychological constructs that can help explain the etiology and maintenance of
these beliefs. A review of the literature identifying psychological differences between higher income
individuals and lower income individuals is then presented. Lastly, the financial psychology,
demographics, and financial behaviors of a sample of wealthy individuals and a sample of other
relatively high-income and high-net-worth individuals are compared to see what, if any, differences
exist.
Rich People Are Greedy and Money Corrupts
While membership in a lower socioeconomic class is associated with a host of negative affective,
social, health, and economic experiences, the perceived association between wealth and maleficence
has a long tradition. According to the King James Version of the Bible, “The love of money is the
root of all evil” (1 Timothy 6:10) and “It is easier for a camel to go through the eye of a needle, than
for a rich man to enter into the kingdom of God” (Matthew 19:24). Recently, money beliefs,
including antirich and antimoney sentiments (e.g., “Rich people are greedy,” “Money corrupts
people,” “It is not okay to have more than you need,” “Good people should not care about money”),
have been the target of scholarly attention. Not surprisingly, these types of negative money beliefs
have been associated with lower income and lower net worth and a host of disordered money
behaviors (Klontz & Britt, 2012;Klontz, Britt, Mentzer, & Klontz, 2011).
Unfortunately, while social class is an important contextual variable for individuals and
families, it is a relatively neglected topic in the mental-health literature (McDowell et al., 2013).
Even so, several psychological constructs can aid in our understanding of the feelings of inferiority,
resentment, and envy felt toward wealthier individuals. These include money ambivalence and
cognitive dissonance, the psychology of envy, and the theory or relative deprivation.
Money Ambivalence and Cognitive Dissonance
Even those who hold strong antiwealthy beliefs would be hard-pressed to refuse a pay increase at
work, an inheritance, or a lottery win based on principle. Ambivalence has been defined as “the
experience of simultaneously positive and negative affect toward the same person, object, or
behavior that draws us in opposite directions and leads to some level of phenomenological
discomfort” (Weingardt, 2000, p. 298). There is some empirical support for the concept of money
ambivalence, the simultaneous positive and negative thoughts and feelings a person holds toward
money.
For example, endorsers of antirich and antimoney beliefs are also more likely to endorse
money-worship scripts, believing that “More money would make you happier,” and “You can never
have enough money” (Klontz & Britt, 2012). The simultaneous love and hate of money may help
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128 KLONTZ, SULLIVAN, SEAY, AND CANALE
explain why wealthier individuals are targets for the frustration and anger experienced by members
of lower socioeconomic classes who aspire to raise their socioeconomic standing. At first blush,
simultaneously despising the wealthy and worshiping money may seem incompatible. However, it
is worthwhile to keep in mind the tremendous social, health, and material benefits of membership
in a higher socioeconomic class. One’s perceived SES may be even more important than actual
financial status (Adler & Snibbe, 2003).
Psychological discomfort is a natural consequence of the love– hate, push–pull, and approach–avoidance
experience of money ambivalence. Cognitive-dissonance theory postulates that an individual’s awareness
of conflicting beliefs creates psychological discomfort, which motivates the individual to alleviate the
discomfort (Elliot & Devine, 1994;Festinger, 1962). As such, when an individual has arrived at a
belief about money, cognitive-dissonance theory suggests that conflicting information may not be
given its due consideration. It has been hypothesized that when a particular money belief was
developed in a dramatic way and is associated with strong emotion, it can be highly resistant to
change (Klontz & Klontz, 2009). Cognitive dissonance has been identified as an important psycho-
logical construct in making sense of self-destructive financial behaviors, including the tendency of
investors to irrationally hold onto losing investments (Goetzmann & Peles, 1997). In addition to the
psychological discomfort associated with an approach–avoidance relationship with money and
efforts to alleviate negative feelings through cognitive distortions, watching others enjoy the
advantages of wealth while feeling left out can lead to feelings of envy.
The Psychology of Envy
Envy has been defined as “an unpleasant, often painful emotion characterized by feelings of
inferiority, hostility, and resentment produced by an awareness of another person or group of
person’s who enjoy a desired possession, position, attribute, or quality of being” (Smith & Kim,
2007, p. 47). Smith and Kim (2007) note that when we experience envy, we often feel that the target
of our envy does not deserve their advantage, that our disadvantage is undeserved, and as a result,
we feel a sense of injustice. They note that people feel envy around advantages enjoyed by others
with regard to relative social standing, which is associated with access to success. They also point
out that “we envy similar others who otherwise enjoy an advantage in an area linked to our
self-worth” (p. 50).
As such, we are most vulnerable to envying individuals who share one or more of our attributes,
such as gender and race, and this comparison toward those of like characteristics is well documented
through social-comparison theory (Festinger, 1954). Furthermore, we may hold particularly negative
views toward people who started out at a similar social class as we did but raised their relative
socioeconomic standing higher than we have. As a result of this envy, wealthy individuals may feel
a sense of paranoia and be more secretive about their income and financial status. Secretiveness
around income has been associated with higher income and net worth and fewer self-destructive
financial behaviors (Klontz & Britt, 2012). While wealthier individuals are privileged in society,
they may also be targeted for victimization because of their success. Research has found that envy
is a significant predictor in the victimization of high performers (Kim & Glomb, 2014).
The Theory of Relative Deprivation
The theory of relative deprivation postulates that an individual’s level of satisfaction is not based on
their objective realties but on their life circumstances relative to the experiences of those around
them. Relative deprivation has been shown to be a strong predictor of prejudice toward another
group, as unfavorable comparisons lead to feelings of deprivation, which motivate hostility toward
another group at increasing levels with higher levels of relative deprivation (Dambrun, Taylor,
McDonald, Crush, & Meot, 2006). Furthermore, higher levels of affluence in one’s reference group
can be associated with higher levels of relative deprivation, anger, and violence (Bernburg,
Thorlindsson, & Sigfusdottir, 2009). The theory of relative deprivation supports the notion that an
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129WEALTHY: A FINANCIAL PSYCHOLOGICAL PROFILE
increase in the wealth gap in the United States would correspond with increasing levels of anger
toward the wealthy.
Research has found that subjective well-being depends more on one’s sense of relative
deprivation than on one’s level of income (D’Ambrosio & Frick, 2007). Relative deprivation has
been linked to a preference for immediate smaller rewards at the expense of larger delayed rewards
(Callan, Shead, & Olson, 2011). When controlling for financial status, perceived SES has been
associated with better physical and mental health (Adler & Snibbe, 2003). When individuals have
low social standing and are simultaneously highly biased against their lower social class, they are
at increased risk for health problems and disease (John-Henderson, Jacobs, Mendoza-Denton, &
Francis, 2013).
Money ambivalence and cognitive dissonance, the psychology of envy, and the theory of
relative deprivation help explain some of the negative stereotypes associated with money and the
wealthy. This study examined the financial psychology, demographics, and behaviors of a sample
of wealthy individuals, comparing them to other relatively high income and/or high net worth
individuals, to see what, if any differences exist. Furthermore, it explored some of the common
stereotypes associated with the wealthy to see which, if any, hold true, and which ones may be
misperceptions of this group of individuals. Insights gleaned from this study might be of benefit to
mental-health providers and financial professionals who are working with wealthier individuals. In
addition, mental-health providers and financial professionals working with individuals who seek
higher incomes and higher net worth might benefit from insight into how wealthy individuals think
or behave differently.
The Psychology of Wealth
Research has noted some differences between higher income individuals and lower income indi-
viduals on a number of psychological variables. There is strong evidence of personality traits being
associated with socioeconomic outcomes, job performance, physical health, and academic achieve-
ment (Borghans, Duckworth, Heckman, & Ter Weel, 2008;Chamorro-Premuzic & Furnham, 2003).
Personality traits have also been found to predict mortality, divorce, and success at work (Roberts,
Kuncel, Shiner, Caspi, & Goldberg, 2007).
Several personality traits have been tied to higher incomes and better economic outcomes.
Conscientiousness, which entails the tendency to be dependable, motivated, and to act with
self-discipline, is associated with higher income (Mueller & Plug, 2006;Heckman, Stixrud, &
Urzua, 2006), entrepreneurial intention and success (Zhao, Seibert, & Lumpkin, 2010), good job
performance (Almlund, Duckworth, Heckman, & Kautz, 2011), and academic success (Chamorro-
Premuzic & Furnham, 2003). Emotional stability is also associated with higher income (Mueller &
Plug, 2006) and better job performance (Almlund, Duckworth, Heckman, & Kautz, 2011;Gelissen
& de Graaf, 2006). Openness to experiences has also been found to be associated with higher levels
of income (Mueller & Plug, 2006).
Locus of control is another important psychological construct linked to income. Locus of control
is defined as the extent to which someone sees his or her life being controlled by themselves or being
at the mercy of external factors outside of their control. Specifically, internal locus of control has
been found to be associated with higher income and wealth (Zagorsky, 2007), higher rates of
reemployment after a job loss (Gallo, Endrass, Bradley, Hell, & Kasl, 2003), and better spending
control (Perry & Morris, 2005). Having a strong sense of control over one’s life is also linked to
greater life satisfaction (Johnson & Krueger, 2006). Good self-esteem is also associated with higher
levels of wealth and income (Zagorsky, 2007).
Research has also linked specific money scripts to income and net worth. Money scripts are
beliefs about money that are typically held outside of conscious awareness until they are explored,
are often trans-generational, are developed in childhood, and influence financial behaviors (Klontz
& Klontz, 2009). For example, Klontz and Britt (2012) found that money-vigilance beliefs, which
include themes of frugality and anxiety about money, are associated with higher income and appear
to be protective factors against destructive financial behaviors. In a sample of 351 full-time workers,
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130 KLONTZ, SULLIVAN, SEAY, AND CANALE
Klontz, Seay, Sullivan, and Canale (2014) found that money-status scripts, which include themes
that link one’s self-worth to their net worth, were a significant predictor of inclusion in a group of
higher earners ($154,000 or greater) versus lower earners (median income of $80,000).
Socioeconomic status in childhood, financial stress, financial knowledge, and education are also
strong predictors of income. Lower SES has been associated with higher levels of risk-taking and
impulsiveness (Griskevicius et al., 2013), and childhood SES is an important predictor of financial
and occupational success and educational attainment (Roberts et al., 2007).
Financial education, which can be acquired formally through high school and college classes,
personal-finance seminars, or informally through the mentoring of family members, friends, or
employers, can also have significant impact on financial outcomes (Perry & Morris, 2005). Not
surprisingly, higher levels of financial knowledge, including knowledge around issues related to
credit, savings, investments, and mortgages, are associated with engagement in prudent financial
behaviors such as paying bills on time and having emergency savings (Hilgert, Hogarth, & Beverly,
2003). Financial knowledge can also increase alongside increases in wealth and economic social-
ization (Hilgert et al., 2003).
Financial stress is associated with the inability to meet one’s economic responsibilities (North-
ern, O’Brien, & Goetz, 2010). It is influenced by attitudes, beliefs, and thoughts associated with
one’s demands and the economic resources available to meet those demands (Aldana & Liljenquist,
1998;Kim, Garman, & Sorhaindo, 2003). Individuals often link their self-worth with their financial
status, and, as a result, financial stress has been associated with negative life consequences affecting
health, self-care, psychological well-being, academic functioning, and interpersonal relationships
(Northern, O’Brien, & Goetz, 2010).
While a variety of personality and demographic factors have been found to be associated with
income, net worth, financial satisfaction, and life satisfaction, little is known about how personality,
money beliefs, and financial behaviors differ between the wealthy and other higher income and/or
higher net worth individuals.
Research Questions and Hypotheses
The aims of this study were to provide a description of wealthy individuals in the current sample
across a range of demographics, attitudes, and behaviors and to see what, if any psychological and
behavioral characteristics differentiate the wealthy from the mass affluent. For the purposes of this
study, wealthy individuals were defined as respondents who had $370,000 or more in yearly income
and/or $2.5 million or more in net worth. The term mass affluent was used to describe the
comparison group, a term that has been used to describe those with higher income and net worth
than the “mass market” but less than those who would be classified as wealthy (e.g., Rumbaugh,
2014).
Based on previous literature and recent popular-culture interests, three research questions were
investigated:
1. What are the demographic characteristics of wealthy individuals and mass-affluent indi-
viduals?
2. Are there differences in the psychological characteristics of wealthy individuals as com-
pared with the mass affluent?
3. Are there differences in the financial behaviors of wealthy individuals as compared with the
mass affluent?
Corresponding hypotheses were developed to be investigated related to research Questions 2
and 3:
Hypothesis 1: There are significant differences in the psychological characteristics of wealthy
individuals as compared with the mass affluent.
Hypothesis 2: There are significant differences in the financial behaviors of wealthy indi-
viduals as compared with the mass affluent.
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131WEALTHY: A FINANCIAL PSYCHOLOGICAL PROFILE
Method
Participants
Because of the difficulty of obtaining data from this exclusive group, various standards have been
applied by researchers to delineate the wealthy. According to the Internal Revenue Service (2012),
in 2010 the top 1% of earners in the United States had income of $370,000 or higher, whereas the
top 10% of earners had incomes from $117,000 to $370,000. Net worth is also an important
benchmark for determining inclusion in the top tiers of wealth. It can be argued that net worth is
even more important than income in classifying degrees of wealth (Gebeloff & Dewan, 2012). While
comprehensive data on the net worth in U.S. households is more difficult to access, the median net
worth for the top 10% of Americans in 2010 was approximately $1.2 million (Bricker, Kennickell,
Moore, & Sabelhaus, 2012).
For the purposes of this study, wealthy individuals were defined as respondents who indicated
they had $370,000 or more in yearly income and/or $2.5 million or more in net worth. As such,
individuals in this sample classified as wealthy were in the top 1% to 5% of Americans in terms of
income and/or net worth. The sample used to explore this question consisted primarily of individuals
recruited through financial-planning firms. Through the use of several listserves of financial
planners, firms were invited to participate in a study on financial psychology by passing the survey
link along to their clients via email. In total, 1,096 respondents participated in the survey in 2012.
As a result of this sampling method, the respondents tended to have significantly higher self-reported
income (mean of $145,206; median of $85,000) and net worth (mean of $3,744,047; median of
$850,000) than the average U.S. population.
An overview of descriptive sample characteristics can be found in Table 1. Approximately 31%
of the sample (n178) were members of the wealthy group as defined by $2.5 million or more in
net worth and/or had $370,000 or more in yearly income. The wealthy in the sample had an average
approximate net worth of $10.7 million (median $2.2 million) and an average income of $271,000
(median $150,000). The comparison group in the study (n837) had an average net worth of
$582,000 (median $500,000) and an average income of $88,000 (median $70,000). Given that
the income and net worth of the comparison group is much higher than that of the average American,
we used the term mass affluent to describe them.
The total sample was slightly skewed toward males (63%) and individuals over the age of 55
(68%), which may be expected given that respondents were identified through financial planners.
The vast majority of the sample was White (94%), had at least a college education (77%), and
reported being married (73%). The majority of the sample attended a public high school, including
75% of the wealthy and 81% of the mass affluent. Fifty-seven percent of the wealthy reported
working full time (53% for the mass affluent), while 32% reported being retired (38% of the mass
affluent were retired). Lastly, 58% of the wealthy in the sample reported that their family has been
at its current socioeconomic level for just one generation, with 48% of the mass affluent reporting
the same. Just 15% of the wealthy in the sample reported that their family has been at its current SES
for three or more generations, while this was true for 21% of the mass affluent.
Measures
The variables of interest in this study included a range of measures developed around demographic
characteristics, psychological variables, and financial behaviors.
Demographic characteristics. Sociodemographic characteristics of interest included gender,
age, race/ethnicity, marital status, education, work status, attendance in public or private high
school, occupation, and length at which one’s family has been at its current socioeconomic level:
one generation (me), two generations (my parents and me), three generations (grandparents, parents,
and me), four generations (great-grandparents, grandparents, parents, and me), or five or more
generations. Self-reported subjective SES in childhood was measured through the use of the
MacArthur Scale of Subjective SES (Adler, Epel, Castellazzo, & Ickovics, 2000). On this single-
item, 10-point scale, participants were asked to place themselves on a ladder representing the SES
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132 KLONTZ, SULLIVAN, SEAY, AND CANALE
of people in the United States based on money, education, and jobs, where 1 the people who are
the worst off and 10 the people who are the best off. To measure subjective SES during childhood,
the first sentence of the question was changed to, “Where on this ladder would you place your family
during your growing up years?
Psychological variables.
Money scripts. The Klontz Money Script Inventory-Revised (KMSI-R) was used to assess
money beliefs (Klontz, Seay, Sullivan, & Canale, 2014). In prior research, the four KMSI subscales
have been shown to correlate with income, net worth, and revolving credit and are associated with
a range of disordered money behaviors (Klontz & Britt, 2012;Klontz et al., 2011). The subscales
include Money Avoidance, Money Status, Money Worship, and Money Vigilance.
Money avoidance beliefs include statements such as “money corrupts people,” “rich people are
greedy,” “people get rich by taking advantage of others,” and “good people should not care about
money.” Money avoidance has been found to be negatively associated with income (r⫽⫺.23) and
net worth (r⫽⫺.22; Klontz et al. 2011) and positively associated with compulsive buying,
workaholism, financial dependence, financial enabling, and financial denial (Klontz & Britt, 2012).
Money worship includes beliefs such as “more money will make you happier,” “things would get
better if I had more money,” and “money would solve all my problems.” Money worship is
Table 1
Sample Bivariate Characteristics
Characteristic
Total
sample n
Total
sample % Wealthy nWealthy %
Mass
affluent n
Mass
affluent %
Gender
Male 637 63.07 126 70.79 511 61.42
Female 373 36.93 52 29.21 321 38.58
Age
Less than 44 157 15.54 20 11.24 137 16.47
Age 45–54 167 16.53 36 20.22 131 15.75
Age 55–64 306 30.30 60 33.71 246 29.57
Age 65 plus 380 37.62 62 34.83 318 38.22
Race
White 946 93.66 170 95.51 776 93.27
Non-White 64 6.34 8 4.49 56 6.73
Education attainment
Less than college graduate 277 27.43 30 16.85 247 29.69
College graduate 394 39.01 70 39.33 324 38.94
Postgraduate degree 339 33.56 78 43.82 261 31.37
Type of high school
Public 819 81.09 133 74.72 686 17.55
Private 191 18.91 45 25.28 146 82.45
Marital status
Married 737 72.97 145 81.46 592 71.24
Previously married 169 16.73 21 11.80 148 17.81
Single 103 10.20 12 6.74 91 10.95
Work status
Full-time 531 52.57 100 56.49 431 52.24
Retired 379 37.52 56 31.64 323 39.15
Other work 92 9.11 21 11.86 71 8.61
Generational money status
First generation 486 48.12 102 57.63 384 46.77
Second generation 298 29.50 49 27.68 249 30.33
Third generation or more 214 21.19 26 14.69 188 22.90
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133WEALTHY: A FINANCIAL PSYCHOLOGICAL PROFILE
negatively correlated with income (r⫽⫺.13), net worth (r⫽⫺.24), and paying off one’s credit
cards monthly so as not to accrue interest (r⫽⫺.16; Klontz et al., 2011) and positively associated
with compulsive buying, hoarding, workaholism, financial dependence, financial enabling, and
financial denial. Money status beliefs include statements such as “I will not buy something unless
it is new” and “your self-worth equals your net worth.” Money-status beliefs are negatively
associated with income (r⫽⫺.13), positively correlated with growing up in a lower socioeconomic
household (r.10), and predictive of compulsive buying, gambling disorder, hoarding, workaho-
lism, financial dependence, financial enabling, financial denial, financial enmeshment, and lying to
one’s spouse about spending.
In contrast, the fourth subscale, money vigilance entails beliefs around the importance of
frugality and saving and has been found to be a financial-health-protective factor. Money-vigilance
beliefs include statements such as “it is important to save for a rainy day,” “you should not tell
others how much money you have or make,” and “money should be saved not spent.” Money
vigilance has been found to be positively correlated with paying off one’s credit cards each month
(r.10) and lower levels of compulsive buying, pathological gambling, financial-enabling
behaviors, financial denial, and lying to one’s spouse or partner around spending. The KMSI-R
retains 32 of the original 51 KMSI items. Internal consistency coefficients (Cronbach’s alpha ⫽␣)
for the KMSI-R have ranged as follows: money avoidance .81–.84, money worship .69 –.75,
money status .74 –.75, and money vigilance .63–.66 (Britt, Klontz, Tibbetts, & Leitz, 2014;
Klontz, Seay, Sullivan, & Canale, 2014). Internal consistency for the KMSI-R in the current study
were as follows: money avoidance ␣⫽.82, money worship ␣⫽.68, money status ␣⫽.73, and
money vigilance ␣⫽.58.
Locus of control. Locus of control was measured using a 7-item External Locus of Control
Scale based on Rotter’s (1975,1966) Locus of Control Scale. This scale was included in the 1999
Freddie Mac Consumer Credit Survey of consumer characteristics (Grable, Archuleta, & Roy, 2011)
and has been used in other research on financial behaviors, with Cronbach’s of .76 (Grable, Park,
& Joo, 2009) and .87 (Perry & Morris, 2005) reported. Respondents indicated their level of
agreement using a 5-point Likert-type scale. Items included statements such as, “There really is no
way I can solve some of my problems” and “I have little control over the things that happen to me.”
Two items are reversed scored, with scores ranging from 7–35. Higher scores indicate a tendency
toward an external locus of control. A Cronbach’s for the current study of .79 was observed.
Financial satisfaction, financial stress, and financial knowledge. Measures of financial sat-
isfaction, financial stress, and subjective financial knowledge were collected to investigate individ-
ual’s perception of their current financial situation. Financial satisfaction, financial stress, and
financial knowledge were all measured on one-item 10-point-stair-step questions used by Joo and
Grable (2004). Specifically, financial stress was assessed by asking respondents “How stressed do
you feel about your personal finances?” on a scale of 1 to 10, where 1 not at all,5average,
and 10 extremely. With regard to financial knowledge, respondents were asked “How would you
rate your financial knowledge level compared to your friends?” on a scale of 1 to 10, where 1
lowest level and 10 highest level. Financial satisfaction, which generally signifies contentment
with one’s objective and subjective financial situation (Joo & Grable, 2004), was measured by
asking respondents “How satisfied are you with your overall financial situation?” on a scale of 1 to
10, where 1 very dissatisfied and 10 very satisfied.
Risk tolerance. Risk tolerance was assessed by one item from the Grable and Lytton (1999,
2003) risk-tolerance assessment. The item asked respondents “In general, how would your best
friend describe you as a risk taker?” where 1 a real risk avoider,2cautious,3willing to
take risks after completing adequate research, and 4 a real gambler. While one-item measures
do not offer a comprehensive view of risk tolerance, for the purposes of limiting the length of
surveys to encourage more respondents, it is common to use just one risk-tolerance question in
consumer-finance research (Grable, 2008).
Life satisfaction. The Satisfaction With Life Scale (Diener, Emmons, Larsen, & Griffin, 1985)
was used to measure life satisfaction. Respondents were asked to indicate how strongly they agreed
or disagreed with five statements on a scale of 1 to 7, where 1 strongly disagree and 7 strongly
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134 KLONTZ, SULLIVAN, SEAY, AND CANALE
agree. Scores range from 5 to 35 with higher scores indicating greater life satisfaction. The
Satisfaction With Life Scale has been shown to have strong internal consistency, with Cronbach’s
ranging from .79 to .89 (Pavot & Diener, 1993). Cronbach’s for the Satisfaction With Life Scale
in the current study was observed to be .89.
Cognitive biases/investing problems. Three common cognitive biases associated with invest-
ment management were measured: (a) overconfidence (“I am an above average investor”), (b) loss
aversion (“When an investment loses money I usually hold onto it so I don’t have to realize the
loss”), and (c) investment mistakes (“I have made one or more major investment mistakes”).
Respondents were asked to indicate the extent to which they agreed or disagreed with these
statements using a 6-point Likert-type scale, where 1 strongly disagree,2disagree,3
disagree a little,4agree a little,5agree, and 6 strongly agree.
Tax aversion. One question related to taxes was created for this study and used in the analysis
to assess respondents’ aversion to paying taxes: “I am against the whole idea of paying taxes.
Respondents were asked to indicate the extent to which they agreed or disagreed with the statement
using a 6-point Likert-type scale, where 1 strongly disagree,2disagree,3disagree a little,
4agree a little,5agree, and 6 strongly agree.
Wealth motivation. To investigate the wealth motivations of respondents, two questions were
developed for this study and included to measure the extent to which they agree or disagree with the
following statements: (a) Much of my financial success has come about because of a commitment
to follow my passions and (b) Much of my financial success has come about because of a
fundamental drive to increase my wealth. Responses were collected on a scale of 1 to 6, where 1
strongly disagree,2disagree,3disagree a little,4agree a little,5agree, and 6
strongly agree.
Financial and social behaviors.
Financial behaviors. Three scales of the Klontz Money Behavior Inventory (Klontz & Britt,
2012;Klontz, Britt, Archuleta, & Klontz, 2012) were used to assess money behaviors of interest in
higher net worth populations. Specifically, the subscales of Financial Dependence, Financial
Enabling, and Workaholism. These scales have been shown to have good internal consistency, with
Cronbach’s as follows: Financial Dependence .79, Financial Enabling .87, and Workahol-
ism .87 (Klontz, Britt, Archuleta, & Klontz, 2012). Internal consistency for these scales in the
current study were as follows: Financial Dependence (␣⫽.64), Financial Enabling (␣⫽.77), and
Workaholism (␣⫽.82). Financial dependence includes a fear of being cut-off from nonwork
income, resentment about money received, and a stifling of passion, creativity, motivation, or drive
to succeed. Financial enablers have trouble refusing financial requests from friends and family
members and feel taken advantage of financially. Although workaholics tend to have higher income,
they feel an irresistible urge to work and have trouble enjoying time away from work.
Dollar cost of expenditures. On an actual dollar basis, respondents were asked, How much did
you pay for your most recent (a) home (primary residence), (b) car, (c) vacation, and (d) watch?
Household and family-service providers. Respondents were asked to indicate whether or not
(yes or no) they used the services of various professionals for their household within the past 12
months: Have you worked with any of the following household/family service providers in the past
12 months? These included (a) an accountant, (b) an attorney, (c) a financial advisor, (d) personal
chef, (e) live-in nanny, (f) physical/athletic trainer, (g) business or life coach, (h) landscaper/
gardener, (i) driver (personal or corporate), and (j) private tutor.
Interaction with neighbors. To examine the stereotype of the reclusive wealthy, respondents
were asked to respond to the question, “How often do you interact with your neighbors?”ona
5-point scale, where 1 never,2rarely,3sometimes,4often, and 5 frequently.
Statistical Analysis
We used a conservative approach to data analysis beginning with multivariate tests of main effects.
If significant effects were found, we progressed to a series of independent samples ttests. With
regard to categorical questions, a series of
2
tests were conducted. We adopted a .05 level of
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135WEALTHY: A FINANCIAL PSYCHOLOGICAL PROFILE
significance for all tests. Cohen’s deffect sizes were calculated for the independent ttests variables,
using the pooled SD (Cohen, 1988).
Results
The Psychology of Wealth
A multivariate analysis of variance (MANOVA) was conducted to compare the wealthy and the
mass affluent on 17 psychological variables. A significant main effect for the model was found:
Wilk’s ␭⫽.923, F(17, 619) 3.02, p.0001. This test provides evidence in support of research
Hypothesis 1 (There are significant differences in the psychological characteristics of wealthy
individuals as compared with the mass affluent) and Hypothesis 2 (There are significant differences
in the financial behaviors of wealthy individuals as compared with the mass affluent). With this
initial support, a series of ttests was then run to explore the differences in the psychological
characteristics of wealthy individuals and individuals classified as mass affluent. The effect sizes (d)
for the psychological variables were in the small to medium range. The ttests and Cohen’s dresults
can be found in Table 2. When compared with the mass affluent, the wealthy reported statistically
significant differences in several areas.
Money scripts. The wealthy are less likely to endorse money avoidance beliefs. As such, they
are less likely to believe that money is a corrupting influence, that rich people are greedy or get rich
by taking advantage of others, that there is virtue in living with less money, or that they do not
deserve money. As a result, the wealthy are less likely to sabotage their financial success, less likely
to overspend or gamble compulsively, less likely to financially enable others, less likely to hoard
possessions, and less likely to have trouble sticking to a budget. A significant difference was also
observed on the Money Status subscale, with the wealthy scoring significantly higher. As such, they
were more likely to believe that self-worth and net worth are intertwined, that success is defined by
how much money one earns, that money follows good works, and money helps give life meaning.
Table 2
Psychological Variables: Means Using t Tests for Equality of Means
Variable n
Mass affluent Wealthy
ttest Cohen’s dMean SD Mean SD
Childhood SES 1,000 5.86 1.83 5.69 1.88 1.16 0.09
$ Avoidance 826 22.44 6.21 21.19 5.29 2.27*** 0.22
$ Worship 832 20.97 5.47 21.63 5.28 1.32 0.12
$ Status 815 12.61 3.81 13.25 3.86 1.79* 0.17
$ Vigilance 823 32.26 4.43 33.92 4.87 1.54 0.36
LOC 821 12.90 4.15 12.09 3.74 2.18** 0.21
$ Satisfaction 999 6.51 2.32 7.29 2.33 4.07*** 0.34
$ Stress 999 4.40 2.13 3.83 2.18 3.23*** 0.26
$ Knowledge 1,001 6.98 1.85 7.86 1.75 5.77** 0.49
Risk tolerance 1,010 2.50 .63 2.42 .58 1.57 0.13
Life satisfaction 899 27.65 6.26 29.30 5.62 3.10*** 0.28
Loss aversion 828 3.44 1.23 3.11 1.10 3.06*** 0.28
Invest mistakes 839 4.23 1.34 4.55 1.23 2.73*** 0.25
Overconfidence 835 3.26 1.32 4.01 1.12 7.22*** 0.61
Against taxes 837 2.18 1.04 2.23 1.01 0.55 0.05
Passion success 822 3.46 1.41 3.75 1.45 2.23** 0.29
Wealth success 830 3.59 1.38 3.92 1.48 2.60*** 0.23
Note. LOC locus of control; SES socioeconomic status.
*p.10. ** p.05. *** p.01.
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136 KLONTZ, SULLIVAN, SEAY, AND CANALE
An interesting find was that prior research has linked money-status scripts to lower SES in
childhood, lower income (Klontz et al., 2011), and greater risk for a host of money disorders,
including pathological gambling, compulsive hoarding, financial enabling, and workaholism (Klontz
& Britt, 2012). The wealthy also reported significantly higher levels of money vigilance scripts. As
such, they scored higher on the belief that money should be saved and not spent, are more likely to
be anxious about not having enough money, and believe it is impolite to talk about money.
Locus of control. The wealthy report significantly higher levels of internal locus of control. As
such, they are less likely to feel helpless in dealing with life’s challenges, take more responsibility
for the outcomes in their lives, have stronger beliefs in their abilities to solve problems and achieve
goals, and believe they have more control over the things that happen to them.
Financial knowledge, financial satisfaction, and financial stress. When compared with the
mass affluent, the wealthy reported significantly higher levels of financial knowledge and financial
satisfaction and significantly less financial stress.
Risk tolerance. There were no significant differences between the self-reported risk tolerance
of the wealthy and the mass affluent in the sample. On average, both groups indicated that in terms
of risk-taking, their friends would describe them as cautious.
Life satisfaction. The wealthy reported significantly higher levels of life satisfaction. This
includes believing that the conditions of one’s life are excellent, and that one’s life is close to ideal
in most ways; they have less regret and believe that they have gotten the important things they want
in life.
Cognitive biases/investing problems. Rather than being immune to common investor mis-
takes, the wealthy endorsed a cognitive bias that has been associated with investing mistakes.
Specifically, they reported significantly higher levels of confidence in their investing acumen.
Furthermore, they were significantly more likely to report making one or more major investing
mistakes. However, when compared with the mass affluent, the wealthy reportedly being signifi-
cantly less likely to report holding onto losing positions to avoid experiencing a loss.
Tax aversion. There were no significant differences with regard to aversion to paying taxes
between the wealthy and the mass-affluent individuals in the study. On average, both groups
indicated that they disagree with the statement, “I am against the whole idea of paying taxes.
Wealth motivation. The wealthy individuals were significantly more likely than the mass
affluent to report attributing their financial success to both a fundamental drive to increase their
wealth and a commitment to follow their passions.
Financial and Social Behaviors
Financial habits of the wealthy were also explored in this study to see what differences, if any, exist
between wealthy individuals and mass-affluent individuals. A MANOVA was conducted to compare
the wealthy and the mass affluent on eight financial and social-behavior variables. This test provides
evidence in support of research Hypothesis 2 (There are significant differences in the financial
behaviors of wealthy individuals as compared with the mass affluent). A significant main effect for
the model was found: Wilk’s ␭⫽.820, F(8, 647) 17.70, p.0001. A series of ttests was then
run to explore differences in the financial behaviors of wealthy individuals and individuals classified
as mass affluent. The ttests and Cohen’s dresults can be found in Table 3. Chi-square test results
for the categorical variables can be found in Table 4. Medium to large effects were observed in the
spending habits of the wealthy as compared with the mass affluent. When compared with the mass
affluent, the wealthy reported statistically significant differences in several areas.
Money disorders. Despite the trust-fund-baby stereotype, the wealthy in this sample were not
significantly more likely to be financially dependent on nonwork income than mass-affluent
individuals. Nor were significant differences in financial-enabling behaviors or workaholism ob-
served between the wealthy and the mass affluent.
Dollar cost of recent expenditures. As might be expected, the wealthy reported spending
significantly more money on their latest purchases than the mass affluent. Specifically, they spent
106% more on the most recent home ($542,000 vs. $263,000), 48% more on the most recent car
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137WEALTHY: A FINANCIAL PSYCHOLOGICAL PROFILE
purchase ($40,000 vs. $27,000), 98% more on the last vacation ($8,300 vs. $4,200), and 150% more
on the last watch ($1,090 vs. $440).
Household and family-service providers. Significant differences were also observed in the
number of household and family-service providers employed in the past 12 months by the wealthy
and mass-affluent individuals in the sample. While there was not enough power to analyze hiring
around nannies or personal chefs, the wealthy were significantly more likely to employ the services
of an accountant, an attorney, a financial advisor, a landscaper, a physical trainer, a business or life
coach, and a landscaper/gardener. While much less common, the wealthy were also significantly
more likely to employ the services of a personal or corporate driver (13% vs. 4%). There were no
significant differences between the wealthy and the mass affluent in their employment of educational
tutors.
Interaction with neighbors. No significant difference was found between the wealthy and the
mass affluent in terms of the degree to which they interacted with their neighbors. On average, both
groups indicated that they rarely interact with their neighbors.
Discussion
This study sought to examine the wealthy across a range of personality, behavior, and sociodemo-
graphic variables. Based on the theories of money ambivalence and cognitive dissonance, the
Table 4
Financial and Social Behaviors:
2
Tests
Variable nMass affluent % Wealthy %
2
Accountant 862 62.78 86.71 33.49***
Attorney 823 50.82 69.33 16.94***
Financial advisor 884 85.01 90.45 3.16*
Personal chef 737 1.63 6.40 N/A
Nanny 741 3.41 6.35 N/A
Physical trainer 764 24.01 38.93 12.38***
Life coach 752 15.81 23.81 4.71**
Landscaper 810 43.05 70.95 37.70***
Driver 739 3.92 12.70 15.75***
Tutor 745 5.19 7.03 0.69
*p.10. ** p.05. *** p.01.
Table 3
Financial and Social Behaviors: t Tests for Equality of Means
Variable n
Mass affluent Wealthy
ttest Cohen’s dMean SD Mean SD
$ Enable 817 15.06 4.78 15.56 5.25 1.13 0.10
$ Dependence 809 9.45 2.97 9.67 3.53 0.78 0.07
Workaholism 789 25.63 8.19 26.26 8.78 0.82 0.16
$ Home 695 252,309 218,076 534,918 442,249 7.72*** 0.86
$ Car 706 26,347 16,685 39,293 19,209 7.75*** 0.72
$ Vacation 699 4,027 4,863 8,166 8,003 6.17*** 0.64
$ Watch 795 314 1,054 829 1,757 3.37*** 0.37
Talk to neighbors 906 2.46 1.08 2.47 1.06 0.16 0.01
*p.10. ** p.05. *** p.01.
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138 KLONTZ, SULLIVAN, SEAY, AND CANALE
psychology of envy, and relative deprivation, the argument was made that negative views of the
wealthy are pervasive and levels of resentment may be keeping pace with the growing wealth gap
in the United States. Whether deserved or not, research has supported the notion that negative beliefs
about money and wealthier individuals are associated with lower income, lower net worth, and a
host of financially self-destructive behaviors (Klontz & Britt, 2012).
The purpose was to explore common stereotypes of the wealthy and examine the financial
psychology of wealthy individuals compared with individuals who could be classified as mass
affluent, with the goal of increasing our understanding of this group of individuals. Significant
differences were found in the financial psychology of the wealthy compared with other higher net
worth individuals. The largest psychological differences with medium effect sizes were observed in
the areas of overconfidence in investing acumen (d0.61), financial knowledge (d0.49), and
financial satisfaction (d0.34).
In addition, the wealthy endorsed less money-avoidant beliefs, more money-status beliefs, a
more internal locus of control, less of a tendency for loss aversion, and were significantly more
likely to attribute their financial success to both a drive to increase their wealth and a commitment
to follow their passions.
With regard to financial behaviors, the wealthy were more likely to report workaholic behaviors
and admit to making significant investment mistakes. The wealthy were not more likely to be
financially dependent, were no more likely to be averse to paying taxes, were not more reclusive,
and tended to be first-generation earners who worked full-time and were products of public high
schools. The largest differences were seen in the amount of money the wealthy paid for their most
recent purchase compared with the mass affluent. On average, the wealthy paid twice as much for
their homes and their most recent vacations and 50% more for their most recent car purchases. The
wealthy in this sample had an income approximately twice as much as the mass affluent, which
appears to correspond with their purchases. However, the wealthy had a median net worth 340%
higher than the mass affluent, suggesting that income could be a better indicator of spending habits
than net worth.
Mental-health Professionals and Money
Mental-health professionals are not immune to negative beliefs about money and wealth. Of
particular interest to consulting psychologists is that mental-health professionals may be at even
higher risk of money-avoidant beliefs and poor financial health. Specifically, one study found that
when compared with other professionals, mental-health professionals were less likely to pay off
credit cards each month, have a budget, have adequate insurance, have money set aside for
emergencies, have confidence in their financial knowledge, and report comfort with their financial
status (Britt, Klontz, Tibbetts, & Leitz, 2014). When compared with financial planners, mental-
health professionals were more likely to endorse money avoidance and antirich beliefs and to engage
in financial-denial behaviors (e.g., avoiding looking at bank statements, trying to forget about one’s
financial situation; Klontz & Britt, 2012). A mental-health professional who is experiencing
significant financial stress related to his or her own lack of financial health could be less effective
in overall job performance.
It has been suggested that therapists’ own unresolved money issues have led to the topic of
money being avoided in the psychological literature, even though money is consistently the primary
source of stress in the lives of three out of four Americans (Klontz et al., 2008;Trachtman, 1999).
In addition to potential stress associated with one’s own financial health, an avoidant or ambivalent
relationship with money can impact the work of a consulting psychologist in several ways. First, it
can have a negative impact on the consulting psychologist’s ability to maintain rapport and positive
regard with wealthier clients, including higher level executives, who may belong to a higher
socioeconomic class. This could lead to feelings of envy and/or relative deprivation that interfere
with the ability to establish rapport and the consulting process. A lack of familiarity with the norms,
backgrounds, and psychology of people from different socioeconomic classes can also have a
negative impact on the consulting process. Schein (2003) cautioned that failure to take adequate
sociological and cultural considerations of one’s client into account can have a negative impact on
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139WEALTHY: A FINANCIAL PSYCHOLOGICAL PROFILE
the consulting-psychology relationship and can negatively impact outcomes. As such, it follows that
a better understanding of the financial psychology of wealthier individuals can help the consulting
psychologist better serve his or her wealthier clients.
As mentioned above, negative beliefs about money and attitudes toward the wealthy have been
associated with poor financial outcomes and self-destructive financial behaviors (Klontz, & Britt,
2012). The present study adds supports for the association between money beliefs and income and
net worth. It follows that psychological intervention targeting self-limiting financial beliefs and
self-destructive financial behaviors could be useful in helping clients challenge and change their
problematic money beliefs and improve their financial trajectory. Several psychotherapeutic ap-
proaches have been adapted to address the psychological components of clients’ financial health in
an effort to improve their financial status and psychological well-being, including cognitive–
behavioral therapy, solution-focused therapy, systemic therapy, humanistic therapy, psychodynamic
therapy, and motivational interviewing (Klontz, Britt, & Archuleta, 2015).
Limitations and Future Directions
There are important limitations to this study. While the respondents were drawn directly from clients
of financial planners, they were a convenience sample, and as such, they were not selected at
random. The study relied exclusively on self-report data and there was no direct observation of
behaviors or objective measures of financial status. Furthermore, the results are strictly descriptive
and cannot be used to establish cause-and-effect relationships between personality variables and
SES. These findings would benefit from further scrutiny and cross-validation from a randomly
selected multicultural sample, both within the United States and abroad. Additionally, a larger and
more diverse sample would allow for examining whether differences in financial psychology exist
across various demographic groups, including comparing money beliefs across various generations
(e.g., Millennials vs. Baby Boomers).
While there are limits to this study, it is offered as a glance into the psychological characteristics
and financial behaviors of this group of individuals who are not well understood but frequently
served by consulting psychologists. Future research could explore the nature of these personality
characteristics to see if they predict future inclusion in higher socioeconomic groups. If certain
personality traits are predictive, it could provide support for cognitive– behavioral interventions
targeting beliefs, attitudes, and behaviors that are keeping a person from reaching his or her goals.
When limiting financial beliefs are identified, they can be changed (Klontz & Britt, 2012). There is
also evidence to support the notion that psychological traits can change over time (Borghans et al.,
2008) and can be altered by therapeutic interventions (De Fruyt, Van Leeuwen, Bagby, Rolland, &
Rouillon, 2006). A deeper understanding of the wealthy can help consulting psychologists better
serve this population and help individuals aspiring to increase their income and net worth by
challenging inaccurate beliefs about this population’s psychology and financial behaviors.
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143WEALTHY: A FINANCIAL PSYCHOLOGICAL PROFILE
... Factor 5 was comprised of 2 items explaining 6.385% of the variance. The items under this factor "I paid a higher price" and "I spent more" explained the concerns about the financial wisdom (Klontz, Sullivan, Seay & Canale, 2015) of the customer after purchase decision was made. ...
... One of the focus group participants expressed a feeling of concern "Have we spent more" -Participant 1 FGD 2" and another stated "Was it a "paisa vasool" or good value for money?"-Participant 3 FGD 3", which confirms the presence of financial concern and interest among Indian customers. This factor explained 6.42 % of the variance and was comprised of 2 items as "I paid a higher price" and "I spent more" explaining the concerns about the financial wisdom (Klontz et al., 2015) of the customer. Being conservative, customers in India take extra precautions while choosing any financial products. ...
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The aim of the study was to understand the dynamics of cognitive dissonance in the context of financial product purchase. A mixed methodology research approach was undertaken to explore the attitudinal and behavioural dimensions (qualitative) and subsequent empirical validation (quantitative) with a sample of customers of financial products. Qualitative research was conducted through focus group discussions to arrive at a pool of 99 items which were then pruned and validated with the help of academic and industry experts. The items were empirically tested and validated with the help of appropriate statistical tools to arrive at a "5 factor and 25 items" measurement scale for cognitive dissonance. The study found two factors "Emotional Gain" & "Financial Concern" as distinguishing factors emerging out as key findings. The arousal of cognitive dissonance after the purchase decision taken by consumer can be a major concern for marketers as it might result in order cancellations, loss of trust for the brand as well as loss of loyal customers. Measuring dissonance in financial product context post purchase can help marketers devise appropriate strategies to reduce dissonance, thereby retaining and attracting customers.
... Achievement motivation, in turn, is associated with both better grades in the classroom (Fortier, Vallerand, & Guay, 1995) and higher job satisfaction in the workplace (Wang, Bowling, & Eschleman, 2010). Furthermore, internal LOC has been found to be associated with higher income and wealth (Klontz, Seay, Sullivan, & Canale, 2014;Klontz, Sullivan, Seay, & Canale, 2015;Zagorsky, 2007). In contrast, people with external LOC tend to attribute their actions to fate, luck, or other people (Schultz & Schultz, 2013). ...
... From those struggling to make ends meet to the wealthy, money can have a profound effect on psychological wellbeing (Klontz, Sullivan, Seay, & Canale, 2015;Mani, Mullainathan, Shafir, & Zhao, 2013). When financial stress adversely impacts financial and psychological health, it is important to rule-out the presence of a money disorder. ...
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Research has implicated locus of control (LOC) as a factor in the development of psychological disorders, but few studies have examined how LOC relates to money disorders, which occur when stress surrounding money negatively impacts financial health. The present study utilized hierarchical regression to examine how select demographic factors and LOC contribute to eight distinct money disorders among a sample of 164 college students. Results demonstrate that the link between external LOC and money disorders is stronger than indicated by previous research. Unlike demographic factors, which are static and were not found to predict money disorders in the present study, LOC is amenable to change, and both financial planners and mental health professionals may wish to incorporate locus of control into assessment and intervention.
... Thirdly, the affluent are rarely sensitive to price. They pay for their passions (Klontz et al., 2015). ...
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As the proportion of glazing on the surface of a car further increases, efficient and pleasant human factors between people and glazing become more critical. This study focuses on wealthy buyers with disgust emotion during in-car user journeys, as assigned by the corporate partner. The research team explores specific contexts in an empathetic way and uncovers context-specific pain points and opportunities. A prototype is designed to monitor and prevent scratching and protect passengers' privacy. Gestural or sound interactions are explored through brainstorming, bodystorming, and quick user testing. A visionary video scenario is provided to guide researchers and engineers to implement the interaction designs.
... In the context of financial planning, emotions, relationships, and past experiences shape what both planners and clients perceive, feel, and believe about money. These perceptions and beliefs about money have been shown to have direct links to financial outcomes, including income, net worth, credit card debt, and financial behaviors (Klontz, Britt, Mentzer, and Klontz 2011;Klontz, Sullivan, Seay, and Canale 2015). For example, a client whose parents grew up during the Great Depression may have learned frugal habits, strong beliefs, and salient anxieties about money that shaped their lives and the lives of their children. ...
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This paper introduces the field of Interpersonal Neurobiology (IPNB) and its application to financial planning. IPNB integrates theories from fields including neuroscience, psychology, systems theory, and relationship studies to create an interdisciplinary approach to well-being. IPNB processes support the healthy integration of emotional, psychological, physiological, and cognitive functioning and can be applied to the financial planning relationship and facilitation of behavioral change. IPNB can be used by financial planners to better understand client attitudes, beliefs, motivations, decisions, and financial behaviors. IPNB provides a conceptual framework for financial planners to improve interpersonal relationships with clients, calm client fears, and gain insight into emotions that lead to financial decisions while promoting a sense of well-being. This paper presents practical applications of IPNB to facilitate financial well-being. IPNB research supports financial planning best practices, which are becoming increasingly focused on evidence-based strategies.
... Financial stress, financial knowledge, and financial satisfaction. Financial stress, financial knowledge, and financial satisfaction were measured on three separate 10-pointstair-step questions, which have been used in previous research (Joo and Grable 2004;Klontz, Sullivan, Seay, and Canale 2015). ...
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Previous research has demonstrated that financial behaviors, such as saving behaviors, are heavily influenced by emotion. This study sought to determine what effect engaging people emotionally using a sentimental item would have on their saving behaviors. A double-blind, randomized experiment was conducted comparing a financial psychology session to a financial education session. A total of 102 subjects participated in the three stages of the study, providing pre-session, post-session, and three-week follow-up data. Immediately after the session, the group that received the financial psychology session showed statistically significant increases in their readiness to save, confidence in their ability to save more, financial satisfaction, and financial health. At the three-week follow-up, the financial psychology group reported a 73 percent increase in their rates of savings from pre-session while the financial education group reported a 22 percent increase in their rates of savings rates during the same period.
... The academic research, especially consumer science research could incorporate these elements into their consumer science education. Money influences individual daily financial decisions and emotions (Klontz, Sullivan, Seay, & Canale, 2015). The financial and psychological aspects could serve as the basis to educate general consumers. ...
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The main objective of this study was to examine the psychological aspect of self-coping mechanisms in influencing the relationship between financial strains and financial security of single mothers. A multistage random sampling was used to gather the data of 600 single mothers from six single mother associations registered under the Ministry of Women, Family and Community Development in Malaysia. The data were statistically analysed using descriptive analysis of Pearson Product Moment Correlation and Structural Equation Modelling. There were positive significant relationships found between self-coping mechanisms, financial strains, and financial security. The structural equation of financial security model showed a relatively good fit to the data obtained in the study. The self-coping mechanisms were distinguished as a mediator in the relationships between financial strains and financial security. The self-coping mechanisms illustrated a moderate relationship (r = 0.427) in the financial security model. In testing the mediation effect, the indirect mediation existed in the relationships between financial strains and financial security. The findings of this have implied that single mother required coping strategies such as social support program or financial education. This study seems to support the importance of behavioural finance in line with notable empirical findings and the theoretical reasoning in understanding financial security of single mothers. Thus, government and non-profit organisation play crucial role to provide social support programme and financial education programme for single mothers.
... The academic research especially the consumer science research could have incorporated these elements into the consumer science education. The way money influence individual daily financial decision and emotion (Klontz, Sullivan, Seay,and Canale, 2015). The financial and psychology aspects could serve as education basis to educate general consumer. ...
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In microeconomic perspective, financial security is often linked with the individual level of saving, the ability to meet the emergency, an adequate fund during retirement and the stability of income. Current macro economic volatility caused several consequences and indirectly affect on consumer saving and spending. Additionally, with a higher cost of living influenced consumers consumption especially among female-headed households with a number of dependents and dual domestic/work roles. This study investigates the relationships between financial strains, self-coping mechanisms, financial literacy, financial practices and financial security. A cross-sectional study of multistage random sampling has been used in the data collection. A structured questionnaire used in the survey method to collect data from 521 female-headed households from six single mothers associations in Malaysia. The results predicted that financial strains, self-coping mechanisms, financial literacy and financial practices explained 42.3% of the variance in financial security. The two strongest predictors are the self-coping mechanisms and financial practices. The implications of findings for policy makers, single mothers associations and financial practitioners were discussed.
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Money is the number one source of stress in the lives of Americans. Financial stress drives many clients to seek the assistance of financial counselors. In some cases, financial stress is not the sole result of a lack of financial resources or poor financial literacy and traditional financial counseling tools do not help clients change their behaviors. When financial counseling is not successful in helping improve a client’s financial behaviors, counselors may want to consider whether the client may be exhibiting signs of a money disorder. This chapter introduces the signs and symptoms of problematic money behaviors and money disorders, including hoarding disorder, gambling disorder, compulsive buying disorder, financial enabling, financial dependence, financial denial, and financial enmeshment. It examines the beliefs driving these behaviors and offers suggestions for financial counselors who encounter clients struggling with problematic financial behaviors and money disorders.
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• Using a sample of financial planning clients, this paper investigated the financial psychology of high earners. For this study, high income was defined as individuals in the top 2.5 percent of earners in the United States ($154,000 or greater), with the comparison group reporting a median income of $80,000. • When compared to other high income financial planning clients, significant financial psychological differences were observed in the highest earners. • Membership in the high earning group was associated with lower levels of money avoidance and money worship scripts, higher levels of money status scripts, higher levels of financial knowledge, more financial enabling behaviors, and a greater likelihood to attribute financial success to a fundamental drive to increase wealth. • A deeper understanding of the financial psychology of high income clients can help financial planners better serve this market niche, predict possible behavioral risks to those with high incomes and net worth, and help clients aspiring to increase their income and net worth through insights gleaned from this population.
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Financial matters have been identified in the literature as a significant source of stress for individuals and families. However, little is known about the psychological issues related to money that may be contributing to individual and family problems. Using a sample of 422 individuals who identified their level of agreement on 72 money-related beliefs, this study identified four distinct money belief patterns. Three of these belief systems were significantly correlated with income and net worth. Demographic features associated with the four money belief scales are provided. The results of this study may be useful for practitioners interested in quickly and accurately identifying money beliefs in their clients that can have a negative impact on financial health.
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Do you overspend? Undersave? Keep secrets about money from a spouse or family member? Are you anxious about dealing with your finances? If so, you are not alone. Let's face it–just about all of have complicated, if not downright dysfunctional, relationships with money. As Drs. Brad and Ted Klontz, a father and son team of pioneers in the emerging field of financial psychology explain, our disordered relationships with money aren’t our fault. They don’t stem from a lack of knowledge or a failure of will. Instead, they are a product of subconscious beliefs and thought patterns, rooted in our childhoods, that are so deeply ingrained in us, they shape the way we deal with money our entire adult lives. But we are not powerless. By looking deep into ourselves and our pasts, we can learn to recognize these negative and self-defeating patterns of thinking, and replace them with better, healthier ones. Drawing on their decades of experience helping patients resolve their troubling issues with money, the Klontzes and describe the twelve most common “money disorders” - like financial infidelity, money avoidance, compulsive shopping, financial enabling, and more — and explain how we can learn to identify them, understand their root causes, and ultimately overcome them. So whether you want to learn how to make better financial decision, have more open communication with your spouse or kids about the family finances, or simply be better equipped to deal with the challenges of these tough economic times, this book will help you repair your dysfunctional relationship with money and live a healthier financial life.
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A salient trend during the current economic crisis is the increasing number of consumers paying closer attention to their spending and saving habits in efforts to control their finances. Not surprisingly, these same uncertain times are witnessing the growth not only of financial planning services, but of financial counseling and therapy. Accompanying the move toward professional standards and an academic research base is the need for a reliable source of quality assessment tools for use with clients, for research, and for training. Financial Planning and Counseling Scales admirably fills this need by collecting a diverse range of instruments specifically designed for the financial fields. The majority of the scales here have never been published in any other manuals or handbooks, appearing only in peer-reviewed journals or, in some cases, dissertations. This timely volume: Reproduces over 280 scales useful across a variety of circumstances Provides key details for each scale, including source, purpose, test sample, scoring information, and discussion of reliability and validity Clearly defines financial counseling/therapy as a field of study and practice (particularly in the context of marriage and family therapy) and establishes the role of psychometric assessment Summarizes a range of theoretical models (e.g., cognitive-behavioral, solution-focused, systems) for financial therapy Offers guidelines for evaluating scales, and for constructing original instruments Financial Planning and Counseling Scales is a first-of-its-kind resource for researchers, educators, and practitioners in family and consumer economics, personal finance, household finance, and financial therapy as these domains evolve.
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Money-related stress dates as far back as concepts of money itself. Formerly it may have waxed and waned in tune with the economy, but today more individuals are experiencing financial mental anguish and self-destructive behavior regardless of bull or bear markets, recessions or boom periods. From a fringe area of psychology, financial therapy has emerged to meet increasingly salient concerns. Financial Therapy is the first full-length guide to the field, bridging theory, practical methods, and a growing cross-disciplinary evidence base to create a framework for improving this crucial aspect of clients' lives. Its contributors identify money-based disorders such as compulsive buying, financial hoarding, and workaholism, and analyze typical early experiences and the resulting mental constructs ("money scripts") that drive toxic relationships with money. Clearly relating financial stability to larger therapeutic goals, therapists from varied perspectives offer practical tools for assessment and intervention, advise on cultural and ethical considerations, and provide instructive case studies. A diverse palette of research-based and practice-based models meets monetary mental health issues with well-known treatment approaches, among them: •Cognitive-behavioral and solution-focused therapies. •Collaborative relationship models. •Experiential approaches. •Psychodynamic financial therapy. •Feminist and humanistic approaches. Stages of change and motivational interviewing in financial therapy. A text that serves to introduce and define the field as well as plan for its future, Financial Therapy is an important investment for professionals in psychotherapy and counseling, family therapy, financial planning, and social policy.
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The Federal Reserve Board's Survey of Consumer Finances for 2010 provides insights into changes in family income and net worth since the 2007 survey. The survey shows that, over the 2007–10 period, the median value of real (inflation-adjusted) family income before taxes fell 7.7 percent, while mean income fell more sharply, an 11.1 percent decline. Both median and mean net worth decreased even more dramatically than income over this period, though the relative movements in the median and the mean are reversed; the median fell 38.8 percent, and the mean fell 14.7 percent. This article reviews these and other changes in the financial condition of U.S. families, including developments in assets, liabilities, and debt payments.
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This article reports the development and validation of a scale to measure global life satisfaction, the Satisfaction With Life Scale (SWLS). Among the various components of subjective well-being, the SWLS is narrowly focused to assess global life satisfaction and does not tap related constructs such as positive affect or loneliness. The SWLS is shown to have favorable psychometric properties, including high internal consistency and high temporal reliability. Scores on the SWLS correlate moderately to highly with other measures of subjective well-being, and correlate predictably with specific personality characteristics. It is noted that the SWLS is suited for use with different age groups, and other potential uses of the scale are discussed.